RIDGEWORTH FUNDS 485APOS
AS FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION ON MAY 30, 2008
File No. 033-45671
File No. 811-06557
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
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REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
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POST-EFFECTIVE AMENDMENT NO. 75
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REGISTRATION STATEMENT UNDER THE INVESTMENT
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COMPANY ACT OF 1940
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AMENDMENT NO. 77
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RIDGEWORTH FUNDS (formerly, STI Classic Funds)
(Exact Name of Registrant as Specified in Charter)
155 Federal Street, Suite 700
Boston, Massachusetts 02110
(Address of Principal Executive Offices, Zip Code)
Registrants Telephone Number, including Area Code: 1-888-784-3863
Richard W. Grant, Esquire
Morgan, Lewis & Bockius LLP
One Oxford Centre
Pittsburgh, PA 15219-6401
(Name and Address of Agent for Service)
Copies to:
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W. John McGuire, Esquire
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Cynthia Surprise, Senior Vice President |
Morgan, Lewis & Bockius LLP
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Citi Fund Services Ohio, Inc. |
1111 Pennsylvania Avenue, NW
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100 Summer St. Suite 1500 |
Washington, DC 20004
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Boston, MA 02110 |
It is proposed that this filing become effective (check appropriate box):
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Immediately upon filing pursuant to paragraph (b) |
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On [date] pursuant to paragraph (b) |
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60 days after filing pursuant to paragraph (a)(1) |
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On August 1, 2008 pursuant to paragraph (a)(1) |
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75 days after filing pursuant to paragraph (a)(2) |
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On [date] pursuant to paragraph (a)(2) of Rule 485 |
If appropriate, check the following box:
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this post-effective amendment designates a new effective date for a previously filed post-
effective amendment. |
RIDGEWORTH FUNDS LOGO
I Shares
PROSPECTUS
RIDGEWORTH EQUITY FUNDS
(formerly, STI Classic Equity Funds)
EQUITY FUNDS
Aggressive Growth Stock Fund
Emerging Growth Stock Fund
International Equity Fund
International Equity Index Fund
Large Cap Core Equity Fund
Large Cap Growth Stock Fund
Large Cap Quantitative Equity Fund
Large Cap Value Equity Fund
Mid-Cap Core Equity Fund
Mid-Cap Value Equity Fund
Select Large Cap Growth Stock Fund
Small Cap Growth Stock Fund
Small Cap Value Equity Fund
ASSET ALLOCATION FUNDS
Life Vision Aggressive Growth Fund
Life Vision Conservative Fund
Life Vision Growth and Income Fund
Life Vision Moderate Growth Fund
Life Vision Target Date 2015 Fund
Life Vision Target Date 2025 Fund
Life Vision Target Date 2035 Fund
Investment Adviser: RidgeWorth Capital Management, Inc. (formerly, Trusco Capital Management, Inc.)
(the Adviser)
August 1, 2008
The Securities and Exchange Commission
has not approved or disapproved these
securities or passed upon the adequacy
of this prospectus. Any representation
to the contrary is a criminal offense.
PROSPECTUS
ABOUT THIS PROSPECTUS
The RidgeWorth Funds (formerly, STI Classic Funds) is a mutual fund family that offers shares in
separate investment portfolios that have individual investment goals and strategies. This
prospectus gives you important information about the I Shares of the Equity Funds and the Asset
Allocation Funds (Funds) that you should know before investing. Please read this prospectus and
keep it for future reference.
This prospectus has been arranged into different sections so that you can easily review this
important information. On the next page, there is some general information you should know about
risk and return that is common to each of the Funds. For more detailed information about each Fund,
please see:
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INSIDE
BACK
COVER |
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PRIVACY POLICY |
BACK
COVER |
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HOW TO OBTAIN MORE INFORMATION ABOUT THE RidgeWorth FUNDS |
AUGUST 1, 2008
CUSIP/TICKER SYMBOLS
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FUND NAME CUSIP |
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EQUITY FUNDS |
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CLASS |
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INCEPTION* |
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TICKER |
Aggressive Growth Stock Fund
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I Shares
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2/23/04
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SCATX
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Emerging Growth Stock Fund
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I Shares
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2/23/04
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SEGTX |
International Equity Fund
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I Shares
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1/31/95
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STITX |
International Equity Index Fund
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I Shares
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6/6/94
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SIEIX |
Large Cap Core Equity Fund
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I Shares
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9/26/92
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CRVAX |
Large Cap Growth Stock Fund
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I Shares
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7/1/92
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STCAX |
Large Cap Quantitative Equity Fund
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I Shares
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8/7/03
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SQETX |
Large Cap Value Equity Fund
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I Shares
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2/12/93
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STVTX |
Mid-Cap Core Equity Fund
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I Shares
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2/2/94
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SAGTX |
Mid-Cap Value Equity Fund
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I Shares
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11/30/01
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SMVTX |
Select Large Cap Growth Stock Fund
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I Shares
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12/11/98
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STTAX |
Small Cap Growth Stock Fund
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I Shares
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10/8/98
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SSCTX |
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Small Cap Value Equity Fund
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I Shares
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1/31/97
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SCETX |
ASSET ALLOCATION FUNDS |
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Life Vision Aggressive Growth Fund
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I Shares
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6/30/97
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CVMGX |
Life Vision Conservative Fund
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I Shares
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11/6/03
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SCCTX |
Life Vision Growth and Income Fund
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I Shares
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6/30/97
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CLVGX |
Life Vision Moderate Growth Fund
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I Shares
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6/30/97
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CLVBX |
Life Vision Target Date 2015 Fund
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I Shares
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10/12/05
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LVFIX |
Life Vision Target Date 2025 Fund
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I Shares
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10/21/05
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LVTIX |
Life Vision Target Date 2035 Fund
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I Shares
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11/2/05
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LVRIX |
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The performance included under Performance Information may include the performance of other
classes of the Fund and/or predecessors of the Fund. |
RISK/RETURN INFORMATION COMMON TO THE RIDGEWORTH FUNDS
Each Fund is a mutual fund. A mutual fund pools shareholders money and, using professional
investment managers, invests it in securities.
Each Fund has its own investment goal and strategies for reaching that goal. The Adviser or the
Subadviser (under the supervision of the Adviser) is responsible for investing Fund assets in a way
that it believes will help a Fund achieve its goal. Still, investing in each Fund involves risk and
there is no guarantee that a Fund will achieve its goal. The Advisers or the Subadvisers
judgments about the markets, the economy or companies may not anticipate actual market movements,
economic conditions or company performance, and these judgments may affect the return on your
investment. In fact, no matter how good a job the Adviser or the Subadviser does, you could lose
money on your investment in a Fund, just as you could with other investments. A FUND SHARE IS NOT A
BANK DEPOSIT AND IT IS NOT INSURED OR GUARANTEED BY THE FDIC OR ANY GOVERNMENT AGENCY.
The value of your investment in a Fund is based on the market prices of the securities the Fund
holds. These prices change daily due to economic and other events that affect particular companies
and other issuers. These price movements, sometimes called volatility, may be greater or lesser
depending on the types of securities a Fund owns and the markets in which they trade. The effect on
a Fund of a change in the value of a single security will depend on how widely the Fund diversifies
its holdings.
Each Funds investment goal may be changed without shareholder approval. Before investing, make
sure that the Funds goal matches your own.
AGGRESSIVE GROWTH STOCK FUND
(SUITCASE ICON)
FUND SUMMARY
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INVESTMENT GOAL
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Long-term capital appreciation |
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INVESTMENT FOCUS
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Common stocks of multi-cap growth companies |
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SHARE PRICE VOLATILITY
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High |
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PRINCIPAL INVESTMENT STRATEGY
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Attempts to identify securities of companies with favorable prospects for future
revenue,
earnings
and/or
cash
flow
growth |
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INVESTOR PROFILE
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Investors who want to increase the value of their
investment,
but
do
not
need
income, and
who
are
willing to
accept
more
volatility
for
the
possibility
of
higher
returns |
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SUBADVISER
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Zevenbergen Capital Investments LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
Under normal circumstances, the Aggressive Growth Stock Fund invests at least 80% of its net assets
in common stocks and other U.S. traded equity securities. U.S. traded equity securities may include
American Depositary Receipts (ADRs). The Fund may invest in companies of any size.
The Fund invests primarily in common stocks of companies that exhibit strong growth
characteristics. Using a fundamental research approach, the Subadviser identifies companies with
favorable prospects for future revenue, earnings, and/or cash flow growth. Growth drivers are
identified for each company and become critical to the ongoing evaluation process. Industry growth
dynamics, company competitive positioning, pricing flexibility, and diversified product offerings
are evaluated, providing the foundation for further fundamental research to determine the weighting
of the Funds investments.
Because companies tend to shift in relative attractiveness, the Fund may buy and sell securities
frequently, which may result in higher transaction costs, additional capital gains tax liabilities
and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, to a limited extent,
derivative instruments (such as futures, options and swaps) to use as a substitute for a purchase
or sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as market risk.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock prices will fall
over short or extended periods of time. Historically, the equity market has moved in cycles, and
the value of the Funds securities may fluctuate drastically from day to day. Individual companies
may report poor results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a decline in
response. These factors contribute to price volatility, which is the principal risk of investing in
the Fund.
Small and mid-cap stocks can perform differently from other segments of the equity market or the
equity market as a whole and can be more volatile than stocks of larger companies.
Because the Fund may invest in ADRs, it is subject to some of the same risks as direct investments
in foreign companies. These include the risk that political and economic events unique to a country
or region will affect those markets and their issuers. These events will not necessarily affect the
U.S. economy or similar issuers located in the United States.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
AGGRESSIVE GROWTH STOCK FUND
(TARGET ICON)
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows performance of the Funds I Shares from year to year.*
(BAR CHART)
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2005
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2006
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2007
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BEST QUARTER
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WORST QUARTER
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The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was xx.xx%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the Russell 3000(R) Growth Index. These returns assume shareholders redeem all of
their shares at the end of the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
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SINCE |
I SHARES |
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1 YEAR |
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INCEPTION* |
Fund Returns Before Taxes
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Fund Returns After Taxes on
Distributions |
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Fund Returns After Taxes on
Distributions and Sale of Fund
Shares |
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Russell 3000(R) Growth Index
(reflects no deduction for fees,
expenses or taxes) |
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Since inception of the I Shares on February 23, 2004. Benchmark returns since February 29, 2004
(benchmark returns available only on a month end basis). |
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Russell 3000(R) Growth Index measures the performance of those
companies found in the Russell universe with higher price-to-book ratios and higher forecasted
growth values. The stocks in this Index are also members of either the Russell 1000(R) Growth or
the Russell 2000(R) Growth indices.
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
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I SHARES |
Investment Advisory Fees
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1.10 |
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Other Expenses |
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Total Annual Operating Expenses(1) |
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(1) |
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The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at
any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
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1 YEAR
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3 YEARS
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5 YEARS
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10 YEARS |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
EMERGING GROWTH STOCK FUND
(SUITCASE ICON)
FUND SUMMARY
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INVESTMENT GOAL
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Long-term capital appreciation |
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INVESTMENT FOCUS
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Common stocks of small and mid-cap
growth companies |
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SHARE PRICE VOLATILITY
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High |
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PRINCIPAL INVESTMENT STRATEGY
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Attempts to identify securities of
small and mid-cap
companies with favorable prospects for future
revenue,
earnings and/or cash flow growth |
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INVESTOR PROFILE
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Investors who want to increase the
value of their
investment, but do not need income, and who are
willing to
accept more volatility for the possibility of higher
returns |
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SUBADVISER
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Zevenbergen Capital Investments LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
Under normal circumstances, the Emerging Growth Stock Fund invests at least 80% of its net assets
in common stocks and other U.S. traded equity securities. U.S. traded equity securities may include
American Depositary Receipts (ADRs). The Fund invests primarily in stocks of small and mid-cap
growth companies. The Subadviser considers small and mid-cap growth companies to be primarily
companies with market capitalizations from $300 million up to the highest capitalization of those
companies included in the Russell Midcap Growth® Index (and as annually reconstituted.)
As of [ ], 2008, the highest capitalization of a company in the Russell Midcap
Growth® Index was approximately $[ ] billion. The Subadviser emphasizes initial
investment in companies with market capitalizations of $5 billion or less.
In selecting investments for the Fund, the Subadviser looks for companies that exhibit strong
growth characteristics. Using a fundamental research approach, the Subadviser identifies companies
with favorable prospects for future revenue, earnings, and/or cash flow growth. Growth drivers
are identified for each company and become critical to the ongoing evaluation process. Industry
growth dynamics, company competitive positioning, pricing flexibility, and diversified product
offerings are evaluated, providing the foundation for further fundamental research to determine the
weighting of the Funds investments.
Because companies tend to shift in relative attractiveness, the Fund may buy and sell securities
frequently, which may result in higher transaction costs, additional capital gains tax liabilities
and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, to a limited extent,
derivative instruments (such as futures, options and swaps) to use as a substitute for a purchase
or sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as market risk.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock prices will fall
over short or extended periods of time. Historically, the equity market has moved in cycles, and
the value of the Funds securities may fluctuate drastically from day to day. Individual companies
may report poor results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a decline in response.
These factors contribute to price volatility, which is the principal risk of investing in the Fund.
Small and mid-cap stocks can perform differently from other segments of the equity market or the
equity market as a whole and can be more volatile than stocks of larger companies.
Because the Fund may invest in ADRs, it is subject to some of the same risks as direct investments
in foreign companies. These include the risk that political and economic events unique to a county
or region will affect those markets and their issuers. These events will not necessarily affect the
U.S. economy or similar issuers located in the United States.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows performance of the Funds I Shares for the year to year.*
(BAR CHART)
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2005 |
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2006 |
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2007 |
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BEST QUARTER |
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WORST QUARTER |
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The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was xx.xx%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2006, to those of the Russell Midcap(R) Growth Index. These returns assume shareholders redeem all
of their shares at the end of the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
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SINCE |
I SHARES |
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1 YEAR |
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INCEPTION* |
Fund Returns Before Taxes |
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Fund Returns After Taxes on Distributions |
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Fund Returns After Taxes on Distributions and Sale of Fund Shares |
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Russell Midcap(R) Growth Index (reflects no deduction for fees, expenses or taxes) |
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* |
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Since inception of the I Shares on February 23, 2004. |
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Russell Midcap(R) Growth Index measures the performance of those
companies in the Russell universe with higher price-to-book ratios and higher forecasted growth
values.
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
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I SHARES |
Investment Advisory Fees |
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1.10 |
% |
Other Expenses |
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Total Annual Operating Expenses(1) |
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(1) |
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The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at
any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
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1 YEAR
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3 YEARS
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5 YEARS
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10 YEARS |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
INTERNATIONAL EQUITY FUND
(SUITCASE ICON)
FUND SUMMARY
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INVESTMENT GOAL
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Long-term capital appreciation |
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INVESTMENT FOCUS
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Foreign common stocks |
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SHARE PRICE VOLATILITY
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High |
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PRINCIPAL INVESTMENT STRATEGY
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Attempts to identify companies with good fundamentals or a
history of consistent growth |
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INVESTOR PROFILE
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Investors who want an increase in the value of their
investment without regard to income , are willing to accept the
increased risks of international investing for the possibility
of higher returns, and want exposure to a diversified portfolio
of actively managed international stocks |
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SUBADVISER
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Certium Asset Management LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
Under normal circumstances, the International Equity Fund invests at least 80% of its net assets in
common stocks and other equity securities of foreign companies. The Fund invests primarily in
developed countries, but may invest in countries with emerging markets. The Subadviser applies a
multi-factor model to identify stocks with positive earnings trends and attractive valuations.
Fundamental analysis is used to determine those companies that are projected to have sustainability
of earnings and global industry positioning. The Subadvisers goal is to find companies with top
management, quality products and sound financial positions, or a history of consistent growth in
cash flows, sales, operating profits, returns on equity and returns on invested capital. Risk
controls are in place to assist in maintaining a portfolio that is diversified by security type and
industry sector and invested across multiple countries.
In selecting investments for the Fund, the Subadviser diversifies the Funds investments among at
least three foreign countries. Because companies tend to shift in relative attractiveness, the Fund
may buy and sell securities frequently, which may result in higher transaction costs, additional
capital gains tax liabilities and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, to a limited extent,
derivative instruments (such as futures, options and swaps) to use as a substitute for a purchase
or
sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as market risk.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock prices will fall
over short or extended periods of time. Historically, the equity market has moved in cycles, and
the value of the Funds securities may fluctuate drastically from day to day. Individual companies
may report poor results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a decline in response.
These factors contribute to price volatility, which is the principal risk of investing in the Fund.
The Fund is also subject to the risk that foreign common stocks may underperform other segments of
the equity market or the equity market as a whole.
Foreign securities involve special risks such as currency fluctuations, economic or financial
instability, lack of timely or reliable financial information and unfavorable political or legal
developments. These risks are increased for investments in emerging markets.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
1997 |
|
|
13.35 |
% |
1998 |
|
|
11.22 |
% |
1999 |
|
|
9.47 |
% |
2000 |
|
|
-3.46 |
% |
2001 |
|
|
-17.71 |
% |
2002 |
|
|
-17.02 |
% |
2003 |
|
|
36.86 |
% |
|
|
|
|
|
2004 |
|
|
19.02 |
% |
2005 |
|
|
13.11 |
% |
2006 |
|
|
24.62 |
% |
2007 |
|
|
|
|
|
BEST QUARTER |
|
|
WORST QUARTER |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was xx.xx%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the Morgan Stanley Capital International Europe, Australasia and Far East (MSCI(R) EAFE(R)) Index. These returns assume shareholders redeem all of their shares at the end of the
period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
I SHARES |
|
1 YEAR |
|
|
5 YEARS |
|
|
10 YEARS |
Fund Returns
Before Taxes |
|
|
|
|
|
|
|
|
|
|
Fund Returns
After Taxes
on Distributions |
|
|
|
|
|
|
|
|
|
|
Fund Returns After Taxes on
Distributions and
Sale of Fund
Shares |
|
|
|
|
|
|
|
|
|
|
MSCI(R)
EAFE(R) Index
(reflects no deduction for
fees, expenses or taxes) |
|
|
|
|
|
|
|
|
|
|
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not
have an investment adviser and does not pay any commissions or expenses. If an index had expenses,
its performance would be lower. The MSCI(R) EAFE(R) Index is a widely-recognized, market
capitalization index that measures market equity performance based upon indices from 21 foreign and
developed countries.
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
1.11 |
% |
Other Expenses |
|
|
|
|
|
|
|
|
|
Total Annual Operating Expenses(1) |
|
|
|
|
|
|
|
(1) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at
any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
1 YEAR
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are
shown as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For
more information about these fees, see Investment Adviser.
INTERNATIONAL EQUITY INDEX FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
Investment results that correspond to the performance of the
MSCI(R) EAFE(R) GDP Weighted Index (Net Return) |
|
|
|
INVESTMENT FOCUS
|
|
Foreign equity securities in the MSCI(R) EAFE(R) GDP
Weighted Index (Net Return) |
|
|
|
SHARE PRICE VOLATILITY
|
|
High |
|
|
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Statistical analysis to track the MSCI(R) EAFE(R) GDP
Weighted Index (Net Return) |
|
|
|
INVESTOR PROFILE
|
|
Investors who want an increase in the value of their
investment without regard to income, are willing to
accept the increased risks of international investing
for the possibility of higher returns, and want exposure to
a diversified portfolio of passively managed international stocks |
|
|
|
SUBADVISER
|
|
Certium Asset Management LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
Under normal circumstances, the International Equity Index Fund invests at least 80% of its net
assets in equity securities of foreign companies.
In selecting investments for the Fund, the Subadviser chooses companies included in the MSCI(R)
EAFE(R)-GDP Weighted Index (Net Return), an index of equity securities of companies located in
Europe, Australasia and the Far East. While the Fund is structured to have overall investment
characteristics similar to those of the Index, it selects a sample of securities within the Index
using a statistical process. Therefore, the Fund will not hold all securities included in the
Index.
The Fund may buy and sell securities frequently, which may result in higher transaction costs,
additional capital gains tax liabilities and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, to a limited extent,
derivative instruments (such as futures, options and swaps) to use as a substitute for a purchase
or sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as market risk.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock prices will fall
over short or extended periods of time. Historically, the equity market has moved in cycles, and
the value of the Funds securities may fluctuate drastically from day to day. Individual companies
may report poor results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a decline in response.
These factors contribute to price volatility, which is the principal risk of investing in the Fund.
The Fund is also subject to the risk that foreign equity securities may underperform other segments
of the equity market or the equity market as a whole.
Foreign securities involve special risks such as currency fluctuations, economic or financial
instability, lack of timely or reliable financial information and unfavorable political or legal
developments. These risks are increased for investments in emerging markets.
In addition to the above mentioned risks, the Subadviser may not be able to match the performance
of the Funds benchmark.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
1998 |
|
|
30.02 |
% |
1999 |
|
|
30.66 |
% |
2000 |
|
|
-17.06 |
% |
2001 |
|
|
-23.47 |
% |
|
|
|
|
|
2002 |
|
|
-16.52 |
% |
2003 |
|
|
40.54 |
% |
2004 |
|
|
21.06 |
% |
2005 |
|
|
12.76 |
% |
2006 |
|
|
26.60 |
% |
2007 |
|
|
|
|
|
BEST QUARTER |
|
|
WORST QUARTER |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was xx.xx%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the Morgan Stanley Capital International Europe, Australasia and Far East Gross
Domestic Product (MSCI(R) EAFE(R)-GDP) Weighted Index (Net Return) and the MSCI EAFE-GDP Weighted
Index (Price Return). These returns assume shareholders redeem all of their shares at the end of
the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
I SHARES |
|
1 YEAR |
|
|
5 YEARS |
|
|
10 YEARS |
Fund Returns Before Taxes |
|
|
|
|
|
|
|
|
|
|
Fund Returns After Taxes on
Distributions |
|
|
|
|
|
|
|
|
|
|
Fund Returns After Taxes on
Distributions and Sale of
Fund Shares |
|
|
|
|
|
|
|
|
|
|
MSCI(R) EAFE(R)-GDP
Weighted Index (Net
Return)* (reflects no
deduction for fees,
expenses or taxes) |
|
|
|
|
|
|
|
|
|
|
MSCI EAFE-GDP
Weighted Index (Price
Return) (reflects no
deduction for fees,
expenses or taxes) |
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Effective March 31, 2008, the Fund transitioned its benchmark from the MSCI EAFE
GDP Weighted Index (Price Return to the MSCI EAFE GDP Weighted Index (Net Return) in order to
better reflect the Funds receipt of dividends from the securities it holds. |
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The MSCI(R) EAFE(R)-GDP Weighted Index (Net Return) and the MSCI
EAFE-GDP Weighted Index (Price Return) are widely-recognized, market capitalization indices that
measure market equity performance based upon indices from 21 foreign and developed countries. The
country weighting of each Index is calculated using the gross domestic product of each of the
various countries and then with respect to the market capitalization of the various companies
operating in each country. The MSCI EAFE-GDP Weighted Index (Net Return) measures the market
performance including both price performance and income from dividend payments. The MSCI EAFE-GDP
Weighted Index (Price Return) measures only the price performance of the market.
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
0.49 |
% |
Other Expenses |
|
|
|
|
|
|
|
|
|
|
Total Annual Operating Expenses(1) |
|
|
|
|
|
|
|
(1) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at
any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
1 YEAR
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
LARGE CAP CORE EQUITY FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOALS |
|
|
PRIMARY
|
|
Long-term capital appreciation |
SECONDARY
|
|
Current income |
|
|
|
INVESTMENT FOCUS
|
|
Equity securities |
|
|
|
SHARE PRICE VOLATILITY
|
|
Moderate |
|
|
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Attempts to identify securities of companies with attractive
valuation and/or above average earnings potential relative
either to their sectors or the market as a whole |
|
|
|
INVESTOR PROFILE
|
|
Investors who are looking for capital appreciation potential
and some income with less volatility than the equity market
as a whole |
|
|
|
SUBADVISER
|
|
IronOak Advisors LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
Under normal circumstances, the Large Cap Core Equity Fund invests at least 80% of its net assets
in common stocks and other U.S. traded equity securities of large cap companies. U.S. traded equity
securities may include American Depositary Receipts (ADRs). The Subadviser considers large cap
companies to be companies with market capitalizations of at least [$3 billion.]
The Subadviser believes that a portfolio of stocks with attractive fundamental characteristics
purchased at a reasonable valuation will provide above average returns over time. In selecting
investments for the Fund, the Subadviser chooses companies that, in its opinion, offer above
average stock appreciation potential relative to other companies in the same economic sector.
The Subadviser uses sector-specific factors to highlight companies whose characteristics are
currently attractive versus market peers. The Subadviser performs fundamental research to evaluate
securities for the portfolio. The Subadvisers approach attempts to identify a well-defined
investment thesis (what it believes a companys prospects may be over the next 12 to 18 months)
based on competitive positioning, business model, and potential catalysts and risks. The
Subadviser
seeks securities with an attractive risk/return profile, improving fundamentals and earnings
outlook, and relative financial strength and flexibility. The Subadviser may sell a security when
the investment thesis is realized, the investment thesis breaks down, or a more attractive
alternative presents itself.
The Subadviser believes a diversified approach to portfolio management is a critical component of
the overall investment process.
Because companies tend to shift in relative attractiveness, the Fund may buy and sell securities
frequently, which may result in higher transaction costs, additional capital gains tax liabilities
and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, to a limited extent,
derivative instruments (such as futures, options and swaps) to use as a substitute for a purchase
or
sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as market risk.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock prices will fall
over short or extended periods of time. Historically, the equity market has moved in cycles, and
the value of the Funds securities may fluctuate drastically from day to day. Individual companies
may report poor results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a decline in response.
These factors contribute to price volatility, which is the principal risk of investing in the Fund.
Large cap stocks can perform differently from other segments of the equity market or the equity
market as a whole. Large capitalization companies may be less flexible in evolving markets or
unable to implement change as quickly as smaller capitalization companies. Accordingly, the value
of large cap stocks may not rise to the same extent as the value of small or mid-cap stocks under
certain market conditions or during certain periods.
Because the Fund may invest in ADRs, it is subject to some of the same risks as direct investments
in foreign companies. These include the risk that political and economic events unique to a country
or region will affect those markets and their issuers. These events will not necessarily affect the
U.S. economy or similar issuers located in the United States.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
1998 |
|
|
18.20 |
% |
1999 |
|
|
14.17 |
% |
2000 |
|
|
1.43 |
% |
2001 |
|
|
-6.60 |
% |
2002 |
|
|
-19.64 |
% |
2003 |
|
|
28.14 |
% |
2004 |
|
|
14.23 |
% |
2005 |
|
|
9.59 |
% |
2006 |
|
|
17.15 |
% |
2007 |
|
|
|
|
|
BEST QUARTER |
|
|
WORST QUARTER |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was x.xx%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the S&P 500(R) Index and the Russell 1000(R) Value Index. These returns assume
shareholders redeem all of their shares at the end of the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
I SHARES |
|
1 YEAR |
|
5 YEARS |
|
10 YEARS |
Fund Returns Before Taxes |
|
|
|
|
|
|
Fund Returns After Taxes on Distributions
|
|
|
|
|
|
|
Fund Returns After Taxes on Distributions and Sale of Fund Shares |
|
|
|
|
|
|
S&P
500(R) Index (reflects no deduction
for fees, expenses or
taxes) |
|
|
|
|
|
|
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The S&P 500(R) Index is a widely-recognized, market value-weighted
(higher market value stocks have more influence than lower market value stocks) index of 500 stocks
designed to mimic the overall U.S. equity markets industry weightings.
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
0.80 |
% |
Other Expenses |
|
|
|
|
|
|
|
|
|
|
Total Annual
Operating Expenses(1) |
|
|
|
|
|
|
|
(1) |
|
The Adviser, Subadviser and/or other service providers may voluntarily waive a portion of their
fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at any
time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
|
|
1 YEAR |
|
|
3 YEARS |
|
|
5 YEARS |
|
|
10 YEARS |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
LARGE CAP GROWTH STOCK FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
Capital appreciation |
|
|
|
INVESTMENT FOCUS
|
|
U.S. common stocks |
|
|
|
SHARE PRICE VOLATILITY
|
|
Moderate |
|
|
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Attempts to identify companies with above average growth
potential |
|
|
|
INVESTOR PROFILE
|
|
Investors who want the value of their investment to grow,
but do not need to receive income on their investment |
|
|
|
SUBADVISER
|
|
Silvant Capital Management LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
Under normal circumstances, the Large Cap Growth Stock Fund invests at least 80% of its net assets
in common stocks and other U.S. traded equity securities of large cap companies. U.S. traded equity
securities may include American Depositary Receipts (ADRs). The Subadviser considers large cap
companies to be companies with market capitalizations of at least [$3 billion]. The Subadviser will
seek out securities it believes have strong business fundamentals, such as revenue growth,
improving cash flows, increasing margins and positive earning trends.
In selecting investments for the Fund, the Subadviser chooses companies that it believes have above
average potential to beat expectations. The Subadviser applies proprietary quantitative models to
rank stocks based on improving fundamentals, valuation, capital deployment and efficiency and
sentiment or behavior factors. It then performs in-depth fundamental analysis to determine the
quality and sustainability of expectations to determine whether or not the company is poised to
beat expectations. The Subadviser uses a bottom-up process based on company fundamentals. Risk
controls are in place to assist in maintaining a portfolio that is diversified by sector and
minimizes unintended risks relative to the primary benchmark.
Because companies tend to shift in relative attractiveness, the Fund may buy and sell securities
frequently, which may result in higher transaction costs, additional capital gains tax liabilities
and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, to a limited extent,
derivative instruments (such as futures, options and swaps) to use as a substitute for a purchase
or sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as market risk.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock prices will fall
over short or extended periods of time. Historically, the equity market has moved in cycles, and
the value of the Funds securities may fluctuate drastically from day to day. Individual companies
may report poor results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may
suffer a decline in response. These factors contribute to price volatility, which is the principal risk of investing in
the Fund.
Large cap stocks can perform differently from other segments of the equity market or the equity
market as a whole. Large capitalization companies may be less flexible in evolving markets or
unable to implement change as quickly as smaller capitalization companies. Accordingly, the value
of large cap stocks may not rise to the same extent as the value of small or mid-cap stocks under
certain market conditions or during certain periods.
Because the Fund may invest in ADRs, it is subject to some of the same risks as direct investments
in foreign companies. These include the risk that political and economic events unique to a country
or region will affect those markets and their issuers. These events will not necessarily affect the
U.S. economy or similar issuers located in the United States.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
1998 |
|
|
28.06 |
% |
1999 |
|
|
9.71 |
% |
2000 |
|
|
1.62 |
% |
2001 |
|
|
-6.49 |
% |
2002 |
|
|
-21.98 |
% |
|
|
|
|
|
2003 |
|
|
18.52 |
% |
2004 |
|
|
6.37 |
% |
2005 |
|
|
-1.27 |
% |
2006 |
|
|
10.27 |
% |
2007 |
|
|
|
|
|
BEST QUARTER |
|
|
WORST QUARTER |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was x.xx%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the Russell 1000(R) Growth Index. These returns assume shareholders redeem all of
their shares at the end of the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
I SHARES |
|
1 YEAR |
|
5 YEARS |
|
10 YEARS |
Fund Returns Before Taxes |
|
|
|
|
|
|
Fund Returns After Taxes on Distributions |
|
|
|
|
|
|
Fund
Returns After Taxes on Distributions and Sale of Fund Shares |
|
|
|
|
|
|
Russell
1000(R) Growth Index (reflects no deduction for fees, expenses or taxes) |
|
|
|
|
|
|
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Russell 1000(R) Growth Index measures the performance of those
Russell 1000(R) companies with higher price-to-book ratios and higher forecasted growth values. The
Russell 1000(R) Index is a comprehensive large cap index measuring the performance of the largest
1,000 U.S. incorporated companies.
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
0.93 |
% |
Other Expenses(1) |
|
|
|
|
|
|
|
|
|
Total Annual Operating Expenses(2) |
|
|
|
|
|
|
|
(1) |
|
Adjusted to reflect expected changes in Other Expenses for the current fiscal year. |
|
(2) |
|
The Adviser, Subadviser and/or other service providers may voluntarily waive a portion of their
fees in order to limit Total Annual Operating Expenses to the level shown below. These waivers may
be discontinued at any time. |
|
|
|
|
|
I SHARES |
Large Cap Growth Stock Fund |
|
|
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual
costs and returns might be different, your approximate costs of investing $10,000 in the Fund would
be:
|
|
|
|
|
|
|
|
|
|
1 YEAR |
|
|
3 YEARS |
|
|
5 YEARS |
|
|
10 YEARS |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
LARGE CAP QUANTITATIVE EQUITY FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
Long-term capital appreciation |
|
INVESTMENT FOCUS
|
|
U.S. common stocks of companies with positive fundamental and market characteristics |
|
SHARE PRICE VOLATILITY
|
|
High |
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Attempts to identify companies with above average appreciation potential within specific market sectors by utilizing quantitative methods |
|
INVESTOR PROFILE
|
|
Investors who want to increase the
value of their investment and are willing to accept more volatility for the possibility of higher returns |
|
SUBADVISER
|
|
Certium Asset Management LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
Under normal circumstances, the Large Cap Quantitative Equity Fund invests at least 80% of its net
assets in common stocks and other U.S. traded equity securities of large cap companies. U.S. traded
equity securities may include American Depositary Receipts (ADRs). The Subdviser considers large
cap companies to be companies with market capitalizations of at least [$3 billion]. The Fund may
also invest in small and mid-cap companies so long as the Subadviser determines they have growth
potential.
The Fund utilizes disciplined quantitative modeling to objectively and consistently identify what
the models determine to be the most attractive companies across the market and within each sector.
The quantitative factors within the sector model are weighted based on their historical ability to
be predictive within each sector. In some sectors, attractive stocks are selected based on a
narrow range of factors. In other sectors, a broad range of factors may be used to identify
attractive stocks.
This approach is based on the philosophy that a stock selection method that evaluates multiple
quantitative factors is superior to a less rigorous approach.
Because companies tend to shift in relative attractiveness, the Fund may buy and sell securities
frequently, which may result in higher transaction costs, additional capital gains tax liabilities
and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, to a limited extent,
derivative instruments (such as futures, options and swaps) to use as a substitute for a purchase
or sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as market risk.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock prices will fall
over short or extended periods of time. Historically, the equity market has moved in cycles, and
the value of the Funds securities may fluctuate drastically from day to day. Individual companies
may report poor results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a decline in response.
These factors contribute to price volatility, which is the principal risk of investing in the Fund.
Large cap stocks can perform differently from other segments of the equity market or the equity
market as a whole. Large capitalization companies may be less flexible in evolving markets or
unable to implement change as quickly as smaller capitalization companies. Accordingly, the value
of large cap stocks may not rise to the same extent as the value of small or mid-cap stocks under
certain market conditions or during certain periods.
Small and mid-cap stocks can perform differently from other segments of the equity market or the
equity market as a whole and can be more volatile than stocks of larger companies.
Because the Fund may invest in ADRs, it is subject to some of the same risks as direct investments
in foreign companies. These include the risk that political and economic events unique to a country
or region will affect those markets and their issuers. These events will not necessarily affect the
U.S. economy or similar issuers located in the United States.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future. This bar chart shows changes in the performance of the Funds I Shares from year to
year.
(BAR CHART)
|
|
|
|
|
2004
|
|
|
16.43 |
% |
2005
|
|
|
8.40 |
% |
2006
|
|
|
8.17 |
% |
2007 |
|
|
|
|
|
BEST QUARTER |
|
|
WORST QUARTER |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was x.xx%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31, 2007
to those of the S&P 500(R) Index. These returns assume shareholders redeem all of their shares at
the end of the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
I SHARES |
|
1 YEAR |
SINCE
INCEPTION* |
Fund Returns Before Taxes |
|
|
|
Fund Returns After Taxes on Distributions |
|
|
|
Fund Returns After Taxes on Distributions and Sale of Fund Shares |
|
|
|
S&P 500(R) Index (reflects no deduction for fees, expenses or taxes) |
|
|
|
|
|
|
* |
|
Since inception of the I Shares on August 7, 2003. Benchmark return since July 31, 2003
(benchmark returns available only on a month end basis). |
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The S&P 500(R) Index is a widely-recognized, market
value-weighted
(higher market value stocks have more influence than lower market value stocks) index of 500 stocks
designed to mimic the overall U.S. equity markets industry weightings.
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
0.85 |
% |
Other Expenses |
|
|
|
|
|
|
|
|
|
Total Annual
Operating Expenses(1) |
|
|
|
|
|
|
|
(1) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at
any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
1 YEAR
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS
|
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are
shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
LARGE CAP VALUE EQUITY FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOALS
|
|
|
|
PRIMARY
|
|
Capital appreciation |
|
SECONDARY
|
|
Current income |
|
INVESTMENT FOCUS
|
|
Equity securities |
|
SHARE PRICE VOLATILITY
|
|
Moderate |
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Attempts to identify high dividend-paying, undervalued stocks |
|
INVESTOR PROFILE
|
|
Investors who are looking for current income and capital appreciation with less volatility than the average stock fund |
|
SUBADVISER
|
|
Ceredex Value Advisors LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
Under normal circumstances, the Large Cap Value Equity Fund invests at least 80% of its net assets
in common stocks and other U.S. traded equity securities of large cap companies. U.S. traded equity
securities may include American Depositary Receipts (ADRs). The Subadviser considers large cap
companies to be companies with market capitalizations of at least [$3 billion].
In selecting investments for the Fund, the Subadviser chooses companies that it believes are
undervalued in the market, relative to the industry sector and the companys own valuation history.
The Subadviser evaluates potential catalysts that may cause an upward re-rating of the stocks
valuation. Additionally, all common stocks purchased for the Fund are required to pay cash
dividends.
Because companies tend to shift in relative attractiveness, the Fund may buy and sell securities
frequently, which may result in higher transaction costs, additional capital gains tax liabilities
and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, to a limited extent,
derivative instruments (such as futures, options and swaps) to use as a substitute for a purchase
or sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as market risk.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock prices will fall
over short or extended periods of time. Historically, the equity market has moved in cycles, and
the value of the Funds securities may fluctuate drastically from day to day. Individual companies
may report poor results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a decline in response.
These factors contribute to price volatility, which is the principal risk of investing in the Fund.
Large cap stocks can perform differently from other segments of the equity market or the equity
market as a whole. Large capitalization companies may be less flexible in evolving markets or
unable to implement change as quickly as smaller capitalization companies. Accordingly, the value
of large cap stocks may not rise to the same extent as the value of small or mid-cap stocks under
certain market conditions or during certain periods.
The Subadvisers value investing style may be out of favor in the marketplace for various periods
of time. Value investing involves purchasing securities that are undervalued in comparison to their
prospects for growth or to their peers or that have historically traded below their historical
value. These securities are subject to the risk that their potential values as perceived by the
Subadviser are never realized by the market.
Because the Fund may invest in ADRs, it is subject to some of the same risks as direct investments
in foreign companies. These include the risk that political and economic events unique to a country
or region will affect those markets and their issuers. These events will not necessarily affect the
U.S. economy or similar issuers located in the United States.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
The bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
1998 |
|
|
10.58 |
% |
1999 |
|
|
-2.93 |
% |
2000 |
|
|
10.85 |
% |
2001 |
|
|
-0.95 |
% |
|
|
|
|
|
2002 |
|
|
-15.47 |
% |
2003 |
|
|
23.64 |
% |
2004 |
|
|
15.08 |
% |
2005 |
|
|
3.70 |
% |
2006 |
|
|
22.53 |
% |
2007 |
|
|
|
|
|
BEST QUARTER |
|
|
WORST QUARTER |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was x.xx%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31, 2007
to those of the Russell 1000(R) Value Index. These returns assume shareholders redeem all of their
shares at the end of the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
I SHARES |
|
1 YEAR
5 YEARS 10 YEARS |
Fund
Returns Before Taxes |
|
|
Fund Returns After Taxes on Distributions |
|
|
Fund Returns After Taxes on Distributions and Sale of Fund Shares |
|
|
Russell 1000(R) Value Index |
|
|
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Russell 1000(R) Value Index is a widely-recognized, capitalization
weighted (companies with larger market capitalizations have more influence than those with smaller
market capitalizations) index of companies in the Russell 1000(R) Index. The Russell 1000(R) Index
is a widely-recognized, comprehensive large-cap index that measures the performance of the largest
1,000 companies in the Russell 3000(R) Index. The Russell 3000(R) Index is a widely-recognized,
capitalization-weighted index that measures the performance of the 3,000 largest U.S. companies
based on total market capitalization.
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
0.78 |
% |
Other Expenses |
|
|
|
|
|
|
|
|
Total Annual
Operating Expenses(1) |
|
|
|
|
|
|
|
(1) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at
any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
1 YEAR
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
MID-CAP CORE EQUITY FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
Capital appreciation |
|
|
|
INVESTMENT FOCUS
|
|
Mid-cap common stocks |
|
|
|
SHARE PRICE VOLATILITY
|
|
Moderate to high |
|
|
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Attempts to identify companies with above average growth
potential at an attractive price |
|
|
|
INVESTOR PROFILE
|
|
Investors who want the value of their investment to grow and
who are willing to accept more
volatility for the
possibility of higher returns |
|
|
|
SUBADVISER
|
|
IronOak Advisors LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
Under normal circumstances, the Mid-Cap Core Equity Fund invests at least 80% of its net assets in
common stocks and other U.S. traded equity securities of mid-cap companies. U.S. traded equity
securities may include American Depositary Receipts (ADRs). The Subadviser considers mid-cap
companies to be companies with market capitalizations similar to those of companies in the Russell
Midcap(R) Index. As of July 1, 2008, the market capitalization range of companies in the Russell
Midcap Index was between approximately $xxx million and $xxx billion.
The Subadviser believes that a portfolio of stocks with attractive fundamental characteristics
purchased at a reasonable valuation will provide above average returns over time. In selecting
investments for the Fund, the Subadviser chooses companies that, in its opinion, offer above
average stock appreciation potential relative to other companies in the same economic sector.
The Subadviser uses sector-specific factors to highlight companies whose characteristics are
currently attractive versus market peers. The Subadviser performs fundamental research to evaluate
securities for the portfolio. The Subadvisers approach attempts to identify a well-defined
investment thesis (what it believes a companys prospects may be over the next 12 to 18 months)
based on competitive positioning, business model, and potential catalysts and risks. The
Subadviser seeks securities with an attractive risk/return profile, improving fundamentals and
earnings outlook, and relative financial strength and flexibility. The Subadviser may sell a
security when the investment thesis is realized, the investment thesis breaks down, or a more
attractive alternative presents itself.
The Subadviser believes a diversified approach to portfolio management is a critical component of
the overall investment process.
Because companies tend to shift in relative attractiveness, the Fund may buy and sell securities
frequently, which may result in higher transaction costs, additional capital gains tax liabilities
and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, to a limited extent,
derivative instruments (such as futures, options and swaps) to use as a substitute for a purchase
or sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as market risk.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock prices will fall
over short or extended periods of time. Historically, the equity market has moved in cycles, and
the value of the Funds securities may fluctuate drastically from day to day. Individual companies
may report poor results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a decline in response.
These factors contribute to price volatility, which is the principal risk of investing in the Fund.
Mid-cap stocks can perform differently from other segments of the equity market or the equity
market as a whole and can be more volatile than stocks of larger companies.
Because the Fund may invest in ADRs, it is subject to some of the same risks as direct investments
in foreign companies. These include the risk that political and economic events unique to a country
or region will affect those markets and their issuers. These events will not necessarily affect the
U.S. economy or similar issuers located in the United States.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
1998 |
|
|
6.48 |
% |
1999 |
|
|
16.14 |
% |
2000 |
|
|
-2.97 |
% |
|
|
|
|
|
2001 |
|
|
2.38 |
% |
2002 |
|
|
-28.78 |
% |
2003 |
|
|
28.99 |
% |
2004 |
|
|
17.06 |
% |
2005 |
|
|
13.94 |
% |
2006 |
|
|
10.92 |
% |
2007 |
|
|
|
|
|
BEST QUARTER |
|
|
WORST QUARTER |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was x.xx%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the Russell Midcap(R) Index. These returns assume shareholders redeem all of
their shares at the end of the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
I SHARES |
|
1 YEAR |
|
|
5 YEARS |
|
|
10 YEARS |
|
Fund Returns Before Taxes |
|
|
|
|
|
|
|
|
|
|
|
|
Fund Returns After Taxes
on Distributions |
|
|
|
|
|
|
|
|
|
|
|
|
Fund Returns After Taxes
on Distributions and Sale
of Fund Shares |
|
|
|
|
|
|
|
|
|
|
|
|
Russell Midcap(R) Index
(reflects no deduction
for fees, expenses or
taxes) |
|
|
|
|
|
|
|
|
|
|
|
|
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Russell Midcap(R) Index is a widely-recognized index that measures
the performance of the 800 smallest companies in the Russell 1000(R) Index, which represent
approximately 26% of the total market capitalization of the Russell 1000(R)
Index. The Russell 1000(R) Index is a widely-recognized comprehensive large-cap index measuring the
performance of the largest 1,000 U.S. incorporated companies. Each security in the Russell 1000(R)
Index is float-adjusted market capitalization-weighted to ensure investable positions.
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
1.00 |
% |
Other Expenses |
|
|
|
|
|
|
|
|
|
Total Annual Operating Expenses(1) |
|
|
|
|
|
|
|
(1) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at
any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
1 YEAR
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are
shown as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For
more information about these fees, see Investment Adviser.
MID-CAP VALUE EQUITY FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOALS |
|
|
PRIMARY |
|
Capital appreciation |
SECONDARY |
|
Current income |
|
|
|
INVESTMENT FOCUS |
|
U.S. mid-cap equity securities |
|
|
|
SHARE PRICE VOLATILITY |
|
Moderate |
|
|
|
PRINCIPAL INVESTMENT STRATEGY |
|
Attempts to identify undervalued mid-cap securities |
|
|
|
INVESTOR PROFILE |
|
Investors who primarily want the value of their investment to grow, but want to receive some income from the investment |
|
|
|
SUBADVISER |
|
Ceredex Value Advisors LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
Under normal circumstances, the Mid-Cap Value Equity Fund invests at least 80% of its net assets in
U.S. traded equity securities of mid-cap companies. U.S. traded equity securities may include
American Depositary Receipts (ADRs). The Subadviser considers mid-cap companies to be companies
with market capitalizations similar to those of companies in the [Russell Midcap® Value
Index]. As of July 1 2008, the market capitalization range of companies in the Russell Midcap Value
Index was between approximately $xxx million and $xx billion.
In selecting investments for the Fund, the Subadviser chooses companies that it believes are
undervalued in the market, relative to the industry sector and the companys own valuation history.
The Subadviser evaluates potential catalysts that may cause an upward re-rating of the stocks
valuation. Additionally, all common stocks purchased for the Fund are required to pay cash
dividends.
Because companies tend to shift in relative attractiveness, the Fund may buy and sell securities
frequently, which may result in higher transaction costs, additional capital gains tax liabilities
and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, to a limited extent,
derivative instruments (such as futures, options and swaps) to use as a substitute for a purchase
or sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as market risk.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock prices will fall
over short or extended periods of time. Historically, the equity market has moved in cycles, and
the value of the Funds securities may fluctuate drastically from day to day. Individual companies
may report poor results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a decline in response.
These factors contribute to price volatility, which is the principal risk of investing in the Fund.
Mid-cap stocks can perform differently from other segments of the equity market or the equity
market as a whole and can be more volatile than stocks of larger companies.
The Advisers value investing style may be out of favor in the marketplace for various periods of
time. Value investing involves purchasing securities that are undervalued in comparison to their
prospects for growth or to their peers or that have historically traded below their historical
value. These securities are subject to the risk that their potential values as perceived by the
Subadviser are never realized by the market.
Because the Fund may invest in ADRs, it is subject to some of the same risks as direct investments
in foreign companies. These include the risk that political and economic events unique to a country
or region will affect those markets and their issuers. These events will not necessarily affect the
U.S. economy or similar issuers located in the United States.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
2002 |
|
|
-21.26 |
% |
2003 |
|
|
29.51 |
% |
2004 |
|
|
20.21 |
% |
2005 |
|
|
9.46 |
% |
2006 |
|
|
21.97 |
% |
2007 |
|
|
|
|
|
BEST QUARTER |
|
|
WORST QUARTER |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was xx.xx%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the Russell Midcap(R) Value Index. These returns assume shareholders redeem all
of their shares at the end of the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SINCE |
I SHARES |
|
1 YEAR |
|
|
5 YEARS |
|
|
INCEPTION* |
Fund Returns Before Taxes |
|
|
|
|
|
|
|
|
|
|
Fund Returns After Taxes on Distributions |
|
|
|
|
|
|
|
|
|
|
Fund Returns After Taxes on Distributions
and Sale of Fund Shares |
|
|
|
|
|
|
|
|
|
|
Russell Midcap(R) Value
Index (reflects no
deduction for fees,
expenses or taxes) |
|
|
|
|
|
|
|
|
|
|
|
* |
|
Since inception of the I Shares on November 30, 2001. |
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Russell Midcap(R) Value Index is a widely-recognized index that
measures the performance of those Russell Midcap companies with lower
price-to-book ratios and
lower forecasted growth values. The stocks are also members of the Russell
1000(R) Value index. The
Russell 1000(R) Value Index is a widely-recognized index that measures the performance of those
Russell 1000(R) companies with lower price-to-book ratios and lower forecasted growth values. The
Russell 1000(R) Index is a widely-recognized comprehensive large-cap index measuring the
performance of the largest 1,000 U.S. incorporated companies. Each security in the Russell
1000(R) Index is float-adjusted market capitalization-weighted to
ensure investable positions.
MID-CAP VALUE EQUITY FUND
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
1.00 |
% |
Other Expenses |
|
|
|
|
|
Total Annual Operating Expenses(1) |
|
|
|
|
|
|
|
(1) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at
any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 YEAR
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are
shown as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For
more information about these fees, see Investment Adviser.
SELECT LARGE CAP GROWTH STOCK FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
Long-term capital appreciation |
|
INVESTMENT FOCUS
|
|
U.S. large cap common stocks with higher than average growth potential |
|
SHARE PRICE VOLATILITY
|
|
Moderate |
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Attempts to identify large cap companies with above average growth potential |
|
INVESTOR PROFILE
|
|
Investors who want the value of their investment to grow, but do not need current income |
|
SUBADVISER
|
|
Silvant Capital Management LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
Under normal circumstances, the Select Large Cap Growth Stock Fund invests at least 80% of its net
assets in common stocks and other U.S. traded equity securities of large cap companies. U.S. traded
equity securities may include American Depositary Receipts (ADRs). The Subadviser considers large
cap companies to be companies with market capitalizations of at least [$3 billion].
The Funds investment philosophy is based on the premise that a portfolio of large cap stocks of
companies with strong revenue growth, earnings, cash flow trends, and strong fundamentals will
provide superior returns over time. The Subadviser applies proprietary quantitative models to rank
stocks based on improving fundamentals, valuation, capital deployment and efficiency and sentiment
or behavior factors. The Subadviser then uses fundamental research to select the portfolio of
stocks it believes has the best current risk/ return characteristics. In selecting investments for
the Fund, the Subadviser seeks companies with strong current earnings, growth in revenue, improving
profitability, strong balance sheet, strong current and projected business fundamentals, and
reasonable valuation. The Subadviser believes in executing a very disciplined and objective
investment process in controlling risk through a broadly diversified portfolio. Generally, the Fund
will hold 40 securities or less.
Because companies tend to shift in relative attractiveness, the Fund may buy and sell securities
frequently, which may result in higher transaction costs, additional capital gains tax liabilities
and lower performance.
In addition, to implement its investment strategy, the Fund may buy of sell, to a limited extent,
derivative instruments (such as futures, options and swaps) to use as a substitute for a purchase
or
sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as market risk.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
Since it purchases common stocks, the Fund is subject to the risk that stock prices will fall over
short or extended periods of time. Historically, the stock markets have moved in cycles, and the
value of the Funds common stocks may fluctuate drastically from day to day. Individual companies
may report poor results or be negatively affected by industry and/or economic trends and
developments. The prices of stocks issued by such companies may suffer a decline in response. These
factors contribute to price volatility, which is the principal risk of investing in the Fund.
Large cap stocks can perform differently from other segments of the equity market or the equity
market as a whole. Large capitalization companies may be less flexible in evolving markets or
unable to implement change as quickly as smaller capitalization companies. Accordingly, the value
of large cap stocks may not rise to the same extent as the value of small or mid-cap stocks under
certain market conditions or during certain periods.
Because the Fund may invest in ADRs, it is subject to some of the same risks as direct investments
in foreign companies. These include the risk that political and economic events unique to a country
or region will affect those markets and their issuers. These events will not necessarily affect the
U.S. economy or similar issuers located in the United States.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future. The Fund began operating as a registered mutual fund on December 11, 1998. Performance
prior to December 11, 1998 is that of the Advisers similarly managed collective investment fund,
which began operations on December 31, 1995. The collective investment funds performance has been
adjusted to reflect the current fees and expenses for I Shares of the Fund. As a collective
investment fund, rather than a registered mutual fund, it was not subject to the same investment
and tax restrictions. If it had been, the collective investment funds performance would have been
lower.
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
1998
|
|
|
31.73 |
% |
1999
|
|
|
24.74 |
% |
2000
|
|
|
-12.15 |
% |
2001
|
|
|
-18.21 |
% |
2002
|
|
|
-22.02 |
% |
2003
|
|
|
21.16 |
% |
2004
|
|
|
6.84 |
% |
2005
|
|
|
2.46 |
% |
2006
|
|
|
6.99 |
% |
2007 |
|
|
|
|
|
|
|
|
|
|
BEST QUARTER |
|
|
WORST QUARTER |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was x.xx%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the Russell 1000(R) Growth Index and the S&P 500(R) Index. These returns assume
shareholders redeem all of their shares at the end of the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SINCE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCEPTION |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AS A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REGISTERED |
|
|
|
|
I SHARES |
|
1 YEAR |
|
|
5 YEARS |
|
|
MUTUAL FUND* |
|
|
10 YEARS** |
|
Fund Returns Before Taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Returns After Taxes
on Distributions |
|
|
+ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Returns After Taxes on
Distributions and Sale of Fund Shares |
|
|
+ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Russell 1000(R) Growth Index (reflects no
deduction fees, expenses or taxes) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Since inception of the I Shares on December 11, 1998, when the Fund began operating as a
registered mutual fund. Benchmark returns since November 30, 1998 (benchmark returns available
only on a month end basis).
|
|
|
** |
|
Includes performance of the Advisers collective investment fund. |
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Russell 1000(R) Growth Index measures the performance of those
Russell 1000(R) companies with higher price-to-book ratios and higher forecasted growth values. The
Russell 1000(R) Index is a comprehensive large cap index measuring the performance of the largest
1,000 U.S. incorporated companies.
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
0.85 |
% |
Other Expenses |
|
|
|
|
|
|
|
|
|
|
Total Annual Operating Expenses
|
|
|
|
|
Fee Waivers and Expense Reimbursements(1) |
|
|
|
|
|
|
|
|
|
|
Net Operating Expenses |
|
|
|
|
|
|
|
(1) |
|
Effective August 1, 2008, the Adviser and the Subadviser have contractually agreed to waive all
or a portion of their fees and reimburse expenses (excluding taxes, brokerage commissions,
extraordinary expenses and estimated indirect expenses attributable to the Funds investments in
other funds, such as ETFs) until at least August 1, 2009 in order to keep Total Annual Operating
Expenses from exceeding 0.xx%. If at any point before August 1, 2011, Total Annual Operating
Expenses are less than the applicable expense cap, the Adviser and the Subadviser may retain the
difference to recapture any of the prior waivers or reimbursements. In addition, the Adviser, the
Subadviser and/or other service providers may voluntarily waive a portion of their fees in order to
limit Total Annual Operating Expenses. These voluntary waivers may be discontinued at any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your share at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 YEAR*
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
|
|
|
* |
|
Without waivers and reimbursements, Year 1 costs would be $. |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
SMALL CAP GROWTH STOCK FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
Long-term capital appreciation |
|
INVESTMENT FOCUS
|
|
U.S. small cap common stocks of growth companies |
|
SHARE PRICE VOLATILITY
|
|
High |
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Attempts to identify small cap companies with above average growth potential |
|
INVESTOR PROFILE
|
|
Investors who want the value of their investment to grow, but do not need
current income |
|
SUBADVISER
|
|
Silvant Capital Management LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
Under normal circumstances, the Small Cap Growth Stock Fund invests at least 80% of its
net assets in U.S. traded equity securities of small cap companies. U.S. traded equity
securities may include American Depositary Receipts (ADRs). The Subadviser considers
small cap companies to be companies with market capitalizations similar to those of
companies in the Russell 2000® Growth Index. As of [ ], 2008, the market
capitalization range of companies in the Russell 2000® Growth Index was between
approximately $[ ] million and $[ ] billion. The Subadviser will seek out securities it
believes have strong business fundamentals, such as revenue growth, improving cash flows,
increasing margins and positive earning trends.
In selecting investments for the Fund, the Subadviser chooses companies that it believes have above
average potential to beat expectations. The Subadviser applies proprietary quantitative models to
rank stocks based on improving fundamentals, valuation, capital deployment and efficiency and
sentiment or behavior factors. It then performs in-depth fundamental analysis to determine the
quality and sustainability of expectations to determine whether or not the company is poised to
beat expectations. The Subadviser uses a bottom-up process based on company fundamentals. Risk
controls are in place to assist in maintaining a portfolio that is diversified by sector and
minimizes unintended risks relative to the primary benchmark.
Because companies tend to shift in relative attractiveness, the Fund may buy and sell securities
frequently, which may result in higher transaction costs, additional capital gains tax liabilities
and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, to a limited extent,
derivative instruments (such as futures, options and swaps) to use as a substitute for a purchase
or
sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as market risk.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
Since it purchases common stocks, the Fund is subject to the risk that stock prices will fall over
short or extended periods of time. Historically, the stock markets have moved in cycles, and the
value of the Funds securities may fluctuate drastically from day to day. Individual companies may
report poor results or be negatively affected by industry and/or economic trends and developments.
The prices of securities issued by such companies may suffer a decline in response. These factors
contribute to price volatility, which is the principal risk of investing in the Fund.
Small cap stocks can perform differently from other segments of the equity market or the equity
market as a whole and can be more volatile than stocks of larger companies.
Because the Fund may invest in ADRs, it is subject to some of the same risks as direct investments
in foreign companies. These include the risk that political and economic events unique to a country
or region will affect those markets and their issuers. These events will not necessarily affect the
U.S. economy or similar issuers located in the United States.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
1999 |
|
|
20.55 |
% |
2000 |
|
|
11.76 |
% |
2001 |
|
|
-0.82 |
% |
2002 |
|
|
-22.71 |
% |
2003 |
|
|
45.64 |
% |
|
|
|
|
|
2004 |
|
|
19.21 |
% |
2005 |
|
|
7.92 |
% |
2006 |
|
|
1.51 |
% |
2007 |
|
|
|
|
|
|
|
|
|
|
BEST QUARTER |
|
|
WORST QUARTER |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08was xx.xx%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
20067 to those of the Russell 2000(R) Growth Index. These returns assume shareholders redeem all of
their shares at the end of the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SINCE |
|
I SHARES |
|
1 YEAR |
|
|
5 YEARS |
|
|
INCEPTION* |
|
Fund Returns Before Taxes |
|
|
|
|
|
|
|
|
|
|
|
|
Fund Returns After Taxes
on Distributions |
|
|
|
|
|
|
|
|
|
|
|
|
Fund Returns After Taxes on
Distributions and Sale of Fund
Shares |
|
|
|
|
|
|
|
|
|
|
|
|
Russell 2000(R) Growth Index
(reflects no deduction for fees,
expenses or taxes) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Since inception of the I Shares on October 8, 1998. Benchmark returns since September 30, 1998
(benchmark returns available only on a month end basis). |
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Russell 2000(R) Growth Index is a widely recognized,
capitalization-weighted index that measures the performance of those Russell 2000 companies with
higher price-to-book ratios and higher forecasted growth values. The Russell 2000(R) Index is a
widely recognized, capitalization-weighted index that measures the performance of the 2,000
smallest companies in the Russell 3000(R) Index. The Russell 3000(R) Index is a widely recognized,
capitalization-weighted index that measures the performance of the 3,000 largest U.S. companies
based on total market capitalization.
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
1.12 |
% |
Other Expenses(1) |
|
|
|
|
|
|
|
|
|
|
Total Annual Operating Expenses(2) |
|
|
|
|
|
|
|
(1) |
|
Adjusted to reflect expected changes in Other Expenses for the current fiscal year. |
|
(2) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at
any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 YEAR
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
SMALL CAP VALUE EQUITY FUND*
* Shares of the Small Cap Value Equity Fund are no longer available for purchase by new investors.
Please refer to the Statement of Additional Information for the definition of new investor.
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOALS |
|
|
PRIMARY
|
|
Capital appreciation |
SECONDARY
|
|
Current income |
|
INVESTMENT FOCUS
|
|
U.S. small cap equity securities |
|
SHARE PRICE VOLATILITY
|
|
Moderate |
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Attempts to identify undervalued small cap securities |
|
INVESTOR PROFILE
|
|
Investors who primarily want the value of their investment
to grow, but want to receive some income from their investment |
|
|
|
SUBADVISER
|
|
Ceredex Value Advisors LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
Under normal circumstances, the Small Cap Value Equity Fund invests at least 80% of its net assets
in U.S. traded equity securities of small cap companies. U.S. traded equity securities may include
American Depositary Receipts (ADRs). The Subadviser considers small cap companies to be companies
with market capitalizations similar to those of companies in the Russell 2000® Value
Index. As of [ ], 2008, the market capitalization range of companies in the Russell
2000® Value Index was between approximately $[ ] million and $[ ] billion. In
selecting investments for the Fund, the Subadviser chooses companies that it believes are
undervalued in the market, relative to the industry sector and the companys own valuation history.
The Subadviser evaluates potential catalysts that may cause an upward re-rating of the stocks valuation. Additionally, all
common stocks purchased for the Fund are required to pay cash dividends.
Because companies tend to shift in relative attractiveness, the Fund may buy and sell securities
frequently, which may result in higher transaction costs, additional capital gains tax liabilities
and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, to a limited extent,
derivative instruments (such as futures, options and swaps) to use as a substitute for a purchase
or sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as market risk.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock prices will fall
over short or extended periods of time. Historically, the equity market has moved in cycles, and
the value of the Funds securities may fluctuate drastically from day to day. Individual companies
may report poor results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a decline in response.
These factors contribute to price volatility, which is the principal risk of investing in the Fund.
Small cap stocks can perform differently from other segments of the equity market or the equity
market as a whole and can be more volatile than stocks of larger companies.
The Subadvisers value investing style may be out of favor in the marketplace for various periods
of time. Value investing involves purchasing securities that are undervalued in comparison to their
prospects for growth or to their peers or that have historically traded below their historical
value. These securities are subject to the risk that their potential values as perceived by the
Subadviser are never realized by the market.
Because the Fund may invest in ADRs, it is subject to some of the same risks as direct investments
in foreign companies. These include the risk that political and economic events unique to a country
or region will affect those markets and their issuers. These events will not necessarily affect the
U.S. economy or similar issuers located in the United States.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future. This bar chart shows changes in the performance of the Funds I Shares from year to
year.*
(BAR CHART)
|
|
|
|
|
1998 |
|
|
-13.45 |
% |
1999 |
|
|
-2.72 |
% |
2000 |
|
|
17.96 |
% |
2001 |
|
|
21.21 |
% |
|
|
|
|
|
|
|
|
2002 |
|
|
-1.74 |
% |
2003 |
|
|
37.05 |
% |
2004 |
|
|
25.47 |
% |
2005 |
|
|
12.46 |
% |
2006 |
|
|
16.14 |
% |
2007 |
|
|
|
|
|
BEST QUARTER |
|
|
WORST QUARTER |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was xx.xx%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2006, to those of the Russell 2000(R) Value Index. These returns assume shareholders redeem all of
their shares at the end of the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
I SHARES |
|
1 YEAR |
|
5 YEARS |
|
10 YEARS |
Fund Returns Before
Taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Returns After
Taxes on
Distributions |
|
|
+ |
|
|
|
|
|
|
|
|
|
Fund Returns After
Taxes on
Distributions and
Sale of Fund Shares |
|
|
+ |
|
|
|
|
|
|
|
|
|
Russell 2000(R) Value
Index (reflects no
deduction for fees,
expenses or taxes) |
|
|
|
|
|
|
|
|
|
|
|
|
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Russell 2000(R) Value Index is a widely-recognized, capitalization
weighted (companies with larger market capitalizations have more influence than those with smaller
market capitalizations) index of companies in the Russell 2000(R) Index with lower growth rates and
price-to-book ratios. The Russell 2000(R) Index is a widely-recognized, capitalization-weighted
index that consists of a subset of the 3,000 largest U.S. companies.
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
1.13 |
% |
Other Expenses(1) |
|
|
|
|
|
|
|
|
|
|
Total Annual Operating Expenses(2) |
|
|
|
|
|
|
|
(1) |
|
Adjusted to reflect expected changes in Other Expenses for the current fiscal year. |
|
(2) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at
any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
1 YEAR
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
LIFE VISION AGGRESSIVE GROWTH FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
High capital appreciation |
|
|
|
INVESTMENT FOCUS
|
|
Equity and money market funds |
|
|
|
SHARE PRICE VOLATILITY
|
|
High |
|
|
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Investing at least 80% of the Funds assets in RidgeWorth
Equity Funds and exchange traded funds (ETFs) that invest in equities (together, Underlying Funds) |
|
|
|
INVESTOR PROFILE
|
|
Investors who want the value of their investment to grow, but do not need to receive income on their investment,
and are willing to be subject to the risks of equity securities |
(TELESCOPE ICON)
INVESTMENT STRATEGY
Under normal circumstances, the Life Vision Aggressive Growth Fund invests at least 80% of its
assets in Underlying Funds that invest primarily in equity securities. The Funds remaining assets
may be invested in RidgeWorth Money Market Funds, securities issued by the U.S. Government, its
agencies or instrumentalities, repurchase agreements and short-term paper.
In selecting a diversified portfolio of Underlying Funds, the Adviser analyzes many factors,
including the Underlying Funds investment objectives, total return, volatility and expenses.
The table below shows how the Adviser currently expects to allocate the Fund among asset classes.
The table also shows the sectors within those asset classes to which the Fund will currently have
exposure.
|
|
|
|
|
|
|
INVESTMENT RANGE |
|
|
(PERCENTAGE OF THE LIFE
VISION AGGRESSIVE |
ASSET CLASS |
|
GROWTH FUNDS ASSETS) |
|
UNDERLYING EQUITY FUNDS |
|
|
80-100 |
% |
U.S. Equities |
|
|
|
|
International Equities |
|
|
|
|
Emerging
Market Equities (All Capitalizations) |
|
|
|
|
|
UNDERLYING MONEY MARKET FUNDS |
|
|
0-20 |
% |
|
Because companies tend to shift in relative attractiveness, the Fund holds Underlying Funds that
buy and sell securities frequently, which may result in higher transaction costs, additional
capital gains tax liabilities and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, to a limited extent,
derivative instruments (such as futures, options and swaps) to use as a substitute for a purchase
or sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as market risk.
You can obtain information about the underlying RidgeWorth Funds in which the Fund invests by
calling 1-888-784-3863, or by visiting the RidgeWorth Funds website at www.ridgeworthfunds.com.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
The value of an investment in the Fund is based primarily on the performance of the Underlying
Funds and the allocation of the Funds assets among them.
Since it purchases Underlying Funds that invest in equities, the Fund is subject to the risk that
stock prices will fall over short or extended periods of time. Historically, the equity market has
moved in cycles, and the value of the Underlying Funds securities may fluctuate drastically from
day to day. Individual companies may report poor results or be negatively affected by industry
and/or economic trends and developments. The prices of securities issued by such companies may
suffer a decline in response. These factors contribute to price volatility, which is the principal
risk of investing in the Fund.
The Fund is also subject to the risk that the Advisers asset allocation decisions will not
anticipate market trends successfully. For example, weighting common stocks too heavily during a
stock market decline may result in a failure to preserve capital. Conversely, investing too heavily
in fixed income securities during a period of stock market appreciation may result in lower total
return. The risks associated with investing in the Fund will vary depending upon how the assets are
allocated among the Underlying Funds.
Large cap stocks can perform differently from other segments of the equity market or the equity
market as a whole. Large capitalization companies may be less flexible in evolving markets or
unable to implement change as quickly as smaller capitalization companies.
LIFE VISION AGGRESSIVE GROWTH FUND
Accordingly, the value of large cap stocks may not rise to the same extent as the value of small or
mid-cap stocks under certain market conditions or during certain periods.
Small and mid-cap stocks can perform differently from other segments of the equity market or the
equity market as a whole and can be more volatile than stocks of larger companies.
A value investing style may be out of favor in the marketplace for various periods of time. Value
investing involves purchasing securities that are undervalued in comparison to their prospects for
growth or to their peers or that have historically traded below their historical value. These
securities are subject to the risk that their potential values as perceived by the Adviser are
never realized by the market.
Foreign securities involve special risks such as currency fluctuations, economic or financial
instability, lack of timely or reliable financial information and unfavorable political or legal
developments. These risks are increased for investments in emerging markets.
The risks of owning shares of an ETF generally reflect the risks of owning the underlying
securities the ETF is designed to track, although lack of liquidity in an ETF could result in being
more volatile than the underlying portfolio of securities. In addition, because of ETF expenses,
compared to owning the underlying securities directly, it may be more costly to own an ETF.
Because the Fund and the Underlying Funds may invest in derivatives, the Fund is exposed to
additional volatility and potential loss.
For further information about these and other risks, see More Information About Risk.
(TARGET ICON)
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future. This bar chart shows changes in the performance of the Funds I Shares from year to
year.*
(BAR CHART)
|
|
|
|
|
1998 |
|
|
12.31 |
% |
1999 |
|
|
10.31 |
% |
2000 |
|
|
6.30 |
% |
2001 |
|
|
-6.52 |
% |
2002 |
|
|
-18.11 |
% |
2003 |
|
|
26.69 |
% |
2004 |
|
|
13.01 |
% |
2005 |
|
|
5.79 |
% |
2006 |
|
|
14.23 |
% |
2007 |
|
|
|
|
|
BEST QUARTER |
|
|
WORST QUARTER |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was x.xx%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the average annual total returns of the Fund for the periods ended December 31,
2007, to those of a Hybrid 85/15 Blend of the Russell 3000(R) Index and the Morgan Stanley Capital
International Europe, Australasia and Far East (MSCI(R) EAFE(R)) Index and a Hybrid 90/10 Blend of
the S&P 500(R) Index and the Citigroup 3-Month Treasury Bill Index. These returns assume
shareholders redeem all of their shares at the end of the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
LIFE VISION AGGRESSIVE GROWTH FUND
PROSPECTUS
|
|
|
|
|
|
|
|
|
|
|
|
|
I SHARES |
|
1 YEAR |
|
|
5 YEARS |
|
|
10 YEARS** |
|
Fund Returns Before Taxes |
|
|
|
|
|
|
|
|
|
|
|
|
Fund Returns After Taxes on Distributions |
|
|
|
|
|
|
|
|
|
|
|
|
Fund Returns After Taxes on Distributions and Sale of Fund Shares |
|
|
|
|
|
|
|
|
|
|
|
|
Hybrid 85/15 Blend of the Following Market Benchmarks* |
|
|
|
|
|
|
|
|
|
|
|
|
Russell 3000(R) Index |
|
|
|
|
|
|
|
|
|
|
|
|
MSCI(R) EAFE(R) Index |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Benchmarks reflect no deductions for fees, expenses or taxes. |
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Russell 3000(R) Index is a widely-recognized,
capitalization-weighted index that measures the performance of the 3,000 largest U.S. companies
based on total market capitalization. The MSCI(R) EAFE(R) Index is a widely-recognized, market
capitalization index that measures market equity performance based upon indices from 21 foreign and
developed countries.
LIFE VISION AGGRESSIVE GROWTH FUND
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
0.10 |
% |
Other Expenses |
|
|
|
|
Acquired (Underlying) Fund Fees and Expenses(1) |
|
|
|
|
|
|
|
|
|
|
Total Annual Operating Expenses(2) |
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
In addition to the Funds direct expenses, the Fund indirectly bears a pro-rata share of the
expenses of the underlying Funds in which it invests. These Underlying Fund Fees and Expenses are
not included in the Financial Highlights section of this Prospectus, which reflects only the Total
Annual Operating Expenses (excluding Underlying Fund Fees and Expenses) of each Fund. |
|
(2) |
|
The Adviser has contractually agreed to waive fees and reimburse expenses until at least August
1, 2009 in order to keep Total Annual Operating Expenses (excluding taxes, brokerage commissions,
extraordinary expenses and estimated Underlying Fund Fees and Expenses) from exceeding %. If at any
point before August 1, 2011, Total Annual Operating Expenses (excluding taxes, brokerage
commissions, extraordinary expenses and estimated Underlying Fund Fees and Expenses) are less than
the applicable expense cap, the Adviser may retain the difference to recapture any of the prior
waivers and reimbursements. In addition, the Adviser and/or other service providers may voluntarily
waive a portion of their fees in order to limit Total Annual Operating Expenses (excluding taxes,
brokerage commissions, extraordinary expenses and estimated Underlying Fund Fees and Expenses).
These voluntary waivers may be discontinued at any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, the Funds operating
expenses remain the same and you reinvest all dividends and distributions. Although your actual
costs and returns might be different, your approximate costs of investing $10,000 in the Fund would
be:
|
|
|
|
|
|
|
1 YEAR
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Fund expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
LIFE VISION CONSERVATIVE FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
Capital appreciation and current income |
|
INVESTMENT FOCUS |
|
|
PRIMARY
|
|
Fixed income funds |
SECONDARY
|
|
Equity funds |
|
SHARE PRICE VOLATILITY
|
|
Low |
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Investing pursuant to an asset allocation strategy in a
combination of RidgeWorth Fixed Income Funds and exchange
traded funds (ETFs) that invest in bonds (together,
Underlying Fixed Income Funds), and to a lesser extent,
RidgeWorth Equity Funds and ETFs that invest in equities
(together, Underlying Equity Funds) |
|
INVESTOR PROFILE
|
|
Investors who want income from their investment, as well as
an increase in its value, but want to reduce risk by
limiting exposure to equity securities |
(TELESCOPE ICON)
INVESTMENT STRATEGY
The Life Vision Conservative Fund invests primarily in Underlying Fixed Income Funds, but may
invest up to 40% of the Funds assets in Underlying Equity Funds. The Funds remaining assets may
be invested in RidgeWorth Money Market Funds, securities issued by the U.S. Government, its
agencies or instrumentalities, repurchase agreements and short-term paper.
In selecting a diversified portfolio of Underlying Fixed Income Funds and Underlying Equity Funds
(together, Underlying Funds), the Adviser analyzes many factors, including the Underlying Funds
investment objectives, total return, volatility and expenses.
The table below shows how the Adviser currently expects to allocate the Fund among asset classes.
The table also shows the sectors within those asset classes to which the Fund will currently have
exposure.
|
|
|
|
|
|
|
INVESTMENT RANGE |
|
|
(PERCENTAGE OF THE |
|
|
LIFE VISION |
|
|
CONSERVATIVE |
ASSET CLASS |
|
FUNDS ASSETS) |
|
UNDERLYING FIXED INCOME FUNDS |
|
|
60-100 |
% |
U.S. Investment Grade Bonds |
|
|
|
|
U.S. High Yield Bonds |
|
|
|
|
U.S. Floating Rate Securities
(including Bank Loans) |
|
|
|
|
International Bonds |
|
|
|
|
Emerging Market Bonds |
|
|
|
|
|
UNDERLYING EQUITY FUNDS |
|
|
20-40 |
% |
U.S. Equities |
|
|
|
|
International Equities |
|
|
|
|
Emerging Market Equities (All
Capitalizations) |
|
|
|
|
|
UNDERLYING MONEY MARKET FUNDS |
|
|
0-20 |
% |
|
Because securities tend to shift in relative attractiveness, the Fund holds Underlying Funds that
buy and sell securities frequently, which may result in higher transaction costs, additional
capital gains tax liabilities and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, to a limited extent,
derivative instruments (such as futures, options and swaps) to use as a substitute for a purchase
or sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as market risk, interest rate risk and credit risk.
You can obtain information about the underlying RidgeWorth Funds in which the Fund invests by
calling 1-888-784-3863, or by visiting the RidgeWorth Funds website at www.ridgeworthfunds.com.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
The value of an investment in the Fund is based primarily on the performance of the Underlying
Funds and the allocation of the Funds assets among them.
The prices of an Underlying Funds fixed income securities respond to economic developments,
particularly interest rate changes, as well as to perceptions about the creditworthiness of
individual issuers, including governments. Generally, an Underlying Funds fixed income securities
will decrease in value if interest rates rise and vice versa, and the volatility of lower rated
securities is even greater than that of higher rated securities. Also, longer-term securities
generally are more volatile, so the average maturity or duration of these securities affects risk.
LIFE VISION CONSERVATIVE FUND
Since it purchases Underlying Equity Funds, the Fund is subject to the risk that stock prices will
fall over short or extended periods of time. Historically, the equity market has moved in cycles,
and the value of an Underlying Equity Funds securities may fluctuate drastically from day to day.
Individual companies may report poor results or be negatively affected by industry and/or economic
trends and developments. The prices of securities issued by such companies may suffer a decline in
response. These factors contribute to price volatility, which is the principal risk of investing in
the Fund.
The Fund is also subject to the risk that the Advisers asset allocation decisions will not
anticipate market trends successfully. For example, weighting common stocks too heavily during a
stock market decline may result in a failure to preserve capital. Conversely, investing too heavily
in fixed income securities during a period of stock market appreciation may result in lower total
return. The risks associated with investing in the Fund will vary depending upon how the assets are
allocated among the Underlying Funds.
Below investment grade securities (sometimes referred to as junk bonds) involve greater risk of
default or downgrade and are more volatile than investment grade securities. Below investment grade
securities may also be less liquid than higher quality securities.
The risks associated with floating rate loans are similar to the risks of below investment grade
securities. In addition, the value of the collateral securing the loan may decline, causing a loan
to be substantially unsecured. Difficulty in selling a floating rate loan may result in a loss.
Borrowers may pay back principal before the scheduled due date when interest rates decline, which
may require the Fund to replace a particular loan with a lower-yielding security. There may be less
extensive public information available with respect to loans than for rated, registered or exchange
listed securities. The Fund may assume the credit risk of the primary lender in addition to the
borrower, and investments in loan assignments may involve the risks of being a lender.
Mortgage-backed investments involve risk of loss due to prepayments and, like any bond, due to
default. Because of the sensitivity of mortgage-related securities to changes in interest rates,
the Funds performance may be more volatile than if it did not hold these securities.
U.S. government securities can exhibit price movements resulting from changes in interest rates.
Treasury inflation protected securities (TIPS) can also exhibit price movements as a result of
changing inflation expectations and seasonal inflation patterns. Certain U.S. government securities
are backed by the full faith and credit of the U.S. Government, while others are backed by the
ability of the issuing entity to borrow from the U.S. Treasury or by the issuing entitys own
resources.
Restricted securities may increase the level of illiquidity in the Fund during any period that
qualified institutional buyers become uninterested in purchasing these restricted securities. The
Adviser intends to invest only in restricted securities that it believes present minimal liquidity
risk.
Large cap stocks can perform differently from other segments of the equity market or the equity
market as a whole. Large capitalization companies may be less flexible in evolving markets or
unable to implement change as quickly as smaller capitalization companies. Accordingly, the
value of large cap stocks may not rise to the same extent as the value of small or mid-cap stocks
under certain market conditions or during certain periods..
Small and mid-cap stocks can perform differently from other segments of the equity market or the
equity market as a whole and can be more volatile than stocks of larger companies.
A value investing style may be out of favor in the marketplace for various periods of time. Value
investing involves purchasing securities that are undervalued in comparison to their prospects for
growth or to their peers or that have historically traded below their historical value. These
securities are subject to the risk that their potential values as perceived by the Adviser are
never realized by the market.
Foreign securities involve special risks such as currency fluctuations, economic or financial
instability, lack of timely or reliable financial information and unfavorable political or legal
developments. These risks are increased for investments in emerging markets.
The risks of owning shares of an ETF generally reflect the risks of owning the underlying
securities the ETF is designed to track, although lack of liquidity in an ETF could result in being
more volatile than the underlying portfolio of securities. In addition, because of ETF expenses,
compared to owning the underlying securities directly, it may be more costly to own an ETF.
Because the Fund and the Underlying Funds may invest in derivatives, the Fund is exposed to
additional volatility and potential loss.
For further information about these and other risks, see More Information About Risk.
LIFE VISION CONSERVATIVE FUND
(TARGET ICON)
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future. I Shares were offered beginning on November 6, 2003. Performance between March 11, 2003
and November 6, 2003 is that of the B Shares of the Fund, and has not been adjusted to reflect I
Share expenses. If it had been, performance would have been higher.
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
2004 |
|
|
6.09 |
% |
2005 |
|
|
3.19 |
% |
2006 |
|
|
6.31 |
% |
2007 |
|
|
|
|
|
|
|
BEST QUARTER |
|
|
WORST QUARTER |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was x.xx%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of a Hybrid 80/17/3 blend of the Lehman Brothers U.S. Aggregate Index, Russell
3000(R) Index and the Morgan Stanley Capital International Europe, Australasia and Far East
(MSCI(R) EAFE(R)) Index. These returns assume shareholders redeem all of their shares at the end of
the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SINCE |
I SHARES |
|
1 YEAR |
|
INCEPTION* |
Fund Returns
Before Taxes |
|
|
6.31 |
% |
|
|
6.72 |
% |
Fund Returns After
Taxes on Distributions |
|
|
4.62 |
% |
|
|
5.57 |
% |
Fund Returns After Taxes
on Distributions and Sale
of Fund Shares |
|
|
4.27 |
% |
|
|
5.13 |
% |
Hybrid 80/17/3 Blend of the
Following Market Benchmarks+ |
|
|
6.85 |
% |
|
|
6.63 |
% |
Lehman Brothers
U.S. Aggregate Index |
|
|
4.33 |
% |
|
|
3.57 |
% |
Russell 3000(R) Index |
|
|
15.72 |
% |
|
|
17.86 |
% |
MSCI(R) EAFE(R) Index |
|
|
26.34 |
% |
|
|
27.70 |
% |
|
|
|
* |
|
Since inception of B Shares on March 11, 2003. Benchmark return since February 28, 2003
(benchmark returns available only on a month end basis). |
|
+ |
|
Benchmarks reflect no deductions for fees, expenses or taxes. |
LIFE VISION CONSERVATIVE FUND
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Lehman Brothers U.S. Aggregate Index is a widely-recognized index
of securities that are SEC-registered, taxable, and dollar denominated. The Index covers the U.S.
investment grade fixed rate bond market, with index components for government and corporate
securities, mortgage pass-through securities, and asset-backed securities. The Russell 3000(R)
Index is a widely-recognized, capitalization-weighted index that measures the performance of the
3,000 largest U.S. companies based on total market capitalization. The MSCI(R) EAFE(R) Index is a
widely-recognized, market capitalization index that measures market equity performance based upon
indices from 21 foreign and developed countries.
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold Fund shares. The
annual fund operating expenses shown in the table below are based on amounts incurred during the
Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
Other Expenses(1) |
|
|
Acquired (Underlying) Fund Fees and Expenses(2)
|
|
|
|
Total Annual Operating Expenses
|
|
|
Fee Waivers and Expense Reimbursements(3)
|
|
|
|
Net Annual Operating Expenses |
|
|
|
|
|
(1) |
|
Adjusted to reflect expected changes in Other Expenses for the current fiscal year. |
|
(2) |
|
In addition to the Funds direct expenses, the Fund indirectly bears a pro-rata share of the
expenses of the underlying Funds in which it invests. These Underlying Fund Fees and Expenses are
not included in the Financial Highlights section of this Prospectus, which reflects only the Net
Annual Operating Expenses (excluding Underlying Fund Fees and Expenses) of each Fund. |
(3) |
|
The Adviser has contractually agreed to waive fees and reimburse expenses until at least August
1, 2009 in order to keep Net Annual Operating Expenses (excluding excluding taxes, brokerage
commissions, extraordinary expenses and estimated Underlying Fund Fees and Expenses) from exceeding
x.xx%. If at any point before August 1, 2011, Net Annual Operating Expenses (excluding taxes,
brokerage commissions, extraordinary expenses and estimated Underlying Fund Fees and Expenses) are
less than the applicable expense cap, the Adviser may retain the difference to recapture any of the
prior waivers and reimbursements. In addition, the Adviser and/or other service providers may
voluntarily waive a portion of their fees in order to limit Net Annual Operating Expenses
(excluding taxes, brokerage commissions, extraordinary expenses and estimated Underlying Fund Fees
and Expenses). These voluntary waivers may be discontinued at any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, the Funds operating
expenses remain the same and you reinvest all dividends and distributions. Although your actual
costs and returns might be different, your approximate costs of investing $10,000 in the Fund would
be:
|
|
|
|
|
|
|
1 YEAR*
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
|
|
|
* |
|
Without waivers and reimbursements, Year 1 costs would be $xx. |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds estimated expenses in the table above
are shown as a percentage of the Funds net assets. These expenses are deducted from Fund assets.
For more information about these fees, see Investment Adviser.
LIFE VISION GROWTH AND INCOME FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
Long-term capital appreciation |
|
INVESTMENT FOCUS
|
|
Equity and fixed income funds |
|
SHARE PRICE VOLATILITY
|
|
Moderate |
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Investing pursuant to an asset
allocation strategy in a
combination of RidgeWorth Equity Funds and exchange
traded
funds (ETFs) that invest in equities (together,
Underlying Equity Funds), and, to a lesser extent,
RidgeWorth Fixed Income Funds and ETFs that invest in bonds
(together, Underlying Fixed Income Funds). |
|
INVESTOR PROFILE
|
|
Investors who want their assets to
grow, but want to
moderate the risks of equity securities through
investment
of a portion of their assets in bonds |
(TELESCOPE ICON)
INVESTMENT STRATEGY
The Life Vision Growth and Income Fund invests at least 80% of its assets in Underlying Equity
Funds and Underlying Fixed Income Funds (together, Underlying Funds). The Funds remaining assets
may be invested in shares of RidgeWorth Money Market Funds, securities issued by the U.S.
Government, its agencies or instrumentalities, repurchase agreements and short-term paper.
In selecting a diversified portfolio of Underlying Funds, the Adviser analyzes many factors,
including the Underlying Funds investment objectives, total returns, volatility and expenses.
The table below shows how the Adviser currently expects to allocate the Fund among asset classes.
The table also shows the sectors within those asset classes to which the Fund will currently have
exposure.
|
|
|
|
|
|
|
INVESTMENT RANGE |
|
|
(PERCENTAGE OF THE LIFE |
|
|
VISION GROWTH AND |
ASSET CLASS |
|
INCOME FUNDS ASSETS) |
UNDERLYING EQUITY FUNDS
|
|
|
60-80 |
% |
U.S. Equities |
|
|
|
|
International Equities |
|
|
|
|
Emerging
Market Equities (All Capitalizations) |
|
|
|
|
|
UNDERLYING FIXED INCOME FUNDS |
|
|
10-40 |
% |
U.S. Investment Grade Bonds |
|
|
|
|
U.S. High Yield Bonds |
|
|
|
|
U.S. Floating Rate Securities (including Bank Loans) |
|
|
|
|
International Bonds |
|
|
|
|
Emerging Market Bonds |
|
|
|
|
|
UNDERLYING MONEY MARKET FUNDS |
|
|
0-20 |
% |
|
Because securities tend to shift in relative attractiveness, the Fund holds Underlying Funds that
buy and sell securities frequently, which may result in higher transaction costs, additional
capital gains tax liabilities and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, to a limited extent,
derivative instruments (such as futures, options and swaps) to use as a substitute for a purchase
or sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as market risk.
You can obtain information about the underlying RidgeWorth Funds in which the Fund invests by
calling 1-888-784-3863, or visiting the RidgeWorth Funds website at www.ridgeworthfunds.com.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
The value of an investment in the Fund is based primarily on the performance of the Underlying
Funds and the allocation of the Funds assets among them.
Since it purchases Underlying Equity Funds, the Fund is subject to the risk that stock prices will
fall over short or extended periods of time. Historically, the equity market has moved in cycles,
and the value of an Underlying Equity Funds securities may fluctuate drastically from day to day.
Individual companies may report poor results or be negatively affected by industry and/or economic
trends and developments. The prices of securities issued by such companies may suffer a decline in
response. These factors contribute to price volatility, which is the principal risk of investing in
the Fund.
The prices of an Underlying Funds fixed income securities respond to economic developments,
particularly interest rate changes, as well as to perceptions about the creditworthiness of
individual issuers, including governments. Generally, an Underlying Funds fixed income securities
will decrease
LIFE VISION GROWTH AND INCOME FUND
in value if interest rates rise and vice versa, and the volatility of lower-rated securities is
even greater than that of higher-rated securities. Also, longer-term securities generally are more
volatile, so the average maturity or duration of these securities affects risk.
The Fund is also subject to the risk that the Advisers asset allocation decisions will not
anticipate market trends successfully. For example, weighting common stocks too heavily during a
stock market decline may result in a failure to preserve capital. Conversely, investing too heavily
in fixed income securities during a period of stock market appreciation may result in lower total
return. The risks associated with investing in the Fund will vary depending upon how the assets are
allocated among the Underlying Funds.
Large cap stocks can perform differently from other segments of the equity market or the equity
market as a whole. Large capitalization companies may be less flexible in evolving markets or
unable to implement change as quickly as smaller capitalization companies. Accordingly, the value
of large cap stocks may not rise to the same extent as the value of small or mid-cap stocks under
certain market conditions or during certain periods.
Small and mid-cap stocks can perform differently from other segments of the equity market or the
equity market as a whole and can be more volatile than stocks of larger companies.
A value investing style may be out of favor in the marketplace for various periods of time. Value
investing involves purchasing securities that are undervalued in comparison to their prospects for
growth or to their peers or that have historically traded below their historical value. These
securities are subject to the risk that their potential values as perceived by the Adviser are
never realized by the market.
Foreign securities involve special risks such as currency fluctuations, economic or financial
instability, lack of timely or reliable financial information and unfavorable political or legal
developments. These risks are increased for investments in emerging markets.
Below investment grade securities (sometimes referred to as junk bonds) involve greater risk of
default or downgrade and are more volatile than investment grade securities. Below investment grade
securities may also be less liquid than higher quality securities.
The risks associated with floating rate loans are similar to the risks of below investment grade
securities. In addition, the value of the collateral securing the loan may decline, causing a loan
to be substantially unsecured. Difficulty in selling a floating rate loan may result in a loss.
Borrowers may pay back principal before the scheduled due date when interest rates decline, which
may require the Fund to replace a particular loan with a lower-yielding security. There may be less
extensive public information available with respect to loans than for rated, registered or exchange
listed securities. The Fund may assume the credit risk of the primary lender in addition to the
borrower, and investments in loan assignments may involve the risks of being a lender.
Mortgage-backed investments involve risk of loss due to prepayments and, like any bond, due to
default. Because of the sensitivity of mortgage-related securities to changes in interest rates,
the Funds performance may be more volatile than if it did not hold these securities.
U.S. government securities can exhibit price movements resulting from changes in interest rates.
Treasury inflation protected securities (TIPS) can also exhibit price movements as a result of
changing inflation expectations and seasonal inflation patterns. Certain U.S. government
securities are backed by the full faith and credit of the U.S. Government, while others are backed
by the ability of the issuing entity to borrow from the U.S. Treasury or by the issuing entitys
own resources.
Restricted securities may increase the level of illiquidity in the Fund during any period that
qualified institutional buyers become uninterested in purchasing these restricted securities. The
Adviser intends to invest only in restricted securities that it believes present minimal liquidity
risk.
The risks of owning shares of an ETF generally reflect the risks of owning the underlying
securities the ETF is designed to track, although lack of liquidity in an ETF could result in being
more volatile than the underlying portfolio of securities. In addition, because of ETF expenses,
compared to owning the underlying securities directly, it may be more costly to own an ETF.
Because the Fund and the Underlying Funds may invest in derivatives, the Fund is exposed to
additional volatility and potential loss.
For further information about these and other risks, see More Information About Risk.
LIFE VISION GROWTH AND INCOME FUND
(TARGET ICON)
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future. This bar chart shows changes in the performance of the Funds I Shares from year to
year.*
(BAR CHART)
|
|
|
|
|
1998 |
|
|
11.16 |
% |
1999 |
|
|
7.95 |
% |
2000 |
|
|
7.08 |
% |
2001 |
|
|
-2.55 |
% |
2002 |
|
|
-11.99 |
% |
2003 |
|
|
23.99 |
% |
2004 |
|
|
10.53 |
% |
2005 |
|
|
5.10 |
% |
2006 |
|
|
11.63 |
% |
2007 |
|
|
|
|
|
BEST QUARTER |
|
|
WORST QUARTER |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was x.xx%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the average annual total returns of the Fund for the periods ended December 31,
2007, to those of a Hybrid 55/35/10 Blend of the Russell 3000(R) Index, Lehman Brothers U.S.
Aggregate Index and the Morgan Stanley Capital International Europe, Australasia and Far East
(MSCI(R) EAFE(R)) Index. These returns assume shareholders redeem all of their shares at the end of
the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
I SHARES |
|
1 YEAR |
|
5 YEARS |
|
10 YEARS |
Fund Returns Before
Taxes |
|
|
|
|
|
|
|
|
|
|
|
|
Fund Returns
After Taxes on
Distributions |
|
|
+ |
|
|
|
|
|
|
|
|
|
Fund Returns
After Taxes on
Distributions
and Sale of
Fund Shares |
|
|
+ |
|
|
|
|
|
|
|
|
|
Hybrid 55/35/10
Blend of the
Following Market
Benchmarks+ |
|
|
|
|
|
|
|
|
|
|
|
|
Russell
3000(R) Index |
|
|
|
|
|
|
|
|
|
|
|
|
Lehman Brothers U.S. Aggregate Index |
|
|
|
|
|
|
|
|
|
|
|
|
MSCI(R)
EAFE(R)
Index |
|
|
|
|
|
|
|
|
|
|
|
|
LIFE VISION GROWTH AND INCOME FUND
|
|
|
+ |
|
Benchmarks reflect no deductions for fees, expenses or taxes. |
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Russell 3000(R) Index is a widely-recognized,
capitalization-weighted index that measures the performance of the 3,000 largest U.S. companies
based on total market capitalization. The Lehman Brothers U.S. Aggregate Index is a widely
recognized index of securities that are SEC-registered, taxable and dollar denominated. The Index
covers the U.S. investment grade fixed income bond market, with index components for government and
corporate securities, mortgage pass-through securities and asset-backed securities. The MSCI(R)
EAFE(R) Index is a widely-recognized, market capitalization index that measures market equity
performance based upon indices from 21 foreign and developed countries.
LIFE VISION GROWTH AND INCOME FUND
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold Fund shares. The
annual fund operating expenses shown in the table below are based on amounts incurred during the
Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
0.10 |
% |
Other Expenses |
|
|
|
|
Acquired
(Underlying) Fund Fees and Expenses(1) |
|
|
|
|
|
|
|
|
|
|
Total Annual
Operating Expenses(2) |
|
|
|
|
(1) In addition to the Funds direct expenses, the Fund indirectly bears a pro-rata share of the
expenses of the underlying Funds in which it invests. These Underlying Fund Fees and Expenses are
not included in the Financial Highlights section of this Prospectus, which reflects only the Total
Annual Operating Expenses (excluding Underlying Fund Fees and Expenses) of each Fund.
(2) The Adviser has contractually agreed to waive fees and reimburse expenses until at least August
1, 2009 in order to keep Total Annual Operating Expenses (excluding taxes, brokerage commissions,
extraordinary expenses and estimated Underlying Fund Fees and Expenses) from exceeding x.xx%. If at
any point before August 1, 2011, Total Annual Operating Expenses (excluding taxes, brokerage
commissions, extraordinary expenses and estimated Underlying Fund Fees and Expenses) are less than
the applicable expense cap, the Adviser may retain the difference to recapture any of the prior
waivers and reimbursements. In addition, the Adviser and/or other service providers may voluntarily
waive a portion of their fees in order to limit Total Annual Operating Expenses (excluding taxes,
brokerage commissions, extraordinary expenses and estimated Underlying Fund Fees and Expenses).
These voluntary waivers may be discontinued at any time.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, the Funds operating
expenses remain the same and you reinvest all dividends and distributions. Although your actual
costs and returns might be different, your approximate costs of investing $10,000 in the Fund would
be:
|
|
|
|
|
|
|
|
|
1 YEAR |
|
|
3 YEARS |
|
|
5 YEARS |
|
10 YEARS |
|
|
|
|
|
|
|
|
|
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Fund expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
LIFE VISION MODERATE GROWTH FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
Capital appreciation and current income |
|
|
|
INVESTMENT FOCUS
|
|
Equity and fixed income funds |
|
|
|
SHARE PRICE VOLATILITY
|
|
Low |
|
|
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Investing pursuant to an asset allocation strategy in a
combination of RidgeWorth Equity Funds, RidgeWorth Fixed
Income Funds and exchange-traded funds (ETFs) (together,
Underlying Funds) |
|
|
|
INVESTOR PROFILE
|
|
Investors who want income from their investment, as well as
an increase in its value, and are willing to be subject to
the risks of equity securities |
(TELESCOPE ICON)
INVESTMENT STRATEGY
The Life Vision Moderate Growth Fund principally invests in Underlying Funds that invest primarily
in equity securities and fixed income securities. The Funds remaining assets may be invested in
shares of RidgeWorth Money Market Funds, securities issued by the U.S. Government, its agencies or
instrumentalities, repurchase agreements and short-term paper.
In selecting a diversified portfolio of Underlying Funds, the Adviser analyzes many factors,
including the Underlying Funds investment objectives, total returns, volatility and expenses.
The table below shows how the Adviser currently expects to allocate the Fund among asset classes.
The table also shows the sectors within those asset classes to which the Fund will currently have
exposure.
|
|
|
|
|
|
|
INVESTMENT RANGE |
|
|
(PERCENTAGE OF THE LIFE |
|
|
VISION MODERATE |
ASSET CLASS |
|
GROWTH FUNDS ASSETS) |
|
UNDERLYING EQUITY FUNDS |
|
|
35-65 |
% |
U.S. Equities |
|
|
|
|
International Equities |
|
|
|
|
Emerging Market Equities (All
Capitalizations) |
|
|
|
|
|
UNDERLYING FIXED INCOME FUNDS |
|
|
35-65 |
% |
U.S. Investment Grade Bonds |
|
|
|
|
U.S. High Yield Bonds |
|
|
|
|
U.S. Floating Rate Securities
(including Bank Loans) |
|
|
|
|
International Bonds |
|
|
|
|
Emerging Market Bonds |
|
|
|
|
|
UNDERLYING MONEY MARKET FUNDS |
|
|
0-20 |
% |
|
Because securities tend to shift in relative attractiveness, the Fund holds Underlying Funds that
buy and sell securities frequently, which may result in higher transaction costs, additional
capital gains taxes and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, to a limited extent,
derivative instruments (such as futures, options and swaps) to use as a substitute for a purchase
or sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as market risk.
You can obtain information about the RidgeWorth Funds in which the Fund invests by calling
1-888-784-3863, or by visiting the RidgeWorth Funds website at www.ridgeworthfunds.com.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
The value of an investment in the Fund is based primarily on the performance of the Underlying
Funds and the allocation of the Funds assets among them.
Since it purchases Underlying Funds that invest in equities, the Fund is subject to the risk that
stock prices will fall over short or extended periods of time. Historically, the equity market has
moved in cycles, and the value of such an Underlying Funds securities may fluctuate drastically
from day to day. Individual companies may report poor results or be negatively affected by industry
and/or economic trends and developments. The prices of securities issued by such companies may
suffer a decline in response. These factors contribute to price volatility, which is the principal
risk of investing in the Fund.
The prices of an Underlying Funds fixed income securities respond to economic developments,
particularly interest rate changes, as well as to perceptions about the creditworthiness of
individual issuers, including governments. Generally, an Underlying Funds fixed income securities
will decrease in value if interest rates rise and vice versa, and the volatility of lower-rated
securities is even greater than that of higher-rated securities. Also, longer-term
LIFE VISION MODERATE GROWTH FUND
securities generally are more volatile, so the average maturity or duration of these securities
affects risk.
The Fund is also subject to the risk that the Advisers asset allocation decisions will not
anticipate market trends successfully. For example, weighting common stocks too heavily during a
stock market decline may result in a failure to preserve capital. Conversely, investing too heavily
in fixed income securities during a period of stock market appreciation may result in lower total
return. The risks associated with investing in the Fund will vary depending upon how the assets are
allocated among the Underlying Funds.
Large cap stocks can perform differently from other segments of the equity market or the equity
market as a whole. Large capitalization companies may be less flexible in evolving markets or
unable to implement change as quickly as smaller capitalization companies. Accordingly, the value
of large cap stocks may not rise to the same extent as the value of small or mid-cap stocks under
certain market conditions or during certain periods.
Small and mid-cap stocks can perform differently from other segments of the equity market or the
equity market as a whole and can be more volatile than stocks of larger companies.
A value investing style may be out of favor in the marketplace for various periods of time. Value
investing involves purchasing securities that are undervalued in comparison to their prospects for
growth or to their peers or that have historically traded below their historical value. These
securities are subject to the risk that their potential values as perceived by the Adviser are
never realized by the market.
Foreign securities involve special risks such as currency fluctuations, economic or financial
instability, lack of timely or reliable financial information and unfavorable political or legal
developments. These risks are increased for investments in emerging markets.
Below investment grade securities (sometimes referred to as junk bonds) involve greater risk of
default or downgrade and are more volatile than investment grade securities. Below investment grade
securities may also be less liquid than higher quality securities.
The risks associated with floating rate loans are similar to the risks of below investment grade
securities. In addition, the value of the collateral securing the loan may decline, causing a loan
to be substantially unsecured. Difficulty in selling a floating rate loan may result in a loss.
Borrowers may pay back principal before the scheduled due date when interest rates decline, which
may require the Fund to replace a particular loan with a lower-yielding security. There may be less
extensive public information available with respect to loans than for rated, registered or exchange
listed securities. The Fund may assume the credit risk of the primary lender in addition to the
borrower, and investments in loan assignments may involve the risks of being a lender.
Mortgage-backed investments involve risk of loss due to prepayments and, like any bond, due to
default. Because of the sensitivity of mortgage-related securities to changes in interest rates,
the Funds performance may be more volatile than if it did not hold these securities.
U.S. government securities can exhibit price movements resulting from changes in interest rates.
Treasury inflation protected securities (TIPS) can also exhibit price movements as a result of
changing inflation expectations and seasonal inflation patterns. Certain U.S. government securities
are backed by the full faith and credit of the U.S. Government, while others are backed
by the ability of the issuing entity to borrow from the U.S. Treasury or by the issuing entitys
own resources.
Restricted securities may increase the level of illiquidity in the Fund during any period that
qualified institutional buyers become uninterested in purchasing these restricted securities. The
Adviser intends to invest only in restricted securities that it believes present minimal liquidity
risk.
The risks of owning shares of an ETF generally reflect the risks of owning the underlying
securities the ETF is designed to track, although lack of liquidity in an ETF could result in being
more volatile than the underlying portfolio of securities. In addition, because of ETF expenses,
compared to owning the underlying securities directly, it may be more costly to own an ETF.
Because the Fund and the Underlying Funds may invest in derivatives, the Fund is exposed to
additional volatility and potential loss.
For further information about these and other risks, see More Information About Risk.
LIFE VISION MODERATE GROWTH FUND
(TARGET ICON)
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future. This bar chart shows changes in the performance of the Funds I Shares from year to
year.*
(BAR CHART)
|
|
|
|
|
1998 |
|
|
11.15 |
% |
1999 |
|
|
6.19 |
% |
2000 |
|
|
5.46 |
% |
2001 |
|
|
-1.10 |
% |
2002 |
|
|
-8.28 |
% |
2003 |
|
|
19.98 |
% |
2004 |
|
|
8.92 |
% |
2005 |
|
|
4.30 |
% |
2006 |
|
|
9.36 |
% |
2007 |
|
|
|
|
|
BEST QUARTER |
|
|
WORST QUARTER |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08was x.xx%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the average annual total returns of the Fund for the periods ended December 31,
2007, to those of a Hybrid 50/42/8 Blend of the Lehman Brothers U.S. Aggregate Index, the Russell
3000(R) Index, and the Morgan Stanley International Europe, Australasia and Far East (MSCI(R)
EAFE(R)) Index These returns assume shareholders redeem all of their shares at the end of the
period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
I SHARES |
|
1 YEAR |
|
|
5 YEARS |
|
|
10 YEARS |
|
Fund Returns Before Taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Returns After
Taxes on Distributions |
|
|
+ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Returns After
Taxes on Distributions and
Sale of Fund Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hybrid 50/42/8 Blend
of the Following
Market Benchmarks+ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lehman
Brothers U.S. Aggregate Index |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Russell 3000(R) Index |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MSCI(R) EAFE(R) Index |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFE VISION MODERATE GROWTH FUND
|
|
|
+ |
|
Benchmarks reflect no deductions for fees, expenses or taxes. |
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Lehman Brothers U.S. Aggregate Index is a widely-recognized index
of securities that are SEC-registered, taxable, and dollar denominated. The Index covers the U.S.
investment grade fixed rate bond market, with index components for government and corporate
securities, mortgage pass-through securities, and asset-backed securities. The Russell 3000(R)
Index is a widely-recognized, capitalization-weighted index that measures the performance of the
3,000 largest U.S. companies based on total market capitalization. The MSCI(R) EAFE(R) Index is a
widely-recognized, market capitalization index that measures market equity performance based upon
indices from 21 foreign and developed countries.
LIFE VISION MODERATE GROWTH FUND
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold Fund shares. The
annual fund operating expenses shown in the table below are based on amounts incurred during the
Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
0.10 |
% |
Other
Expenses(1) |
|
|
|
|
|
|
|
|
|
|
Acquired
(Underlying) Fund Fees and Expenses(2) |
|
|
|
|
Total Annual
Operating Expenses(3) |
|
|
|
|
|
|
|
(1) |
|
Adjusted to reflect expected changes in Other Expenses for the current fiscal year. |
|
(2) |
|
In addition to the Funds direct expenses, the Fund indirectly bears a pro-rata share of the
expenses of the underlying Funds in which it invests. These Underlying Fund Fees and Expenses are
not included in the Financial Highlights section of this Prospectus, which reflects only the Total
Annual Operating Expenses (excluding Underlying Fund Fees and Expenses) of each Fund. |
|
(3) |
|
The Adviser has contractually agreed to waive fees and reimburse expenses until at least August
1, 2009 in order to keep Total Annual Operating Expenses (excluding taxes, brokerage commissions,
extraordinary expenses and estimated Underlying Fund Fees and Expenses) from exceeding x.xx%. If at
any point before August 1, 2011, Total Annual Operating Expenses (excluding taxes, brokerage
commissions, extraordinary expenses and estimated Underlying Fund Fees and Expenses) are less than
the applicable expense cap, the Adviser may retain the difference to recapture any of the prior
waivers and reimbursements. In addition, the Adviser and/or other service providers may voluntarily
waive a portion of their fees in order to limit Total Annual Operating Expenses (excluding taxes,
brokerage commissions, extraordinary expenses and estimated Underlying Fund Fees and Expenses).
These voluntary waivers may be discontinued at any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, the Funds operating
expenses remain the same and you reinvest all dividends and distributions. Although your actual
costs and returns might be different, your approximate costs of investing $10,000 in the Fund would
be:
|
|
|
|
|
|
|
1 YEAR
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Fund expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
LIFE VISION TARGET DATE 2015 FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
High total return |
|
INVESTMENT FOCUS
|
|
Equity funds, fixed income funds, index funds, money market
funds and
exchange-traded
funds (ETFs)
(together,
Underlying Funds) |
|
SHARE PRICE VOLATILITY
|
|
Moderate |
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Investing pursuant to an asset allocation strategy in a
combination of
Underlying Funds |
|
INVESTOR PROFILE
|
|
Investors who expect to retire or require income around the
year 2015 |
(TELSCOPE ICON)
INVESTMENT STRATEGY
The Life Vision Target Date 2015 Fund invests in a mix of Underlying Funds representing various
asset classes and sectors using an asset allocation strategy designed for investors expecting to
retire or require income around the year 2015. T Over time, the allocation to asset classes and
Underlying Funds will change. The asset allocation strategy will tend to emphasize higher
returning but more volatile strategies (such as stocks) when the target date is still years away,
and will increase the relative proportion of less volatile assets (such as bonds) as the target
date draws nearer. As a result, the asset mix of the Fund generally becomes more conservative over
time. When the target asset allocation of the Fund is similar to the asset allocation of the
RidgeWorth Life Vision Conservative Fund (within two years after the target date, i.e., 2017), it
is expected that the Fund will seek to be combined with the RidgeWorth Life Vision Conservative
Fund, and shareholders of the Fund would then become shareholders of the RidgeWorth Life Vision
Conservative Fund.
The table below shows how the Adviser currently expects to allocate the Fund among asset classes.
The table also shows the sectors within those asset classes to which the Fund will currently have
exposure. Based on prevailing market conditions and expectations, the target allocations listed
may vary from the Funds actual allocations.
|
|
|
|
|
|
|
INVESTMENT RANGE |
|
|
(PERCENTAGE OF THE |
ASSET CLASS |
|
2015 FUNDS ASSETS) |
|
UNDERLYING EQUITY FUNDS |
|
|
50-70 |
% |
U.S. Equities |
|
|
|
|
International Equities |
|
|
|
|
Emerging Market Equities (All
Capitalizations) |
|
|
|
|
|
UNDERLYING FIXED INCOME FUNDS |
|
|
30-50 |
% |
U.S. Investment Grade Bonds |
|
|
|
|
U.S. High Yield Bonds |
|
|
|
|
U.S. Floating Rate Securities
(including Bank Loans) |
|
|
|
|
International Bonds |
|
|
|
|
Emerging Market Bonds |
|
|
|
|
|
UNDERLYING MONEY MARKET FUNDS |
|
|
0-20 |
% |
|
The Funds investments in ETFs may include iShares. iShares (R) is a registered trademark of
Barclays Global Investors, N.A. (BGI). Neither BGI nor any iShares Fund makes any representations
regarding the advisability of investing in the Fund.
Due to its investment strategy, the Fund holds Underlying Funds that buy and sell securities
frequently, which may result in higher transaction costs, additional capital gains tax liabilities
for taxable investors and lower performance.
In addition, to implement its strategy, the Fund may buy or sell, to a limited extent, derivative
instruments (such as futures, options and swaps) to use as a substitute for a purchase or sale of a
position in the underlying assets and/or as part of a strategy designed to reduce exposure to other
risks, such as market risk.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
The value of an investment in the Fund is based primarily on the performance of the Underlying
Funds and the allocation of the Funds assets among them.
Since it purchases Underlying Funds that invest in equities, the Fund is subject to the risk that
stock prices will fall over short or extended periods of time. Historically, the equity market has
moved in cycles, and the value of such an Underlying Funds securities may fluctuate drastically
from day to day. Individual companies may report poor results or be negatively affected by industry
and/or economic trends and developments. The prices of securities issued by such companies may
suffer a decline in response. These factors contribute to price volatility, which is the principal
risk of investing in the Fund.
The prices of an Underlying Funds fixed income securities respond to economic developments,
particularly interest rate changes, as well as to perceptions about the creditworthiness of
individual
LIFE VISION TARGET DATE 2015 FUND
issuers, including governments. Generally, an Underlying Funds fixed income securities will
decrease in value if interest rates rise and vice versa, and the volatility of lower-rated
securities is even greater than that of higher-rated securities. Also, longer-term securities
generally are more volatile, so the average maturity or duration of these securities affects risk.
The Fund is also subject to the risk that the Advisers asset allocation decisions will not
anticipate market trends successfully. For example, weighting common stocks too heavily during a
stock market decline may result in a failure to preserve capital. Conversely, investing too heavily
in fixed income securities during a period of stock market appreciation may result in lower total
return. The risks associated with investing in the Fund will vary depending upon how the assets are
allocated among the Underlying Funds.
Large cap stocks can perform differently from other segments of the equity market or the equity
market as a whole. Large capitalization companies may be less flexible in evolving markets or
unable to implement change as quickly as smaller capitalization companies. Accordingly, the value
of large cap stocks may not rise to the same extent as the value of small or mid-cap stocks under
certain market conditions or during certain periods.
Small and mid-cap stocks can perform differently from other segments of the equity market or the
equity market as a whole and can be more volatile than stocks of larger companies.
A value investing style may be out of favor in the marketplace for various periods of time. Value
investing involves purchasing securities that are undervalued in comparison to their prospects for
growth or to their peers or that have historically traded below their historical value. These
securities are subject to the risk that their potential values as perceived by the Adviser are
never realized by the market.
Foreign securities involve special risks such as currency fluctuations, economic or financial
instability, lack of timely or reliable financial information and unfavorable political or legal
developments. These risks are increased for investments in emerging markets.
Below investment grade securities (sometimes referred to as junk bonds) involve greater risk of
default or downgrade and are more volatile than investment grade securities. Below investment grade
securities may also be less liquid than higher quality securities.
The risks associated with floating rate loans are similar to the risks of below investment grade
securities. In addition, the value of the collateral securing the loan may decline, causing a loan
to be substantially unsecured. Difficulty in selling a floating rate loan may result in a loss.
Borrowers may pay back principal before the scheduled due date when interest rates decline, which
may require the Fund to replace a particular loan with a lower-yielding security. There may be less
extensive public information available with respect to loans than for rated, registered or exchange
listed securities. The Fund may assume the credit risk of the primary lender in addition to the
borrower, and investments in loan assignments may involve the risks of being a lender.
Mortgage-backed investments involve risk of loss due to prepayments and, like any bond, due to
default. Because of the sensitivity of mortgage-related securities to changes in interest rates,
the Funds performance may be more volatile than if it did not hold these securities.
U.S. government securities can exhibit price movements resulting from changes in interest rates.
Treasury inflation protected securities (TIPS) can also exhibit price movements as a result of
changing inflation expectations and seasonal inflation patterns. Certain U.S. government securities
are backed by the full faith and credit of the U.S. Government, while others are backed by the
ability of the issuing entity to borrow from the U.S. Treasury or by the issuing entitys own
resources.
Restricted securities may increase the level of illiquidity in the Fund during any period that
qualified institutional buyers become uninterested in purchasing these restricted securities. The
Adviser intends to invest only in restricted securities that it believes present minimal liquidity
risk.
The risks of owning shares of an ETF generally reflect the risks of owning the underlying
securities the ETF is designed to track, although lack of liquidity in an ETF could result in being
more volatile than the underlying portfolio of securities. In addition, because of ETF expenses,
compared to owning the underlying securities directly, it may be more costly to own an ETF.
To the extent that the Underlying Funds include index funds, the Fund is subject to the risk that
the index fund may not be able to match the performance of its benchmark.
Because the Fund and the Underlying Funds may invest in derivatives, the Fund is exposed to
additional volatility and potential loss.
For further information about these and other risks, see More Information About Risk.
LIFE VISION TARGET DATE 2015 FUND
(TARGET ICON)
PERFORMANCE INFORMATION
The bar chart and performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
2006 |
|
|
11.86 |
% |
2007 |
|
|
|
|
|
BEST QUARTER |
|
|
WORST QUARTER |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was x.xx%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the a Hybrid 60/40 Blend of the S&P 500 (R) Index and the Lehman Brothers U.S.
Aggregate Bond Index. These returns assume shareholders redeem all of their shares at the end of
the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SINCE |
|
I SHARES |
|
1 YEAR |
|
|
INCEPTION* |
|
Fund Returns Before Taxes |
|
|
|
|
|
|
|
|
Fund Returns After Taxes on Distributions |
|
|
|
|
|
|
|
|
Fund Returns After Taxes on
Distributions and Sale of Fund
Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SINCE |
|
I SHARES |
|
1 YEAR |
|
|
INCEPTION* |
|
Hybrid 60/40 Blend of the
Following Market Benchmarks
(reflects no deduction for
fees, expenses or taxes) |
|
|
|
|
|
|
|
|
S&P 500(R) Index (reflects no
deduction for fees, expenses or
taxes) |
|
|
|
|
|
|
|
|
Lehman Brothers U.S. Aggregate
Bond Index (reflects no
deduction for fees, expenses or
taxes) |
|
|
|
|
|
|
|
|
|
|
|
* |
|
Since inception of the I Shares on October 12, 2005. Benchmark returns since September 30, 2005
(benchmark returns available only on a month end basis). |
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The S&P 500(R) Index is a widely-recognized, market value-weighted
(higher market value stocks have more influence than lower market value stocks) index of 500 stocks
designed to mimic the overall U.S. equity markets industry weightings. The Lehman Brothers U.S.
Aggregate Index is a widely-recognized index of securities that are SEC-registered, taxable, and
dollar denominated. The Index covers the U.S. investment grade fixed rate bond market, with index
components for government and corporate securities, mortgage pass-through securities, and
asset-backed securities.
LIFE VISION TARGET DATE 2015 FUND
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
0.10 |
% |
Other Expenses |
|
|
|
|
Acquired (Underlying) Fund Fees and Expenses(1) |
|
|
|
|
|
Total Annual Operating Expenses |
|
|
|
|
Fee Waivers and Expense Reimbursements(2) |
|
|
|
|
|
Net Annual Operating Expenses |
|
|
|
|
|
|
|
(1) |
|
In addition to the Funds direct expenses, the Fund indirectly bears a pro-rata share of the
expenses of the underlying Funds in which it invests. These Underlying Fund Fees and Expenses are
not included in the Financial Highlights section of this Prospectus, which reflects only the Net
Annual Operating Expenses (excluding Underlying Fund Fees and Expenses) of each Fund. |
|
(2) |
|
The Adviser has contractually agreed to waive fees and reimburse expenses until at least August
1, 2009 in order to keep Net Annual Operating Expenses (excluding taxes, brokerage commissions,
extraordinary expenses and estimated Underlying Fund Fees and Expenses) from exceeding x.xx%. If at
any point before August 1, 2011, Net Annual Operating Expenses (excluding taxes, brokerage
commissions, extraordinary expenses and estimated Underlying Fund Fees and Expenses) are less than
the applicable expense cap, the Adviser may retain the difference to recapture any of the prior
waivers and reimbursements. In addition, the Adviser and/or other service providers may voluntarily
waive a portion of their fees in order to limit Net Annual Operating Expenses (excluding taxes,
brokerage commissions, extraordinary expenses and estimated Underlying Fund Fees and Expenses).
These voluntary waivers may be discontinued at any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
1 YEAR*
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
|
|
|
* |
|
Without waivers and reimbursements, Year 1 costs would be $xxx. |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
LIFE VISION TARGET DATE 2025 FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
High total return |
|
INVESTMENT FOCUS
|
|
Equity funds, fixed income funds, index funds, money market
funds and
exchange-traded
funds (ETFs)
(together,
Underlying Funds) |
|
SHARE PRICE VOLATILITY
|
|
Moderate |
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Investing pursuant to an asset allocation strategy in a
combination of
Underlying Funds |
|
INVESTOR PROFILE
|
|
Investors who expect to retire or require income around the
year 2025 |
(TELESCOPE ICON)
INVESTMENT STRATEGY
The Life Vision Target Date 2025 Fund invests in a mix of Underlying Funds representing various
asset classes and sectors using an asset allocation strategy designed for investors expecting to
retire or require income around the year 2025. Over time, the allocation to asset classes and
Underlying Funds will change. The asset allocation strategy will tend to emphasize higher
returning but more volatile strategies (such as stocks) when the target date is still years away,
and will increase the relative proportion of less volatile assets (such as bonds) as the target
date draws nearer. As a result, the asset mix of the Fund generally becomes more conservative over
time.When the target asset allocation of the Fund is similar to the asset allocation of the
RidgeWorth Life Vision Conservative Fund (within two years after the target date, i.e., 2027), it
is expected that the Fund will seek to be combined with the RidgeWorth Life Vision Conservative
Fund, and shareholders of the Fund would then become shareholders of the RidgeWorth Life Vision
Conservative Fund.
The table below shows how the Adviser currently expects to allocate the Fund among asset classes.
The table also shows the sectors within those asset classes to which the Fund will currently have
exposure and the Underlying Funds that will be used to represent those sectors. Based on
prevailing market conditions and expectations, the target allocations listed may vary from the
Funds actual allocations.
|
|
|
|
|
|
|
INVESTMENT RANGE |
|
|
(PERCENTAGE OF THE
|
ASSET CLASS |
|
2025 FUNDS ASSETS) |
|
UNDERLYING EQUITY FUNDS |
|
|
65-85 |
% |
U.S. Equities |
|
|
|
|
International Equities |
|
|
|
|
Emerging Market Equities
(All Capitalizations) |
|
|
|
|
|
UNDERLYING FIXED INCOME FUNDS |
|
|
15-35 |
% |
U.S. Investment Grade Bonds |
|
|
|
|
U.S. High Yield Bonds |
|
|
|
|
U.S. Floating Rate Securities
(including Bank Loans) |
|
|
|
|
International Bonds |
|
|
|
|
Emerging Market Bonds |
|
|
|
|
|
UNDERLYING MONEY MARKET FUNDS |
|
|
0-20 |
% |
|
The Funds investments in ETFs may include iShares. iShares(R) is a registered trademark of
Barclays Global Investors, N.A. (BGI). Neither BGI nor any iShares Fund makes any representations
regarding the advisability of investing in the Fund.
Due to its investment strategy, the Fund holds Underlying Funds that buy and sell securities
frequently, which may result in higher transaction costs, additional capital gains tax liabilities
for taxable investors and lower performance. In addition, to implement its strategy, the Fund may
buy or sell, to a limited extent, derivative instruments (such as futures, options and swaps) to
use as a substitute for a purchase or sale of a position in the underlying assets and/or as part of
a strategy designed to reduce exposure to other risks, such as market risk.
You can obtain information about the underlying RidgeWorth Funds in which the Fund invests by
calling 1-888-784-3863 or by visiting the RidgeWorth Funds website at www.ridgeworthfunds.com.
LIFE VISION TARGET DATE 2025 FUND
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
The value of an investment in the Fund is based primarily on the performance of the Underlying
Funds and the allocation of the Funds assets among them.
Since it purchases Underlying Funds that invest in equities, the Fund is subject to the risk that
stock prices will fall over short or extended periods of time. Historically, the equity market has
moved in cycles, and the value of such an Underlying Funds securities may fluctuate drastically
from day to day. Individual companies may report poor results or be negatively affected by industry
and/or economic trends and developments. The prices of securities issued by such companies may
suffer a decline in response. These factors contribute to price volatility, which is the principal
risk of investing in the Fund.
The prices of an Underlying Funds fixed income securities respond to economic developments,
particularly interest rate changes, as well as to perceptions about the creditworthiness of
individual issuers, including governments. Generally, an Underlying Funds fixed income securities
will decrease in value if interest rates rise and vice versa, and the volatility of lower-rated
securities is even greater than that of higher-rated securities. Also, longer-term securities
generally are more volatile, so the average maturity or duration of these securities affects risk.
The Fund is also subject to the risk that the Advisers asset allocation decisions will not
anticipate market trends successfully. For example, weighting common stocks too heavily during a
stock market decline may result in a failure to preserve capital. Conversely, investing too heavily
in fixed income securities during a period of stock market appreciation may result in lower total
return. The risks associated with investing in the Fund will vary depending upon how the assets are
allocated among the Underlying Funds.
Large cap stocks can perform differently from other segments of the equity market or the equity
market as a whole. Large capitalization companies may be less flexible in evolving markets or
unable to implement change as quickly as smaller capitalization companies. Accordingly, the value
of large cap stocks may not rise to the same extent as the value of small or mid-cap stocks under
certain market conditions or during certain periods.
Small and mid-cap stocks can perform differently from other segments of the equity market or the
equity market as a whole and can be more volatile than stocks of larger companies. A value
investing style may be out of favor in the marketplace for various periods of time. Value investing
involves purchasing securities that are undervalued in comparison to their prospects for growth or
to their peers or that have historically traded below their historical value. These securities are
subject to the risk that their potential values as perceived by the Adviser are never realized by
the market.
Foreign securities involve special risks such as currency fluctuations, economic or financial
instability, lack of timely or reliable financial information and unfavorable political or legal
developments. These risks are increased for investments in emerging markets.
Below investment grade securities (sometimes referred to as junk bonds) involve greater risk of
default or downgrade and are more volatile than investment grade securities. Below investment grade
securities may also be less liquid than higher quality securities.
The risks associated with floating rate loans are similar to the risks of below investment grade
securities. In addition, the value of the collateral securing the loan may decline, causing a loan
to be substantially unsecured. Difficulty in selling a floating rate loan may result in a loss.
Borrowers may pay back principal before the scheduled due date when interest rates decline, which
may require the Fund to replace a particular loan with a lower-yielding security. There may be less
extensive public information available with respect to loans than for rated, registered or exchange
listed securities. The Fund may assume the credit risk of the primary lender in addition to the
borrower, and investments in loan assignments may involve the risks of being a lender.
Mortgage-backed investments involve risk of loss due to prepayments and, like any bond, due to
default. Because of the sensitivity of mortgage-related securities to changes in interest rates,
the Funds performance may be more volatile than if it did not hold these securities.
U.S. government securities can exhibit price movements resulting from changes in interest rates.
Treasury inflation protected securities (TIPS) can also exhibit price movements as a result of
changing inflation expectations and seasonal inflation patterns. Certain U.S. government securities
are backed by the full faith and credit of the U.S. Government, while others are backed by the
ability of the issuing entity to borrow from the U.S. Treasury or by the issuing entitys own
resources.
Restricted securities may increase the level of illiquidity in the Fund during any period that
qualified institutional buyers become uninterested in purchasing these restricted securities. The
Adviser intends to invest only in restricted securities that it believes present minimal liquidity
risk.
The risks of owning shares of an ETF generally reflect the risks of owning the underlying
securities the ETF is designed to track, although lack of liquidity in an ETF
LIFE VISION TARGET DATE 2025 FUND
could result in being more volatile than the underlying portfolio of securities. In addition,
because of ETF expenses, compared to owning the underlying securities directly, it may be more
costly to own an ETF.
To the extent that the Underlying Funds include index funds, the Fund is subject to the risk that
the index fund may not be able to match the performance of its benchmark.
Because the Fund and the Underlying Funds may invest in derivatives, the Fund is exposed to
additional volatility and potential loss.
For further information about these and other risks, see More Information About Risk.
(TARGET ICON)
PERFORMANCE INFORMATION
The bar chart and performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
2006 |
|
|
13.96 |
% |
2007 |
|
|
|
|
|
BEST QUARTER |
|
|
WORST QUARTER |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08was x.xx%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2006, to those of a Hybrid 60/40 Blend of the S&P 500(R) Index and the Lehman Brothers U.S.
Aggregate Bond Index. These returns assume shareholders redeem all of their shares at the end of
the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SINCE |
|
I SHARES |
|
1 YEAR |
|
|
INCEPTION* |
|
Fund Returns Before Taxes |
|
|
|
|
|
|
|
|
Fund Returns After Taxes on
Distributions |
|
|
|
|
|
|
|
|
Fund Returns After Taxes on
Distributions and Sale of Fund
Shares |
|
|
|
|
|
|
|
|
Hybrid 60/40 Blend of the
Following Market Benchmarks
(reflects no deduction for fees,
expenses or taxes) |
|
|
|
|
|
|
|
|
S&P 500(R) Index (reflects no
deduction for fees, expenses or
taxes) |
|
|
|
|
|
|
|
|
Lehman Brothers U.S. Aggregate
Bond Index (reflects no deduction
for fees, expenses or taxes) |
|
|
|
|
|
|
|
|
|
|
|
* |
|
Since inception of the I Shares on October 21, 2005. Benchmark returns since September 30, 2005
(benchmark returns available only on a month end basis). |
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The S&P 500(R) Index is a widely-recognized, market value-weighted
(higher market value stocks have more influence than lower market value stocks) index of 500 stocks
designed to mimic the overall U.S. equity markets industry weightings. The Lehman Brothers U.S.
Aggregate Index is a widely-recognized index of securities that are SEC-registered, taxable, and
dollar denominated. The Index covers the U.S. investment grade fixed rate bond market, with index
components for government and corporate securities, mortgage pass-through securities, and
asset-backed securities.
LIFE VISION TARGET DATE 2025 FUND
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
0.10 |
% |
Other Expenses |
|
|
|
|
Acquired (Underlying) Fund Fees and Expenses(1) |
|
|
|
|
|
Total Annual Operating Expenses |
|
|
|
|
Fee Waivers and Expense Reimbursements(2) |
|
|
|
|
|
Net Annual Operating Expenses |
|
|
|
|
|
|
|
(1) |
|
In addition to the Funds direct expenses, the Fund indirectly bears a pro-rata share of the
expenses of the underlying Funds in which it invests. These Underlying Fund Fees and Expenses are
not included in the Financial Highlights section of this Prospectus, which reflects only the Net
Annual Operating Expenses (excluding Underlying Fund Fees and Expenses) of each Fund. |
|
(2) |
|
The Adviser has contractually agreed to waive fees and reimburse expenses until at least August
1, 2009 in order to keep Net Annual Operating Expenses (excluding taxes, brokerage commissions,
extraordinary expenses and estimated Underlying Fund Fees and Expenses) from exceeding x.xx%. If at
any point before August 1, 2011, Net Annual Operating Expenses (excluding taxes, brokerage
commissions, extraordinary expenses and estimated Underlying Fund Fees and Expenses) are less than
the applicable expense cap, the Adviser may retain the difference to recapture any of the prior
waivers and reimbursements. In addition, the Adviser and/or other service providers may voluntarily
waive a portion of their fees in order to limit Net Annual Operating Expenses (excluding taxes,
brokerage commissions, extraordinary expenses and estimated Underlying Fund Fees and Expenses).
These voluntary waivers may be discontinued at any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
1 YEAR*
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
|
|
|
* |
|
Without waivers and reimbursements, Year 1 costs would be $xxx. |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
LIFE VISION TARGET DATE 2035 FUND
PROSPECTUS 69
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
High total return |
|
INVESTMENT FOCUS
|
|
Equity funds, fixed income funds, index funds, money market
funds and
exchange-traded
funds (ETFs)
(together,
Underlying Funds) |
|
SHARE PRICE VOLATILITY
|
|
Moderate |
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Investing pursuant to an asset allocation strategy in a
combination of
Underlying Funds |
|
INVESTOR PROFILE
|
|
Investors who expect to retire or require income around the
year 2035 |
(TELESCOPE ICON)
INVESTMENT STRATEGY
The Life Vision Target Date 2035 Fund invests in a mix of Underlying Funds representing various
asset classes and sectors using an asset allocation strategy designed for investors expecting to
retire or require income around the year 2035. Over time, the allocation to asset classes and
Underlying Funds will change. The asset allocation strategy will tend to emphasize higher
returning but more volatile strategies (such as stocks) when the target date is still years away,
and will increase the relative proportion of less volatile assets (such as bonds) as the target
date draws nearer. As a result, the asset mix of the Fund generally becomes more conservative over
time.When the target asset allocation of the Fund is similar to the asset allocation of the
RidgeWorth Life Vision Conservative Fund (within two years after the target date, i.e., 2037), it
is expected that the Fund will seek to be combined with the RidgeWorth Life Vision Conservative
Fund, and shareholders of the Fund would then become shareholders of the RidgeWorth Life Vision
Conservative Fund.
The table below shows how the Adviser currently expects to allocate the Fund among asset classes.
The table also shows the sectors within those asset classes to which the Fund will currently have
exposure and the Underlying Funds that will be used to represent those sectors. Based on
prevailing market conditions and expectations, the target allocations listed may vary from the
Funds actual allocations.
|
|
|
|
|
|
|
INVESTMENT RANGE |
|
|
(PERCENTAGE OF THE |
ASSET CLASS |
|
2035 FUNDS ASSETS) |
|
UNDERLYING EQUITY FUNDS |
|
|
75-95 |
% |
Domestic Equities |
|
|
|
|
International Equities |
|
|
|
|
Emerging Market Equities (All
Capitalizations) |
|
|
|
|
|
UNDERLYING FIXED INCOME FUNDS |
|
|
5-25 |
% |
U.S. Investment Grade Bonds |
|
|
|
|
U.S. High Yield Bonds |
|
|
|
|
U.S. Floating Rate Securities
(including Bank Loans) |
|
|
|
|
International Bonds |
|
|
|
|
Emerging Market Bonds |
|
|
|
|
|
UNDERLYING MONEY MARKET FUNDS |
|
|
0-20 |
% |
|
The Funds investments in ETFs may include iShares. iShares(R) is a registered trademark of
Barclays Global Investors, N.A. (BGI). Neither BGI nor any iShares Fund makes any representations
regarding the advisability of investing in the Fund.
Due to its investment strategy, the Fund holds Underlying Funds that buy and sell securities
frequently, which may result in higher transaction costs, additional capital gains tax liabilities
for taxable investors and lower performance. In addition, to implement its strategy, the Fund may
buy or sell, to a limited extent, derivative instruments (such as futures, options and swaps) to
use as a substitute for a purchase or sale of a position in the underlying assets and/or as part of
a strategy designed to reduce exposure to other risks, such as market risk.
You can obtain information about the underlying RidgeWorth Funds in which the Fund invests by
calling 1-888-784-3863 or from the RidgeWorth Funds website at www.ridgeworthfunds.com.
LIFE VISION TARGET DATE 2035 FUND
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
The risks of the Fund will directly correspond to the risks of the Underlying Funds in which it
invests. These risks will vary depending upon how the assets are allocated among the Underlying
Funds.
The value of an investment in the Fund is based primarily on the performance of the Underlying
Funds and the allocation of the Funds assets among them.
Since it purchases Underlying Funds that invest in equities, the Fund is subject to the risk that
stock prices will fall over short or extended periods of time. Historically, the equity market has
moved in cycles, and the value of such an Underlying Funds securities may fluctuate drastically
from day to day. Individual companies may report poor results or be negatively affected by industry
and/or economic trends and developments. The prices of securities issued by such companies may
suffer a decline in response. These factors contribute to price volatility, which is the principal
risk of investing in the Fund.
The prices of an Underlying Funds fixed income securities respond to economic developments,
particularly interest rate changes, as well as to perceptions about the creditworthiness of
individual issuers, including governments. Generally, an Underlying Funds fixed income securities
will decrease in value if interest rates rise and vice versa, and the volatility of lower-rated
securities is even greater than that of higher-rated securities. Also, longer-term securities
generally are more volatile, so the average maturity or duration of these securities affects risk.
The Fund is also subject to the risk that the Advisers asset allocation decisions will not
anticipate market trends successfully. For example, weighting common stocks too heavily during a
stock market decline may result in a failure to preserve capital. Conversely, investing too heavily
in fixed income securities during a period of stock market appreciation may result in lower total
return. The risks associated with investing in the Fund will vary depending upon how the assets are
allocated among the Underlying Funds.
Large cap stocks can perform differently from other segments of the equity market or the equity
market as a whole. Large capitalization companies may be less flexible in evolving markets or
unable to implement change as quickly as smaller capitalization companies. Accordingly, the value
of large cap stocks may not rise to the same extent as the value of small or mid-cap stocks under
certain market conditions or during certain periods.
Small and mid-cap stocks can perform differently from other segments of the equity market or the
equity market as a whole and can be more volatile than stocks of larger companies.
A value investing style may be out of favor in the marketplace for various periods of time. Value
investing involves purchasing securities that are undervalued in comparison to their prospects for
growth or to their peers or that have historically traded below their historical value. These
securities are subject to the risk that their potential values as perceived by the Adviser are
never realized by the market.
Foreign securities involve special risks such as currency fluctuations, economic or financial
instability, lack of timely or reliable financial information and unfavorable political or legal
developments. These risks are increased for investments in emerging markets.
Below investment grade securities (sometimes referred to as junk bonds) involve greater risk of
default or downgrade and are more volatile than investment grade securities. Below investment grade
securities may also be less liquid than higher quality securities.
The risks associated with floating rate loans are similar to the risks of below investment grade
securities. In addition, the value of the collateral securing the loan may decline, causing a loan
to be substantially unsecured. Difficulty in selling a floating rate loan may result in a loss.
Borrowers may pay back principal before the scheduled due date when interest rates decline, which
may require the Fund to replace a particular loan with a lower-yielding security. There may be less
extensive public information available with respect to loans than for rated, registered or exchange
listed securities. The Fund may assume the credit risk of the primary lender in addition to the
borrower, and investments in loan assignments may involve the risks of being a lender.
Mortgage-backed investments involve risk of loss due to prepayments and, like any bond, due to
default. Because of the sensitivity of mortgage-related securities to changes in interest rates,
the Funds performance may be more volatile than if it did not hold these securities.
U.S. government securities can exhibit price movements resulting from changes in interest rates.
Treasury inflation protected securities (TIPS) can also exhibit price movements as a result of
changing inflation expectations and seasonal inflation patterns. Certain U.S. government securities
are backed by the full faith and credit of the U.S. Government, while others are backed by the
ability of the issuing entity to borrow from the U.S. Treasury or by the issuing entitys own
resources.
Restricted securities may increase the level of illiquidity in the Fund during any period that
qualified institutional buyers become uninterested in purchasing these restricted securities. The
Adviser intends to invest
LIFE VISION TARGET DATE 2035 FUND
only in restricted securities that it believes present minimal liquidity risk.
The risks of owning shares of an ETF generally reflect the risks of owning the underlying
securities the ETF is designed to track, although lack of liquidity in an ETF could result in being
more volatile than the underlying portfolio of securities. In addition, because of ETF expenses,
compared to owning the underlying securities directly, it may be more costly to own an ETF.
To the extent that the Underlying Funds include index funds, the Fund is subject to the risk that
the index fund may not be able to match the performance of its benchmark.
Because the Fund and the Underlying Funds may invest in derivatives, the Fund is exposed to
additional volatility and potential loss.
For further information about these and other risks, see More Information About Risk.
(TARGET ICON)
PERFORMANCE INFORMATION
The bar chart and performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows performance for the Funds I Shares from last year.*
(BAR CHART)
|
|
|
|
|
2006 |
|
|
14.24 |
% |
2007 |
|
|
|
|
|
BEST QUARTER |
|
|
WORST QUARTER |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was x.xx%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of a Hybrid 60/40 Blend of the S&P 500 (R) Index and the Lehman Brothers U.S.
Aggregate Bond Index. These returns assume shareholders redeem all of their shares at the end of
the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
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SINCE |
|
I SHARES |
|
1 YEAR |
|
|
INCEPTION* |
|
Fund Returns |
|
|
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Before Taxes |
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|
Fund Returns After Taxes
on Distributions |
|
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|
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|
Fund Returns After Taxes
on Distributions and Sale
of Fund Shares |
|
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|
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Hybrid 60/40 Blend of the
Following Market Benchmarks (reflects no
deduction for fees,
expenses or taxes) |
|
|
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|
S&P 500(R) Index
(reflects no deduction
for fees, expenses or
taxes) |
|
|
|
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|
|
Lehman Brothers U.S. Aggregate Bond Index
(reflects no deduction
for fees, expenses or
taxes) |
|
|
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|
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|
|
|
|
|
* |
|
Since inception of the I Shares on November 2, 2005. Benchmark returns since October 31, 2005
(benchmark returns available only on a month end basis). |
LIFE VISION TARGET DATE 2035 FUND
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The S&P 500 (R) Index is a widely-recognized, market value-weighted
(higher market value stocks have more influence than lower market value stocks) index of 500 stocks
designed to mimic the overall U.S. equity markets industry weightings. The Lehman Brothers U.S.
Aggregate Index is a widely-recognized index of securities that are SEC-registered, taxable, and
dollar denominated. The Index covers the U.S. investment grade fixed rate bond market, with index
components for government and corporate securities, mortgage pass-through securities, and
asset-backed securities.
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
0.10 |
% |
Other Expenses |
|
|
|
|
Acquired (Underlying) Fund Fees and Expenses(1) |
|
|
|
|
|
Total Annual Operating Expenses |
|
|
|
|
Fee Waivers and Expense Reimbursements(2) |
|
|
|
|
|
Net Annual Operating Expenses |
|
|
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|
|
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|
(1) |
|
In addition to the Funds direct expenses, the Fund indirectly bears a pro-rata share of the
expenses of the underlying Funds in which it invests. These Underlying Fund Fees and Expenses are
not included in the Financial Highlights section of this Prospectus, which reflects only the Net
Annual Operating Expenses (excluding Underlying Fund Fees and Expenses) of each Fund. |
|
(2) |
|
The Adviser has contractually agreed to waive fees and reimburse expenses until at least August
1, 2009 in order to keep Net Annual Operating Expenses (excluding taxes, brokerage |
|
|
|
|
|
commissions, extraordinary expenses and estimated Underlying Fund Fees and Expenses) from exceeding
x.xx%. If at any point before August 1, 2011, Net Annual Operating Expenses (excluding taxes,
brokerage commissions, extraordinary expenses and estimated Underlying Fund Fees and Expenses) are
less than the applicable expense cap, the Adviser may retain the difference to recapture any of the
prior waivers and reimbursements. In addition, the Adviser and/or other service providers may
voluntarily waive a portion of their fees in order to limit Net Annual Operating Expenses
(excluding taxes, brokerage commissions, extraordinary expenses and estimated Underlying Fund Fees
and Expenses). These voluntary waivers may be discontinued at any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
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|
1 YEAR*
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
|
|
|
* |
|
Without waivers and reimbursements, Year 1 costs would be $xxx. |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
(LIFE PRESERVER ICON)
MORE INFORMATION
ABOUT RISK
BELOW INVESTMENT GRADE RISK
Life Vision Conservative Fund
Life Vision Growth and Income Fund
Life Vision Moderate Growth Fund
Life Vision Target Date 2015 Fund
Life Vision Target Date 2025 Fund
Life Vision Target Date 2035 Fund
High yield securities, which are also known as junk bonds, involve greater risks of default or
downgrade and are more volatile than investment grade securities. High yield securities involve
greater risk of default or price declines than investment grade securities due to actual or
perceived changes in an issuers credit-worthiness. In addition, issuers of high yield securities
may be more susceptible than other issuers to economic downturns. High yield securities are subject
to the risk that the issuer may not be able to pay interest or dividends and ultimately to repay
principal upon maturity. Discontinuation of these payments could substantially adversely affect the
market value of the security. High yield securities may be less liquid than higher quality
investments. A security whose credit rating has been lowered may be particularly difficult to sell.
DERIVATIVES RISK
All Funds
Derivatives may involve risks different from, and possibly greater than, those of traditional
investments. A derivative is a financial contract whose value depends on changes in the value of
one or more underlying assets, reference rates or indices. A Fund may use derivatives (such as
futures, options, and swaps) to attempt to achieve its investment objective and offset certain
investment risks, while at the same time attempting to maintain liquidity. These positions may be
established for hedging or speculation purposes. Hedging involves making an investment (e.g.,in a
futures contract) to reduce the risk of adverse price movements in an already existing investment
position.
Risks associated with the use of derivatives include those associated with hedging and leveraging
activities:
- The success of a hedging strategy may depend on an ability to predict movements in the prices of
individual securities, fluctuations in markets, and movements in interest rates.
- A Fund experiencing losses over certain ranges in the market that exceed losses experienced by a
fund that does not use derivatives.
- There may be an imperfect or no correlation between the changes in market value of the securities
held by a Fund and the prices of derivatives.
- There may not be a liquid secondary market for derivatives.
- Trading restrictions or limitations may be imposed by an exchange.
- Government regulations may restrict trading in derivatives.
- The other party to an agreement (e.g., options or swaps) may default; however, in certain
circumstances, such counter-party risk may be reduced by having an organization with very good
credit act as intermediary.
Because premiums or totals paid or received on derivatives are small in relation to the market
value of the underlying investments, buying and selling derivatives can be more speculative than
investing directly in securities. In addition, many types of derivatives have limited investment
lives and may expire or necessitate being sold at inopportune times.
The use of derivatives may cause a Fund to recognize higher amounts of short-term capital gains,
which are generally taxed to shareholders at ordinary income tax rates.
Credit default swaps can increase a Funds exposure to credit risk and could result in losses if
the Subadviser does not correctly evaluate the creditworthiness of the entity on which the credit
default swap is based. Total return swaps could result in losses if their reference index, security
or investments do not perform as anticipated.
To limit leveraging risk, a Fund observes asset segregation requirements to cover its obligations
under derivative instruments. By setting aside assets equal only to its net obligations under
certain derivative instruments, a Fund will have the ability to employ leverage to a greater extent
than if it were required to segregate assets equal to the full notional value of such derivative
instruments.
EMERGING MARKETS RISK
International Equity Fund
International Equity Index Fund
Life Vision Aggressive Growth Fund
Life Vision Conservative Fund
Life Vision Growth and Income Fund
Life Vision Moderate Growth Fund
Life Vision Target Date 2015 Fund
Life Vision Target Date 2025 Fund
Life Vision Target Date 2035 Fund
Emerging market countries are countries that the World Bank or the United Nations considers to be
emerging or developing. Most countries or regions are included in this category, except for
Australia, Canada, Hong Kong, Japan, New Zealand, Singapore, the United Kingdom, the United States
and most of the countries located in Western Europe. Emerging markets may be more likely to
experience political turmoil or rapid changes in market or economic conditions than more developed
countries. In addition, the financial stability of issuers (including governments) in emerging
market countries may be more precarious than in other countries. As a result, there will tend to be
an increased risk of price volatility associated with a Funds investments in emerging market
countries, which may be magnified by currency fluctuations relative to the U.S. dollar. Governments
of some emerging market countries have defaulted on their bonds and may do so in the future.
EQUITY RISK
All Funds
Equity securities include public and privately issued equity securities, common and preferred
stocks, warrants, rights to subscribe to common stock and convertible securities, as well as
instruments that attempt to track the price movement of equity indices. Investments in equity
securities and equity derivatives in general are subject to market risks that may cause their
prices to fluctuate over time. The value of securities convertible into equity securities, such as
warrants or convertible debt, is also affected by prevailing interest rates, the credit quality of
the issuer and any call provision. Fluctuations in the value of equity securities in which a mutual
fund invests will cause a funds net asset value to fluctuate. An investment in a portfolio of
equity securities may be more suitable for long-term investors who can bear the risk of these share
price fluctuations.
EXCHANGE TRADED FUND RISK
All Funds
The Funds may purchase shares of exchange-traded funds (ETFs) to gain exposure to a particular
portion of the market. ETFs are investment companies that are bought and sold on a securities
exchange. An ETF holds a portfolio of securities designed to track a particular market segment or
index. ETFs, like mutual funds, have expenses associated with their operation, including advisory
fees. When the Fund invests in an ETF, in addition to directly bearing expenses associated with its
own operations, it will bear a pro rata portion of the ETFs expense. The risks of owning shares of
an ETF generally reflect the risks of owning the underlying securities the ETF is designed to
track, although lack of liquidity in an ETF could result in being more volatile than the underlying
portfolio of securities. In addition, because of ETF expenses, compared to owning the underlying
securities directly, it may be more costly to own an ETF.
FIXED INCOME RISK
Life Vision Conservative Fund
Life Vision Growth and Income Fund
Life Vision Moderate Growth Fund
Life Vision Target Date 2015 Fund
Life Vision Target Date 2025 Fund
Life Vision Target Date 2035 Fund
The prices of a Funds fixed income securities respond to economic developments, particularly
interest rate changes, as well as to perceptions about the creditworthiness of individual issuers,
including governments. Generally, a Funds fixed income securities will decrease in value if
interest rates rise and vice versa.
Long-term debt securities generally are more sensitive to changes in interest rates, usually making
them more volatile than short-term debt securities and thereby increasing risk.
Debt securities are also subject to credit risk, which is the possibility than an issuer will fail
to make timely payments of interest or principal, or go bankrupt. The lower the ratings of such
debt securities, the greater their risks. In addition, lower rated securities have higher risk
characteristics, and changes in economic conditions are likely to cause issuers of these securities
to be unable to meet their obligations.
Debt securities are also subject to income risk, which is the possibility that falling interest
rates will cause a Funds income to decline. Income risk is generally higher for short-term bonds.
An additional risk of debt securities is reinvestment risk, which is the possibility that a Fund
may not be able to reinvest interest or dividends earned from an investment in such a way that they
earn the same rate of return as the invested funds that generated them. For example, falling
interest rates may prevent bond coupon payments from earning the same rate of return as the
original bond. Furthermore, pre-funded loans and issues may cause a Fund to reinvest those assets
at a rate lower than originally anticipated.
FLOATING RATE LOAN RISK
Life Vision Conservative Fund
Life Vision Growth and Income Fund
Life Vision Moderate Growth Fund
Life Vision Target Date 2015 Fund
Life Vision Target Date 2025 Fund
Life Vision Target Date 2035 Fund
As fixed income securities, investments in floating rate loans are subject to interest rate risk,
but that risk is less because the interest rate of the loan adjusts periodically. As debt
securities, investments in floating rate loans are subject to credit risk. Many floating rate loans
are in unrated or lower credit rated securities. When a security is unrated, a Fund must rely more
heavily on the analytical ability of the Subadviser. Many floating rate loan investments share the
same risks as high yield securities, although these risks are reduced when the floating rate loans
are senior and secured as opposed to many high yield securities that are junior and unsecured.
Floating rate securities are often subject to restrictions on resale which can result in reduced
liquidity. A floating rate loan also may not be fully collateralized, although one lending
institution will often be required to monitor collateral. Borrowers may repay principal faster than
the scheduled due date which may result in a Fund replacing that loan with a lower-yielding
security. Investment in loan participation interests may result in increased exposure to financial
services sector risk.
A loan may not be fully collateralized which may cause the loan to decline significantly in value,
although one lending institution acting as agent for all of the lenders will generally be required
to administer and manage the loan and, with respect to collateralized loans, to service or monitor
the collateral.
Certain portfolio managers and other personnel of the Subadviser may also manage similar investment
portfolios of floating rate loans for another non-investment Subadviser contracted affiliated
business, Seix Structured Products, LLC (SSP). SSP is a subsidiary of SunTrust Bank and an
affiliate of the Adviser and Subadviser, but not a client of the Adviser or Subadviser. In that
role, this group purchases bank loans on behalf of SSP, for purposes of subsequent collateralized
loan obligation (CLO) transactions where the Adviser, Subadviser and their affiliate, SunTrust
Capital Markets, Inc., will serve as collateral manager and as structuring agent/placement agent,
respectively. The trustee and custodian of the CLO transactions are not affiliated entities of the
Adviser, Subadviser or SunTrust Capital Markets. In addition, the Adviser serves as adviser to an
account established with its affiliate, SunTrust Equity Funding, LLC for the purpose of purchasing
high yield securities for subsequent sale to these same CLO transactions. Each of these
transactions is subject to the approval of the independent trustee of the CLO transaction. In
addition to disclosure to the trustee, all such transactions are fully disclosed to potential
investors in the CLOs offering and disclosure documents.
As a result of these multiple investment-oriented and associated relationships, there exists a
potential risk that the portfolio managers may favor other adviser and non-adviser contracted
businesses over the Fund. The Subadviser has created and implemented additional policies and
procedures designed to protect shareholders against such conflicts; however, there can be no
absolute guarantee that a Fund will always participate in the same or similar investments or
receive equal or better individual investment allocations at any given time.
FOREIGN SECURITY RISK
All Funds
Investments in securities of foreign companies or governments can be more volatile than investments
in U.S. companies or governments. Political and economic events unique to a country or region will
affect those markets and their issuers. These events will not necessarily affect the U.S. economy
or similar issuers located in the United States. Diplomatic, political, or economic developments,
including nationalization or appropriation, could affect investments in
foreign countries. Foreign securities markets generally have less trading volume and less liquidity
than U.S. markets.
The value of securities denominated in foreign currencies, and of dividends from such securities,
can change significantly when foreign currencies strengthen or weaken relative to the U.S. dollar.
As a result, changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Funds investment. Certain foreign currencies may be
particularly volatile, and foreign governments may intervene in the currency markets, causing a
decline in value or liquidity in a Funds foreign currency holdings. These currency movements may
happen separately from and in response to events that do not otherwise affect the value of the
security in the issuers home country.
Foreign companies or governments generally are not subject to uniform accounting, auditing, and
financial reporting standards comparable to those applicable to domestic U.S. companies or
governments. Transaction costs are generally higher than those in the U.S. and expenses for
custodial arrangements of foreign securities may be somewhat greater than typical expenses for
custodial arrangements of similar U.S. securities. Some foreign governments levy withholding taxes
against dividend and interest income. Although in some countries a portion of these taxes are
recoverable, the non-recovered portion will reduce the income received from the securities
comprising the portfolio.
LARGE COMPANY RISK
Aggressive Growth Stock Fund
International Equity Fund
International Equity Index Fund
Large Cap Core Equity Fund
Large Cap Growth Stock Fund
Large Cap Quantitative Equity Fund
Large Cap Value Equity Fund
Life Vision Aggressive Growth Fund
Life Vision Conservative Fund
Life Vision Growth and Income Fund
Life Vision Moderate Growth Fund
Life Vision Target Date 2015 Fund
Life Vision Target Date 2025 Fund
Life Vision Target Date 2035 Fund
Mid-Cap Core Equity Fund
Mid-Cap Value Equity Fund
Select Large Cap Growth Stock Fund
Large cap stocks can perform differently from other segments of the equity market or the equity
market as a whole. Companies with large capitalization tend to go in and out of favor based on
market and economic conditions and, while they can be less volatile than companies with smaller
market capitalizations, they may also be less flexible in evolving markets or unable to implement
change as quickly as their smaller counterparts. Accordingly, the value of large cap stocks may not
rise to the same extent as the value of small or mid-cap companies under certain market conditions
or during certain periods.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES RISK
Life Vision Conservative Fund
Life Vision Growth and Income Fund
Life Vision Moderate Growth Fund
Life Vision Target Date 2015 Fund
Life Vision Target Date 2025 Fund
Life Vision Target Date 2035 Fund
Mortgage-backed and asset-backed securities are fixed income securities representing an interest in
a pool of underlying mortgages or other cash-flow producing assets such as automobile loans, credit
card receivables and other financial assets. These securities are sensitive to changes in interest
rates, but may respond to these changes differently from other fixed income securities due to the
likelihood that a change in the general level of interest rates will impact the magnitude and
timing of any prepayments of the underlying mortgage loans. As a result, it may not be possible to
accurately determine in advance the actual maturity date or average life of these securities. The
uncertainty inherent in assessing prepayment risk makes it difficult to calculate the average
maturity of a portfolio including these securities, and therefore, to assess the volatility risk of
a Fund.
SECURITIES LENDING RISK
All Funds
A Fund may lend securities to broker-dealers to earn additional income. Risks include the potential
insolvency of the borrower that could result in delays in recovering securities and capital losses.
Additionally, losses could result from the reinvestment of collateral received on loaned securities
in investments that default or do not perform well. It is also possible that if a security on loan
is sold and a Fund is unable to timely recall the security, the Fund may be required to repurchase
the security in the market place, which may result in a potential loss to shareholders. As
securities on loan may not be voted by the Fund, there is a risk that the Fund may not be able to
recall the securities in sufficient time to vote on material proxy matters.
SMALLER COMPANY RISK
All Funds
Small and mid-capitalization stocks can perform differently from other segments of the equity
market or the equity market as a whole. The small and mid- capitalization companies the Fund
invests in may be more vulnerable to adverse business or economic events than larger, more
established companies. In particular, these companies may have limited product lines, markets and
financial resources, and may depend upon a relatively small management group. Also, there may be
less publicly available information about the issuers of the securities or less market interest in
such securities than in the case of larger companies. Therefore, small and mid-cap stocks can be
more volatile than those of larger companies. The securities of small and mid-capitalization
companies may be illiquid, restricted as to resale, or may trade less frequently and in smaller
volume than more widely held securities, which may make it more difficult for a Fund to establish
or close out a position in these securities at prevailing market prices. These securities may be
traded over-the-counter or listed on an exchange.
TRACKING ERROR RISK
International Equity Index Fund
Life Vision Aggressive Growth Fund
Life Vision Conservative Fund
Life Vision Growth and Income Fund
Life Vision Moderate Growth Fund
Life Vision Target Date 2015 Fund
Life Vision Target Date 2025 Fund
Life Vision Target Date 2035 Fund
Factors such as Fund expenses, imperfect correlation between the Funds investments and those of
its benchmarks, rounding of share prices, changes to the benchmark, regulatory policies, and
leverage, may affect their ability to achieve perfect correlation. The magnitude of any tracking
error may be affected by a higher portfolio turnover rate. Because an index is just a composite of
the prices of the securities it represents rather than an actual portfolio of those securities, an
index will have no expenses. As a result, the Fund, which will have expenses such as taxes,
custody, management fees and other operational costs, and brokerage, may not achieve its investment
objective of accurately correlating to an index.
(MOUNTAIN ICON)
MORE INFORMATION ABOUT FUND INVESTMENTS
This prospectus describes the Funds primary strategies, and the Funds will normally invest in the
types of securities described in this prospectus. However, in addition to the investments and
strategies described in this prospectus, each Fund also may invest in other securities, use other
strategies and engage in other investment practices. These investments and strategies, as well as
those described in this prospectus, are described in detail in the Statement of Additional
Information.
The investments and strategies described in this prospectus are those that the Funds use under
normal conditions. During unusual economic or market conditions, or for temporary defensive or
liquidity purposes, each Fund may invest up to 100% of its assets in cash, money market
instruments, repurchase agreements and short-term obligations. The Small Cap Value Equity Fund also
may invest in investment grade fixed income securities and mid- to large-cap common stocks that
would not ordinarily be consistent with the Funds objective. A Fund will do so only if the
Subadviser believes that the risk of loss outweighs the opportunity for capital gains or higher
income. Of course, a Fund cannot guarantee that it will achieve its investment goal.
Each Fund may invest in other mutual funds for cash management purposes. When a Fund invests in
another mutual fund, in addition to directly bearing expenses associated with its own operations,
it will bear a pro rata portion of the other mutual funds expenses.
INFORMATION ABOUT PORTFOLIO HOLDINGS
A description of the Funds policies and procedures with respect to the circumstances under which
the Funds disclose their portfolio securities is available in the Statement of Additional
Information.
MANAGEMENT
The Board of Trustees is responsible for the overall supervision and management of the business and
affairs of RidgeWorth Funds. The Board of Trustees supervises the Adviser and Subadvisers and
establishes policies that the Adviser and Subadvisers must follow in their management activities.
The day-to-day operations of RidgeWorth Funds are the responsibilities of the officers and various
service organizations retained by RidgeWorth Funds.
INVESTMENT ADVISER
[LOGO] RidgeWorth Capital Management, Inc. (formerly, Trusco Capital Management, Inc.), 50 Hurt
Plaza, Suite 1400, Atlanta, Georgia 30303 (RidgeWorth or the Adviser), serves as the investment
adviser to the Funds. As of June 30, 2008, the Adviser had approximately $[73.3] billion in assets
under management. The Adviser is responsible for overseeing the Subadvisers to ensure compliance
with each Funds investment policies and guidelines and monitors each Subadvisers adherence to its
investment style. The Adviser also executes transactions with respect to specific securities
selected by the Subadvisers (excluding Zevenbergen Capital Investments LLC) for purchase and sale
by the Funds. The Adviser pays the Subadvisers out of the fees it receives from the Funds.
The Adviser is also responsible for making investment decisions for the Asset Allocation Funds and
continuously reviews, supervises and administers each Asset Allocation Funds respective investment
program.
The Adviser may use its affiliates as brokers for Fund transactions.
An investment adviser has a fiduciary obligation to its clients when the adviser has authority to
vote their proxies. Under the current contractual agreement, the Adviser is authorized to vote
proxies on behalf of each Fund. Information regarding the Advisers, and thus each Funds, Proxy
Voting Policies and Procedures is provided in the Statement of Additional Information. A copy of
the Advisers Proxy Voting Policies and Procedures may be obtained by contacting the RidgeWorth
Funds at 1-888-784-3863, or by visiting www.ridgeworthfunds.com.
For the fiscal year ended March 31, 2008, the Funds paid the Adviser advisory fees (after waivers)
based on the respective Funds average daily net assets of:
|
|
|
|
|
Aggressive Growth Stock Fund |
|
|
1.10 |
% |
Emerging Growth Stock Fund |
|
|
1.10 |
% |
International Equity Fund |
|
|
1.12 |
% |
International Equity Index Fund |
|
|
0.49 |
% |
Large Cap Core Equity Fund |
|
|
0.80 |
% |
Large Cap Growth Stock Fund |
|
|
0.93 |
% |
Large Cap Quantitative Equity Fund |
|
|
0.85 |
% |
Large Cap Value Equity Fund |
|
|
0.78 |
% |
Life Vision Aggressive Growth Fund |
|
|
0.10 |
%* |
Life Vision Conservative Fund |
|
|
0.00 |
%* |
Life Vision Growth and Income Fund |
|
|
0.10 |
%* |
Life Vision Moderate Growth Fund |
|
|
0.10 |
%* |
Life Vision Target Date 2015 Fund |
|
|
0.00 |
%* |
|
|
|
|
|
Life Vision Target Date 2025 Fund |
|
|
0.00 |
%* |
Life Vision Target Date 2035 Fund |
|
|
0.00 |
%* |
Mid-Cap Core Equity Fund |
|
|
1.00 |
% |
Mid-Cap Value Equity Fund |
|
|
1.00 |
% |
Select Large Cap Growth Stock Fund |
|
|
0.85 |
%* |
Small Cap Growth Stock Fund |
|
|
1.10 |
% |
Small Cap Value Equity Fund |
|
|
1.13 |
% |
|
|
|
* |
|
The Adviser has contractually agreed to waive fees and reimburse expenses of the Life Vision
Aggressive Growth Fund, the Life Vision Conservative Fund, the Life Vision Growth and
Income Fund, the Life Vision Moderate Growth Fund, the Life Vision Target Date 2015 Fund, the Life
Vision Target Date 2025 Fund, the Life Vision Target Date 2035 Fund and the Select Large Cap Growth
Stock Fund until at least August 1, 2009 in order to keep total operating expenses (excluding
taxes, brokerage commissions, extraordinary expenses and estimated underlying fund fees and
expenses ) from exceeding the expense cap. If at any point before August 1, 2011, such total annual
operating expenses are less than the expense cap, the Adviser may retain the difference to
recapture any of the prior waivers or reimbursements. |
The following breakpoints are used in computing the advisory fee:
|
|
|
|
|
AVERAGE DAILY NET ASSETS |
|
DISCOUNT FROM FULL FEE |
First $500 million |
|
None-Full Fee |
Next $500 million |
|
|
5 |
% |
Over $1 billion |
|
|
10 |
% |
Based on net assets as of March 31, 2008, the asset levels of the following Funds had reached a
breakpoint in the advisory fee.* Had the Funds asset levels been lower, the Adviser may have been
entitled to receive maximum advisory fees as follows:
|
|
|
|
|
International Equity Fund |
|
|
% |
|
International Equity Index Fund |
|
|
% |
|
Large Cap Core Equity Fund |
|
|
% |
|
Large Cap Growth Stock Fund |
|
|
% |
|
Large Cap Value Equity Fund |
|
|
% |
|
Small Cap Growth Stock Fund |
|
|
% |
|
Small Cap Value Equity Fund |
|
|
% |
|
|
|
|
* |
|
Fund expenses in the Annual Fund Operating Expenses tables shown earlier in this prospectus
reflect the advisory breakpoints. |
A discussion regarding the basis for the Board of Trustees approval of the investment advisory
contract with the Adviser appears in the Funds annual report to shareholders for the period ended
March 31, 2008.
Mr. Alan Gayle is primarily responsible for the day-to-day management of the Life Vision Aggressive
Growth Fund, the Life Vision Conservative Fund, the Life Vision Growth and Income Fund, the Life
Vision Moderate Fund, the Life Vision 2015 Target Date Fund, the Life Vision 2025 Target Date Fund
and the Life Vision 2035 Target Date Fund. Mr. Gayle has served as Managing Director of RidgeWorth
since July 2000 and Director of Asset Allocation since March 2006. He has served as lead manager of
the Funds since each Funds respective inception. He has more than 31 years of investment
experience.
INVESTMENT SUBADVISERS
The Subadvisers are responsible for managing the portfolios of the Funds on a day-to-day basis and
selecting the specific securities to buy, sell and hold for the Funds under the supervision of the
Adviser and the Board of Trustees. A discussion regarding the basis for the Board of Trustees
approval of the investment subadvisory agreements will appear in the Funds annual report to
shareholders for the period ending March 31, 2008 for each Subadviser except Zevenbergen
Capital Investments. The information regarding Zevenbergen Capital Investments appears in the
annual report to shareholders for the period ended March 31, 2008.
Information about the Subadvisers and the individual portfolio managers of the Funds is discussed
below. The Statement of Additional Information provides additional information regarding the
portfolio managers compensation, other accounts managed by the portfolio managers, potential
conflicts of interest and the portfolio managers ownership of securities in the Funds.
[LOGO] Ceredex Value Advisors LLC (Ceredex)
www.ceredexvalue.com
Ceredex, 300 South Orange Avenue, Suite 1600, Orlando, Florida 32801, serves as the Subadviser to
the Large Cap Value Equity Fund, the Mid-Cap Value Equity Fund and the Small Cap Value Equity Fund.
Ceredex was founded in 2007 and is a wholly-owned subsidiary of the RidgeWorth. As of June 30,
2008, Ceredex had approximately $[ ] in assets under management.
Ceredex is a value equity asset management firm adept at managing the art and the science of
identifying catalysts that may lead to appreciation in undervalued, dividend-paying stocks. Its
culture of craftsmanship coupled with a strict enforcement of specific investment guidelines, have
enabled it to construct value-oriented portfolios that help clients seek to achieve their goals.
Mr. Brett Barner, CFA, is primarily responsible for the day-to-day management of the Small Cap
Value Equity Fund. Mr. Barner has served as Managing Director of Trusco since July 2000. He has
managed the
Fund since its inception. He has more than 23 years of investment experience.
Mr. Mills Riddick, CFA, is primarily responsible for the day-to-day management of the Large Cap
Value Equity Fund. Mr. Riddick has served as Managing Director of Trusco since July 2000. He has
managed the Fund since April 1995. He has more than 26 years of investment experience.
Mr. Don Wordell, CFA, is primarily responsible for the day-to-day management of the Mid-Cap Value
Equity Fund has served as Director of Trusco since December 2005. He has managed the Fund since
December 2003, after co-managing the Fund since its inception. He has more than 12 years of
investment experience.
[LOGO] Certium Asset Management LLC (Certium)
www.certiumllc.com
Certium, 50 Hurt Plaza, Suite 1400, Atlanta, Georgia 30303, serves as the Subadviser to the
International Equity Fund, the International Equity Index Fund and the Large Cap Quantitative
Equity Fund. Certium was founded in 2007 and is a wholly-owned subsidiary of the RidgeWorth. As
of June 30, 2008, Certium had approximately $[ ] in assets under management.
Certium is an institutional investment management firm focused on passive, quantitative and active
strategies which provide clients with risk-controlled exposure to equity markets. The degree of
rigor, depth of analysis and level of understanding that result from Certiums multi-factor alpha
models provide its investment team with a high level of certainty in their investment process. This
consistent approach has allowed Certium to manage the downside risk while growing clients
investments over the years.
Mr. Chad Deakins, CFA, is primarily responsible for the day-to-day management of the International
Equity Index Fund, the International Equity Fund and the Large Cap Quantitative Equity Fund. He
has served as Managing Director of Trusco since May 2000. He has co-managed the International
Equity Index Fund since March 2005, after managing the Fund since 1999. He has managed the Large
Cap Quantitative Equity Fund since October 2007 and the International Equity Fund since May 2000.
He has more than 14 years of investment experience.
Mr. Matthew Welden, is primarily responsible for the day-to-day management of the
International Equity Index Fund. He has served as a Director of Trusco since July 2006
after having served as an Equity Trader from August 1999 to June 2006. He has co-managed
the International Equity Index Fund since April 2008. He has more than 9 years of
investment experience.
[LOGO] IronOak Advisors LLC (IronOak)
www.ironoakadvisors.com
IronOak, 919 East Main Street, 15th Floor, Richmond Virginia 23219, serves as the
Subadviser to the Large Cap Core Equity Fund and the Mid-Cap Core Equity Fund. IronOak was founded
in 2007 and is a wholly-owned subsidiary of the RidgeWorth. As of June 30, 2008, IronOak had
approximately $[ ] in assets under management.
IronOak specializes in core-equity strategies for institutional investors. Its portfolio managers
purchase stocks considered to be on sale under prevailing market conditions, regardless of
whether they are growth or value, and build core portfolios that are positioned to benefit from
opportunities they believe are overlooked. A culture of consistency and continuity supported by a
team-based approach, a time-tested philosophy and a proven process are what has allowed IronOak to
deliver consistent, competitive results for clients.
Mr. Charles B. Arrington, CFA, is primarily responsible for the day-to-day management of the
Mid-Cap Core Equity Fund. Mr. Arrington has served as Director of Trusco since January 2006, after
serving as Vice President since 1997. He has managed the Fund since August 2008 after having
co-managed the Fund since January 2007. He has more than 25 years of investment experience.
Mr. Jeffrey E. Markunas, CFA, is primarily responsible for the day-to-day management of the Large
Cap Core Equity Fund. Mr. Markunas has served as Managing Director of Trusco since July 2000. He
has managed the Fund since its inception. He has more than 24 years of investment experience.
[LOGO] Silvant Capital Management LLC (Silvant)
www.silvantcapital.com
Silvant, 50 Hurt Plaza, Suite 1400, Atlanta, Georgia 30303, serves as the Subadviser to the Large
Cap Growth Stock Fund, the Select Large Cap Growth Stock Fund and the Small Cap Growth Stock Fund.
Silvant was founded in 2007 and is a wholly-owned subsidiary of the RidgeWorth. As of June 30,
2008, Silvant had approximately $[ ] in assets under management.
Silvant focuses on managing growth equity products for a diverse range of institutional clients.
Its philosophy is that consistent outperformance can be delivered by an investment process which is
grounded in fundamental analysis and includes sophisticated risk management and stock selection
techniques. Silvants investment team seeks to generate performance (alpha) through bottom-up stock
selection, minimizing the potential impact of unintended style bias, sector bets, or macroeconomic
risks relative to the primary benchmark.
Mr. Christopher Guinther is primarily responsible for the day-to-day management of the Large Cap
Growth Stock Fund, the Small Cap Growth Fund and the Select Large Cap Growth Stock Fund. Mr.
Guinther has served as Managing Director of Trusco since February 2007. He has co-managed the Large
Cap Growth Stock Fund and the Select Large Cap Growth Stock Fund since March 2007 and the Small Cap
Growth Stock Fund since February 2007. Prior to joining Trusco, Mr. Guinther served as
Institutional Small Cap Growth Portfolio Manager of Northern Trust Bank from September 2005 to
January 2007, Small Cap Growth Portfolio Manager of Principal Financial Group from September 2003
to August 2005, and as One Groups Small Cap Growth Co-Mutual Fund Manager of Banc One Investment
Advisers from January 1996 to March 2003. He has more than 17 years of investment experience.
Mr. Joe Ransom, CFA, is primarily responsible for the day-to-day management of the Select Large Cap
Growth Stock Fund. Mr. Ransom has served as Managing Director of Trusco since June 2000. He has
co-managed the Fund since March 2007 after managing the Fund since January 2007. He has more than
35 years of investment experience.
Mr. Michael A. Sansoterra is primarily responsible for the day-to-day management of the Large Cap
Growth Stock Fund, the Select Large Cap Growth Stock Fund and the Small Cap Growth Stock Fund. Mr.
Sansoterra has served as Director of Trusco since March 2007. He has co-managed the Funds since
March 2007. Prior to joining Trusco, Mr. Sansoterra served as Large Cap Diversified Growth
Portfolio Manager and Senior Equity Analyst of Principal Global Investors from February 2003
through March 2007. He has more than 13 years of investment experience.
[LOGO] Zevenbergen Capital Investments LLC (ZCI)
www.zci.com
ZCI, 601 Union Street, Seattle, Washington 98101, serves as the Subadviser to the Aggressive Growth
Stock Fund and Emerging Growth Stock Fund. Zevenbergen was founded in 1987 and is a minority-owned
subsidiary of the Adviser. The firms client base is comprised of a blend of institutional
tax-exempt and taxable separately managed accounts. As a domestic growth equity manager, ZCI
manages assets for a variety of entities, including public funds, foundations, endowments,
corporations, pooled accounts, and private individuals. As of June 30, 2008, ZCI had approximately
$1.8 billion in assets under management. ZCI selects, buys, and sells securities for the Aggressive
Growth Stock Fund and Emerging Growth Stock Fund under the supervision of the Adviser and the Board
of Trustees.
ZCI specializes in aggressive growth-equity investment advisory services for separately managed
portfolios and mutual funds. ZCIs investment philosophy and stock selection process, unchanged
since 1987, operates under the principle that revenue, cash flow and earnings growth are the key
determinants of long-term stock price appreciation. The firms continuous integrity of aggressive
growth style investing, its commitment to client-first service and a savvy, experienced
management team together for over ten years has allowed ZCI to deliver long-term performance for
clients.
Ms. Nancy Zevenbergen, CFA, is primarily responsible for the day-to-day management of the
Aggressive Growth Stock Fund and the Emerging Growth Stock Fund. Ms. Zevenbergen has served as
President and Chief Investment Officer of ZCI since January 1987. She has co-managed the Funds
since each Funds respective inception. She has more than 26 years of investment experience.
Ms. Brooke de Boutray, CFA, is primarily responsible for the day-to-day management of the
Aggressive Growth Stock Fund and the Emerging Growth Stock Fund. Ms. de Boutray has served as
Managing Director, Principal, Portfolio Manager and Analyst of ZCI since 1992. She has co-managed
the Funds since each Funds respective inception. She has more than 25 years of investment
experience.
Ms. Leslie Tubbs, CFA, is primarily responsible for the day-to-day management of the Aggressive
Growth Stock Fund and the Emerging Growth Stock Fund. Ms. Tubbs has served as Managing Director,
Principal, Portfolio Manager and Analyst for ZCI since 1995. She has co-managed the Funds since
each Funds respective inception. She has more than 13years of investment experience.
PURCHASING AND SELLING FUND SHARES
This section tells you how to purchase and sell (sometimes called redeem) I Shares of the Funds.
HOW TO PURCHASE FUND SHARES
The Funds offer I Shares to financial institutions and intermediaries for their own accounts or for
the accounts of customers for whom they may act as fiduciary agent, investment adviser, or
custodian. These accounts primarily consist of:
- assets of a bona fide trust,
- assets of a business entity possessing a tax identification number,
- assets of an employee benefit plan,
- assets held within select fee-based programs, or
- assets held within certain non-discretionary intermediary no-load platforms.
Employee benefit plans generally include profit sharing, 401(k) and 403(b) plans. Employee benefit
plans generally do not include IRAs; SIMPLE, SEP, SARSEP plans; plans covering self-employed
individuals and their employees or health savings accounts unless you, as a customer of a financial
institution or intermediary, meet the Funds established criteria as described above.
As a result, you, as a customer of a financial institution or intermediary, may, under certain
circumstances that meet the Funds established criteria, be able to purchase I Shares through
accounts made with select financial institutions or intermediaries. I Shares will be held of record
by (in the name of) your financial institution or intermediary. Depending upon the terms of your
account, you may have, or be given, the right to vote your I Shares. Financial institutions or
intermediaries may impose eligibility requirements for each of their clients or customers investing
in the Funds, including investment minimum requirements, which may differ from those imposed by the
Funds. Please contact your financial institution or intermediary for complete details for purchasing I Shares.
I Shares may also be purchased directly from the Funds by officers, directors or trustees, and
employees and their immediate families (strictly limited to current spouses/domestic partners and
dependent children) of:
- RidgeWorth Funds,
- Subadvisers to the RidgeWorthFunds, or
- SunTrust Banks, Inc. and its subsidiaries.
Validation of current employment/service will be required upon establishment of the account. The
Funds, in their sole discretion, may determine if an applicant qualifies for this program.
Shares of the SMALL CAP VALUE EQUITY FUND are no longer available for purchase by new investors.
Please refer to the Statement of Additional Information for the definition of new investor.
WHEN CAN YOU PURCHASE SHARES?
The Funds are open for business on days when the New York Stock Exchange (the NYSE) is open for
regular trading (a Business Day).
Each Fund calculates its net asset value per share (NAV) once each Business Day at the close of
regular trading on the NYSE (normally 4:00 p.m. Eastern Time.)
If a Fund or its authorized agent receives your purchase or redemption request in proper form
before 4:00 p.m., Eastern Time, your transaction will be priced at that Business Days NAV. If your
request is received after 4:00 p.m., it will be priced at the next Business Days NAV.
The time at which transactions and shares are priced and the time until which orders are accepted
may be changed if the NYSE closes early.
The Funds will not accept orders that request a particular day or price for the transaction or any
other special conditions.
YOU MAY HAVE TO TRANSMIT YOUR PURCHASE AND SALE ORDERS TO YOUR FINANCIAL INSTITUTION OR
INTERMEDIARY AT AN EARLIER TIME FOR YOUR TRANSACTION TO BECOME EFFECTIVE THAT DAY. THIS ALLOWS THE
FINANCIAL INSTITUTION OR INTERMEDIARY TIME TO PROCESS YOUR ORDER AND TRANSMIT IT TO THE TRANSFER
AGENT IN TIME TO MEET THE ABOVE STATED FUND CUT-OFF TIMES. FOR MORE INFORMATION ABOUT HOW TO
PURCHASE OR SELL FUND SHARES, INCLUDING A SPECIFIC FINANCIAL INSTITUTIONS OR INTERMEDIARYS
INTERNAL ORDER ENTRY CUT-OFF TIME, PLEASE CONTACT YOUR FINANCIAL INSTITUTION OR INTERMEDIARY
DIRECTLY.
A Fund may reject any purchase order.
HOW THE FUNDS CALCULATE NAV
NAV is calculated by adding the total value of a Funds investments and other assets, subtracting
its liabilities, and then dividing that figure by the number of outstanding shares of the Fund.
In calculating NAV, each Fund generally values its investment portfolio at market price. If market
prices are not readily available or the Fund reasonably believes that they are unreliable, such as
in the case of a security value that has been materially affected by events occurring after the
relevant market closes, a Fund is required to price those securities at fair value as determined in
good faith using methods approved by the Board of Trustees. A Funds determination of a securitys
fair value price often involves the consideration of a number of subjective factors, and is
therefore subject to the unavoidable risk that the value that a Fund assigns to a security may be
higher or lower than the securitys value would be if a reliable market quotation for the security
was readily available.
When valuing fixed income securities with remaining maturities of more than 60 days, the Funds use
the value of the security provided by pricing services. The values provided by a pricing service
may be based upon market quotations for the same security, securities expected to trade in
a similar manner, or a pricing matrix. When valuing fixed income securities with remaining
maturities of 60 days or less, the Funds use the securitys amortized cost. Amortized cost and the
use of a pricing matrix in valuing fixed income securities are forms of fair value pricing. Fair
value prices may be determined in good faith using methods approved by the Board of Trustees.
Although the Funds, except the International Equity Fund and International Equity Index Fund,
invest primarily in the stocks of companies that are traded on U.S. exchanges, there may be limited
circumstances in which a Fund would price securities at fair value for example, if the exchange
on which a portfolio security is principally traded closed early or if trading in a particular
security was halted during the day and did not resume prior to the time a Fund calculated its NAV.
With respect to non-U.S. securities held by a Fund, the Fund may take factors influencing specific
markets or issues into consideration in determining the fair value of a non-U.S. security.
International securities markets may be open on days when the U.S. markets are closed. In such
cases, the value of any international securities owned by a Fund may be significantly affected on
days when investors cannot buy or sell shares. In addition, due to the difference in times between
the close of the international markets and the time a Fund prices its shares, the value the Fund
assigns to securities generally will not be the same as the primary markets or exchanges. In
determining fair value prices, a Fund may consider the performance of securities on their primary
exchanges, foreign currency appreciation/depreciation, securities market movements in the U.S., or
other relevant information as related to the securities.
IN-KIND PURCHASES
Payment for shares of a Fund may, in the discretion of the Adviser, be made in the form of
securities that are permissible investments for such Fund. In connection with an in-kind securities
payment, a Fund will require, among other things, that the securities (a) meet the investment
objectives and policies of the Fund; (b) are acquired for investment and not for resale; (c) are
liquid securities that are not restricted as to transfer either by law or liquidity of markets; (d)
have a value that is readily ascertainable (e.g., by a listing on a nationally recognized
securities exchange); and (e) are valued on the day of purchase in accordance with the pricing
methods used by the Fund. For further information about this form of payment, please call
1-888-784-3863.
CUSTOMER IDENTIFICATION
FOREIGN INVESTORS
The Funds do not generally accept investments in I Shares by non-U.S. citizens or entities.
CUSTOMER IDENTIFICATION AND VERIFICATION
To help the government fight the funding of terrorism and money laundering activities, federal law
requires all financial institutions to obtain, verify, and record information that identifies each
person who opens an account.
When you open an account, you will be asked to provide your name, residential street address, date
of birth, Social Security number or tax identification number. You may also be asked for other
information that will allow us to identify you. Entities are also required to provide additional
documentation. This information will be verified to ensure the identity of all persons opening a
mutual fund account.
In certain instances, the Funds are required to collect documents to fulfill their legal
obligation. Documents provided in connection with your application will be used solely to establish
and verify a customers identity.
The Funds are required by law to reject your new account application if the required identifying
information is not provided. Attempts to collect the missing information required on the
application will be performed by either contacting you or, if applicable, your broker. If this
information is unable to be obtained within a timeframe established in the sole discretion of the
Funds, your application will be rejected.
Upon receipt of your application in proper form (or upon receipt of all identifying information
required on the application), your investment will be accepted and your order will be processed at
the NAV next determined.
However, the Funds reserve the right to close your account at the then-current days price if the
Funds are unable to verify your identity. Attempts to verify your identity will be performed within
a timeframe established in the sole discretion of the Funds. If the Funds are unable to verify your
identity, the Funds reserve the right to liquidate your account at the then-current days price and
remit proceeds to you via check. The Funds reserve the further right to hold your proceeds until
your original check clears the bank. In such an instance, you may be subject to a gain or loss on
Fund shares and will be subject to corresponding tax implications.
ANTI-MONEY LAUNDERING PROGRAM
Customer identification and verification is part of the Funds overall obligation to deter money
laundering under federal law. The Funds have adopted an anti-money laundering compliance program
designed to prevent the Funds from being used for money laundering or the financing of terrorist
activities. In this regard, the Funds reserve the right to (i) refuse, cancel or rescind any
purchase or exchange order, (ii) freeze any account and/or suspend account services, or (iii)
involuntarily redeem your account in cases of threatening conduct or suspected fraudulent or
illegal activity. These actions will be taken when, in the sole discretion of Fund management, they
are deemed to be in the best interest of the Funds or in cases when the Funds are requested or compelled to do so by
governmental or law enforcement authority.
HOW TO SELL YOUR FUND SHARES
You may sell your shares on any Business Day by contacting your financial institution or
intermediary. Your financial institution or intermediary will give you information about how to
sell your shares including any specific cut-off times required.
Holders of I Shares may sell shares by following the procedures established when they opened their
account or accounts with the Funds or with their financial institution or intermediary. The sale
price of each share will be the NAV next determined after the Funds receive your request in proper
form.
A MEDALLION SIGNATURE GUARANTEE by a bank or other financial institution (a notarized signature is
not sufficient) is required to redeem shares:
- made payable to someone other than the registered shareholder;
- sent to an address or bank account other than the address or bank account of record; or
- sent to an address or bank account of record that has been changed within the last 15 calendar
days.
Other documentation may be required depending on the registration of the account.
MEDALLION SIGNATURE GUARANTEE: A Medallion Signature Guarantee verifies the authenticity of your
signature and helps ensure that changes to your account are in fact authorized by you. A Medallion
Signature Guarantee may be obtained from a domestic bank or trust company, broker, dealer, clearing
agency, savings association or other financial institution participating in a Medallion Program
recognized by the Securities Trading Association. Signature guarantees from financial institutions
that do not reflect one of the following are not part of the program and will not be accepted. The
acceptable Medallion programs are Securities Transfer Agents Medallion Program, (STAMP), Stock
Exchange Medallion Program, (SEMP), or the New York Stock Exchange, Inc. Medallion Program, (NYSE
MSP). Contact your local financial adviser or institution for further assistance.
RECEIVING YOUR MONEY
Normally, the Funds will send your sale proceeds within five Business Days after the Funds receive
your request, but a Fund may take up to seven days to pay the sale proceeds if making immediate
payment would adversely affect the Fund (for example, to allow the Fund to raise capital in the
case of a large redemption).
REDEMPTIONS IN KIND
The Funds generally pay redemption proceeds in cash. However, under unusual conditions that make
the payment of cash unwise (and for the protection of the Funds remaining shareholders), the Funds
might pay all or part of your redemption proceeds in liquid securities with a market value equal to
the redemption price (redemption in kind). It is highly unlikely that your shares would ever be
redeemed in kind, but if they were you would probably have to pay transaction costs to sell the
securities distributed to you, as well as taxes on any capital gains from the sale as with any
redemption.
SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
A Fund may suspend your right to sell your shares if the NYSE restricts trading, the SEC declares
an emergency or for other reasons approved by the SEC. More information about this is in the
Statement of Additional Information.
TELEPHONE TRANSACTIONS
Purchasing and selling Fund shares over the telephone is extremely convenient, but not without
risk. Although the Funds have certain safeguards and procedures to confirm the identity of callers
and the authenticity of instructions, the Funds are not responsible for any losses or costs
incurred by following telephone instructions the Funds reasonably believe to be genuine. If you or
your financial institution or intermediary transact with the Funds over the telephone, you will
generally bear the risk of any loss. The Funds reserve the right to modify, suspend or terminate
telephone transaction privileges at any time.
To redeem shares by telephone:
- redemption checks must be made payable to the registered shareholder; and
- redemption checks must be mailed to an address or wired to a bank account of record that has been
associated with the shareholder account for at least 15 calendar days.
MARKET TIMING POLICIES AND
PROCEDURES
The Funds are intended for long-term investment purposes only and discourage shareholders from
engaging in market timing or other types of excessive short-term trading. This frequent trading
into and out of the Funds may present risks to the Funds long-term shareholders, all of which
could adversely affect shareholder returns. The risks posed by frequent trading include interfering
with the efficient implementation of the Funds investment strategies, triggering the recognition
of taxable gains and losses on the sale of Fund investments, requiring the Funds to maintain higher
cash balances to meet redemption requests, and experiencing increased transaction costs. A Fund
that invests a significant amount of its assets in overseas markets is particularly susceptible to
the risk of certain investors using a strategy known as time-zone arbitrage. Investors using this
strategy attempt to take advantage of the differences in value of foreign securities that might
result from events that occur between the close of the foreign securities market on which a foreign
security is traded and the time at which the Fund calculates its NAV.
The Funds and/or their service providers will take steps reasonably designed to detect and deter
frequent trading by shareholders pursuant to the Funds policies and procedures described in this
prospectus and approved by the Funds Board of Trustees. For purposes of applying these policies,
the Funds service providers may consider the trading history of accounts under common ownership or
control. The Funds policies and procedures include:
- Shareholders are restricted from making more than one (1) round trip into or out of a Fund
within 14 days or more than two (2) round trips within any continuous 90 day period. If a
shareholder exceeds either round trip restriction, he or she may be deemed a Market Timer, and
the Funds and/or their service providers may, at their discretion, reject any additional purchase
orders. The Funds define a round trip as a purchase into a Fund by a shareholder, followed by a
subsequent redemption out of the Fund. Anyone considered to be a Market Timer by the Funds, their
manager(s) or a shareholder servicing agent may be notified in writing of their designation as a
Market Timer.
- The Funds reserve the right to reject any purchase request by any investor or group of investors
for any reason without prior notice, including, in particular, if the Funds or their Adviser
reasonably believes that the trading activity would be harmful or disruptive to the Funds.
The Funds and/or their service providers seek to apply these policies to the best of their
abilities uniformly and in a manner they believe is consistent with the interests of the Funds
long-term shareholders.
Although these policies are designed to deter frequent trading, none of these measures alone nor
all of them taken together eliminate the possibility that frequent trading in the Funds will occur,
particularly with respect to trades placed by shareholders that invest in the Funds through omnibus
arrangements maintained by brokers, retirement plan accounts and other financial intermediaries.
Purchase and redemption transactions submitted to the Funds by these intermediaries reflect the
transactions of multiple beneficial owners whose individual transactions are not automatically
disclosed to the Funds. Therefore, the Funds rely in large part on the intermediaries who maintain
omnibus arrangements (which may represent a majority of Fund
shares) to aid in the Funds efforts to detect and deter short-term trading. The Funds monitor
trading activity at the omnibus account level and look for activity that indicates potential
short-term trading. If they detect suspicious trading activity, the Funds contact the
intermediaries to determine whether the short-term trading policy has been violated and may request
and receive personal identifying information and transaction histories for some or all beneficial
owners to make this determination. If a Fund believes that a shareholder has violated the
short-term trading policy, it will take further steps to prevent any future short-term trading by
such shareholder in accordance with the policy. The Funds cannot guarantee the accuracy of the
information provided by the intermediaries and may not always be able to track short-term trading
effected through these intermediaries. A Fund has the right to terminate an intermediarys ability
to invest in a Fund if excessive trading activity persists and a Fund or its Adviser or Subadviser
reasonably believes that such termination would be in the best interests of long-term shareholders.
Further, the Funds seek to discourage short-term trading by using fair value pricing procedures to
fair value certain investments under some circumstances. In addition to the Funds market timing
policies and procedures described above, you may be subject to the market timing policies and
procedures of the intermediary through which you invest. Please consult with your intermediary for
additional information regarding its frequent trading restrictions.
DISTRIBUTION OF FUND SHARES
From its own assets, the Adviser, the Subadviser or their affiliates may make payments based on
gross sales and current assets to selected brokerage firms or institutions. The amount of these
payments may be substantial. The minimum aggregate sales required for eligibility for such
payments, and the factors in selecting the brokerage firms and institutions to which they will be
made, are determined from time to time by the Adviser or Subadviser. Furthermore, in addition to
the fees that may be paid by the Fund, the Adviser, the Subadviser or their affiliates may pay fees
from their own capital resources to brokers, banks, financial advisers, retirement plan service
providers and other financial intermediaries, including affiliates, for providing
distribution-related or shareholder services.
The Adviser, the Subadviser or their affiliates may pay fees from their own capital resources to
financial intermediaries to compensate them for marketing expenses they incur or to pay for the
opportunity to have them distribute the Funds. The amount of these payments is determined by the
Adviser or the Subadviser and may differ among financial intermediaries. Such payments may provide
incentives for financial intermediaries to make shares of the Funds available to their customers,
and may allow the Funds greater access to such financial intermediaries and their customers than
would be the case if no payments were made. You may wish to consider whether such arrangements
exist when evaluating any recommendation to purchase shares of the Funds.
Please refer to the Statement of Additional Information for more information regarding these
arrangements.
DIVIDENDS AND DISTRIBUTIONS
Each Fund distributes its net investment income as follows:
QUARTERLY
Aggressive Growth Stock Fund
Emerging Growth Stock Fund
Large Cap Core Equity Fund
Large Cap Growth Stock Fund
Large Cap Quantitative Equity Fund
Large Cap Value Equity Fund
Life Vision Aggressive Growth Fund
Life Vision Conservative Fund
Life Vision Growth and Income Fund
Life Vision Moderate Growth Fund
Life Vision Target Date 2015 Fund
Life Vision Target Date 2025 Fund
Life Vision Target Date 2035 Fund
Mid-Cap Core Equity Fund
Mid-Cap Value Equity Fund
Select Large Cap Growth Stock Fund
Small Cap Growth Stock Fund
Small Cap Quantitative Equity Fund
Small Cap Value Equity Fund
ANNUALLY
International Equity Fund
International Equity Index Fund
Each Fund makes distributions of its net realized capital gains, if any, at least annually. If you
own Fund shares on a Funds record date, you will be entitled to receive the distribution.
You will receive dividends and distributions in the form of additional Fund shares unless you elect
to receive payment in cash. To elect cash payment, you must notify the Fund in writing prior to the
date of the distribution. Your election will be effective for dividends and distributions paid
after the Fund receives your written notice. To cancel your election, simply send the Fund written
notice.
TAXES
PLEASE CONSULT YOUR TAX ADVISOR REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL, STATE AND LOCAL
INCOME TAXES. Below the Funds have summarized some important tax issues that affect the Funds and
their shareholders. This summary is based on current tax laws, which may change.
Each Fund will distribute substantially all of its net investment income and its net realized
capital gains, if any, at least annually. The dividends and distributions you receive may be
subject to federal, state and local taxation, depending upon your tax situation. Distributions you
receive from a Fund may be taxable whether or not you reinvest them. Income distributions are
generally taxable either as ordinary income or as qualified dividend income. Dividends that are
qualified dividend income are eligible for the reduced maximum rate to individuals of 15% (5% for
individuals in lower tax brackets) to the extent that the Fund receives qualified dividend income.
Capital gains distributions are generally taxable at the rates applicable to long-term capital
gains. Long-term capital gains are currently taxed at a maximum rate of 15%. Absent further
legislation, the maximum 15% tax rate on qualified dividend income and long-term capital gains will
cease to apply to taxable years beginning after December 31, 2010. EACH SALE OF FUND SHARES MAY BE
A TAXABLE EVENT. FOR TAX PURPOSES, AN EXCHANGE OF FUND SHARES FOR SHARES OF A DIFFERENT STI CLASSIC
FUND IS TREATED THE SAME
AS A SALE. A TRANSFER FROM ONE SHARE CLASS TO ANOTHER SHARE CLASS IN THE SAME STI CLASSIC FUND
SHOULD NOT BE A TAXABLE EVENT.
The Fund will inform you of the amount of your ordinary income dividends, qualified dividend
income, and capital gains distributions shortly after the close of each calendar year.
If you have a tax-advantaged or other retirement account you will generally not be subject to
federal taxation on income and capital gain distributions until you begin receiving your
distributions from your retirement account. You should consult your tax advisor regarding the rules
governing your own retirement plan.
The International Equity Fund and International Equity Index Fund may be able to pass along a tax
credit for foreign income taxes they pay. In such event, each Fund will provide you with the
information necessary to reflect such foreign taxes on your federal income tax return.
MORE INFORMATION ABOUT TAXES IS IN THE STATEMENT OF ADDITIONAL INFORMATION.
[THIS PAGE INTENTIONALLY LEFT BLANK]
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand a Funds financial performance
for the past 5 years or, if shorter, the period of the Funds operations. Certain information
reflects financial results for a single Fund share. The total returns in the table represent the
rate that an investor would have earned (or lost) on an investment in the Fund (assuming
reinvestment of all dividends and distributions). This financial information has been audited by
[to be updated by amendment]. The Report of Independent Registered Public Accounting Firm for each
period shown, along with the Funds financial statements and related notes, are included in the
Annual Reports to Shareholders for such periods. The 2008 Annual Report is available upon request
and without charge by calling 1-888-784-3863 or on the Funds website at www.ridgeworthfunds.com.
FINANCIAL HIGHLIGHTS
PROSPECTUS 89
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INVESTMENT ADVISER:
RidgeWorth Capital Management, Inc.
50 Hurt Plaza, Suite 1400
Atlanta, Georgia 30303
INVESTMENT SUBADVISERS:
Ceredex Value Advisors LLC
300 South Orange Avenue, Suite 1600
Orlando, Florida 32801
Certium Asset Management LLC
50 Hurt Plaza, Suite 1400
Atlanta, Georgia 30303
IronOak Advisors LLC
919 East Main Street 15th Floor
Richmond Virginia 23219
Silvant Capital Management LLC
50 Hurt Plaza, Suite 1400
Atlanta, Georgia 30303
Zevenbergen Capital Investments LLC
601 Union Street, Suite 4600
Seattle, Washington 98101
More information about the RidgeWorth Funds is available without charge through the following:
STATEMENT OF ADDITIONAL INFORMATION (SAI):
The SAI includes detailed information about the RidgeWorth Funds. The SAI is on file with the SEC
and is incorporated by reference into this prospectus. This means that the SAI, for legal purposes,
is a part of this prospectus.
ANNUAL AND SEMI-ANNUAL REPORTS:
These reports list each Funds holdings and contain information from the Funds managers about
strategies and recent market conditions and trends and their impact on Fund performance. The
reports also contain detailed financial information about the Funds.
TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT,
OR MORE INFORMATION:
TELEPHONE: Shareholder Services
1-888-784-3863MAIL:
RidgeWorth Funds
3435 Stelzer Road
Columbus, Ohio 43219
WEBSITE: www.ridgeworthfunds.com
SEC:
You can also obtain the SAI or the Annual and Semi-Annual reports, as well as other information
about the RidgeWorth Funds, from the EDGAR Database on the SECs website at http://www.sec.gov. You
may review and copy documents at the SEC Public Reference Room in Washington, DC (for information
on the operation of the Public Reference Room, call 202-551-8090). You may request documents by
mail from the SEC, upon payment of a duplicating fee, by writing to:
Securities and Exchange Commission, Public Reference Section, Washington, DC 20549-0102. You may
also obtain this information, upon payment of a duplicating fee, by e-mailing the SEC at
publicinfo@sec.gov.
The RidgeWorth Funds Investment Company Act registration number is 811-06557.
RIDGEWORTH FUNDS LOGO
I Shares
Prospectus
RidgeWorth Equity Funds (formerly, STI Classic Funds)
International Equity 130/30 Fund
Real Estate 130/30 Fund
U.S. Equity 130/30 Fund
Investment Adviser: RidgeWorth Capital Management, Inc. (formerly Trusco Capital Management, Inc.)
(the Adviser)
Investment Subadviser: Alpha Equity Management LLC (the Subadviser)
August 1, 2008
The Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy
of this prospectus. Any representation to the contrary is a criminal offense.
Prospectus
The RidgeWorth Funds is a mutual fund family that offers shares in separate investment portfolios
that have individual investment goals and strategies. This prospectus gives you important
information about the I Shares of the International Equity 130/30 Fund, the Real Estate 130/30 Fund
and the U.S. Equity 130/30 Fund (Funds) that you should know before investing. Please read this
prospectus and keep it for future reference.
This prospectus has been arranged into different sections so that you can easily review this
important information. On the next page, there is some general information you should know about
risk and return that is common to each of the Funds. For more detailed information about each Fund,
please see:
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Inside Back Cover |
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Privacy Policy |
Back Cover |
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How to Obtain More Information About the RidgeWorth Funds |
August 1, 2008
Prospectus 1
CUSIP/ TICKER SYMBOLS
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Fund Name |
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Ticker |
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CUSIP |
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International Equity 130/30 Fund |
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I Shares |
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12/18/07 |
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SCEIX |
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Real Estate 130/30 Fund |
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I Shares |
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12/18/07 |
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SRIEX |
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U.S. Equity 130/30 Fund |
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12/18/07 |
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SUEIX |
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RISK/ RETURN INFORMATION COMMON TO THE RIDGEWORTH FUNDS (formerly STI Classic Funds)
Each Fund is a mutual fund. A mutual fund pools shareholders money and, using professional
investment managers, invests it in securities.
Each Fund has its own investment goal and strategies for reaching that goal. The Subadviser (under
the supervision of the Adviser) is responsible for investing Fund assets in a way that it believes
will help a Fund achieve its goal. Still, investing in each Fund involves risk and there is no
guarantee that a Fund will achieve its goal. The Subadvisers judgments about the markets, the
economy or companies may not anticipate actual market movements, economic conditions or company
performance, and these judgments may affect the return on your investment. In fact, no matter how
good a job the Adviser (or the Subadviser) does, you could lose money on your investment in a Fund,
just as you could with other investments. A Fund share is not a bank deposit and it is not insured
or guaranteed by the FDIC or any government agency.
The value of your investment in a Fund is based on the market prices of the securities the Fund
holds. These prices change daily due to economic and other events that affect particular companies
and other issuers. These price movements, sometimes called volatility, may be greater or lesser
depending on the types of securities a Fund owns and the markets in which they trade. The effect on
a Fund of a change in the value of a single security will depend on how widely the Fund diversifies
its holdings. Each Funds investment goal may be changed without shareholder approval. Before investing, make
sure that the Funds goal matches your own.
INTERNATIONAL EQUITY 130/30 FUND
Fund Summary
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Investment Goal
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Long-term capital appreciation |
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Investment Focus
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Foreign equity securities |
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Share Price Volatility
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High |
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Principal Investment Strategy
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Establish long and short
positions in equity securities of
non-U.S. companies using a
quantitative process |
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Investor Profile
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Investors who want an increase in
the value of their investment
without regard to income, are
willing to accept the increased
risks of international investing
for the possibility of higher
returns, and want exposure to a
diversified portfolio of
international stocks |
Subadviser
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Alpha Equity Management LLC |
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Investment Strategy
Under normal circumstances, the International Equity 130/30 Fund invests at
least 80% of its net assets in common stocks and other equity securities of
non-U.S. companies. The Fund may invest in companies of any size and in both
developed and emerging markets. The Fund may also invest in exchange-traded
funds (ETFs).
In selecting investments, the Subadviser uses a proprietary quantitative process. The stock
selection model emphasizes characteristics such as relative value, analyst sentiment, earnings
quality, long-term price momentum, and short-term price reversal. The Fund holds a diversified
portfolio to reduce stock-specific risk. Portfolio construction is driven by the Subadvisers daily
assessment of expected return, transaction cost, and risk for each of the securities in the Funds
investment universe. The Subadviser focuses on bottom-up stock selection and does not emphasize
macro forecasts of overall market returns, growth versus value returns, or large capitalization
versus small capitalization returns.
The Fund pursues its investment goal by establishing long and short positions in equity securities.
The Fund normally takes long positions in stocks that the Subadviser believes have the highest
utility and normally takes short positions in stocks that it believes have the lowest utility.
Utility is defined as an individual securitys expected return from its exposure to the return
factors in the stock selection model less expected transaction costs and risk penalties. The Fund
normally holds long positions in equity securities with an aggregate value of approximately 130% (within a range
of 100% to 150%) of its net assets. In addition, the Fund normally establishes short positions in
equity securities with a market value
of approximately 30% (within a range of 0% to 50%) of its net
assets. The Fund is generally managed to be 100% net long. When the Fund establishes a long
position, it purchases the security outright. When the Fund establishes a short position, it sells
a security that it does not own and settles the sale by borrowing the same stock from a lender. To
close out the short position, the Fund subsequently buys back the same security in the market and
returns it to the lender. The Fund makes money on a short position if the market price of the
security goes down after the short sale. Conversely, if the price of the stock goes up after the
short sale, the Fund will lose money because it will have to pay more to replace the borrowed
security that it received when it sold the security short. When borrowing a security for delivery
to a buyer, the Fund also may be required to pay a premium and other transaction costs, which would
increase the cost of the security sold short.
When the Fund settles a short sale, the broker effecting the short sale generally holds the
proceeds as part of the collateral securing the Funds obligation to cover the short position. The
Fund may use this cash to purchase additional securities, which will allow the Fund to maintain
long positions in excess of 100% of the Funds net assets. When the Fund does this, it is required
to pledge collateral as security to the broker. Alternatively, the Fund may achieve the same result
by borrowing money from banks and using the proceeds to purchase additional securities. Each of
these investment techniques is known as leverage.
Because companies tend to shift in relative attractiveness, the Fund may buy and sell securities
frequently, which may result in higher transaction costs, additional capital gains tax liabilities
and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, to a limited extent,
derivative instruments (such as futures, options and swaps) to use as a substitute for a purchase
or sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as market risk.
What are the principal risks of investing in this Fund?
Since it purchases equity securities, the Fund is subject to the risk that
stock prices will fall over short or extended periods of time. Historically,
the equity market has moved in cycles, and the value of the Funds securities
may fluctuate drastically from day to day. Individual companies may report poor
results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.
The Fund is also subject to the risk that foreign common stocks may underperform other segments of
the equity market or the equity market as a whole.
Foreign securities involve special risks such as currency fluctuations, economic or financial
instability, lack of timely or reliable financial information and unfavorable political or legal
developments. These risks are increased for investments in emerging markets.
With a long position, the Fund purchases a stock outright; with a short position, the Fund sells a
security that it does not own and must borrow to meet its settlement obligations. To close the
short position, the Fund buys the same stock in the market and returns it to the lender. The Fund
makes money if the market price of the stock goes down after the short sale is executed.
Conversely, if the price of the stock goes up after the short sale, the Fund will lose money
because it will have to pay more to replace the borrowed stock than it received when it sold the
stock short. Short positions may be used to hedge against the
volatility of the long portion of the overall portfolio and/or to garner returns from declines in security prices. The Fund may take long
and short positions in the same sector/industry.
The Funds short sales effectively leverage the Funds assets. It is possible that the Fund may
lose money on both long and short positions at the same time. The Funds assets that are used as
collateral to secure the short sales may decrease in value while the short positions are
outstanding, which may force the Fund to use its other assets to increase the collateral. Leverage
also creates interest expense that may decrease the Funds overall returns.
If the Fund borrows money from banks for investment purposes, the Funds borrowing activities will
amplify any increase or decrease in the Funds net asset value. In addition, the interest which the
Fund must pay on borrowed money will reduce or eliminate any net investment profits.
Small and mid-cap stocks may perform differently from other segments of the equity market or the
equity market as a whole and may be more volatile than stocks of larger companies.
Large cap stocks can perform differently from other segments of the equity market or the equity
market as a whole. Large capitalization companies may be less flexible in evolving markets or
unable to implement change as quickly as smaller capitalization companies. Accordingly, the value
of large cap stocks may not rise to the same extent as the value of small or mid-cap stocks under
certain market conditions or during certain periods.
The risks of owning shares of an ETF generally reflect the risks of owning the underlying
securities the ETF is designed to track, although lack of liquidity in an ETF could result in being
more volatile than the underlying portfolio of securities. In addition, because of ETF management
expenses, compared to owning the underlying securities directly, it may be more costly to own an
ETF.
Due to its trading strategies, the Fund may experience a portfolio turnover rate of over 100%.
Portfolio turnover measures the amount of trading the Fund does during the year. Funds with high
turnover rates (over 100%) often have higher transaction costs (which are paid by the Fund) and may
generate short-term capital gains (on which you will pay taxes, even if you do not sell any shares
by year-end).
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
Performance Information
The Fund is new and therefore does not have performance history for a full
calendar year.
After the Fund has been in operation for one full calendar year, such
performance information will be available. The performance information and bar
charts help to illustrate the risks of investing in the Fund by showing changes
in the Funds performance from year to year and by showing how the Funds
average annual returns for 1, 5, and 10 years (or the life of the Fund, if
shorter) compare with those of a broad measure of market performance.
Fund Fees and Expenses
This table describes the Funds fees and expenses that you may pay if you buy
and hold Fund shares.
Annual Fund Operating Expenses (expenses deducted from Fund assets)
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I Shares |
Investment Advisory Fees |
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1.25 |
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Other Expenses |
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Dividend Expense on Short Sales1 |
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0.[70] |
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Other Operating Expenses |
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0.[27] |
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Total Other Expenses |
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0.[97] |
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Total Annual Operating Expenses2 |
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[2.22] |
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12 |
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This expense reflects the estimate of amounts to be paid as substitute dividend
expenses on securities borrowed for the settlement of short sales. Short sale
dividends generally reduce the market value of the securities by the amount of the
dividend declared; thus increasing the Funds unrealized gain or reducing the
Funds unrealized loss on the securities sold short. Short sale dividends are
treated as an expense, and increase the Funds total expense ratio, although no
cash is received or paid by the Fund. |
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Excluding dividend expense on short sales, the Total Annual Operating Expenses for the Fund would
be 1.52%. |
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The Adviser and Subadviser have contractually agreed to
waive fees and reimburse expenses until at least August 1,
2009 in order to keep Total Annual Operating Expenses
(excluding taxes, brokerage commissions, substitute dividend
expenses on securities sold short, extraordinary expenses
and estimated indirect expenses attributable to the Funds
investment in other funds, such as ETFs) from exceeding
1.55%. If at any point before August 1, 2011, Total Annual
Operating Expenses are less than the applicable expense cap,
the Adviser and Subadviser may retain the difference to
recapture any of the prior waivers or reimbursements. In
addition, the Adviser and/or other service providers may
voluntarily waive a portion of their fees in order to limit
Total Annual Operating Expenses. These voluntary waivers may
be discontinued at any time. |
Example
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual
costs and returns might be different, your approximate costs of investing $10,000 in the Fund would
be:
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1 Year |
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3 Years |
$ [ ] |
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$ |
[ ] |
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Fund Expenses
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
REAL ESTATE 130/30 FUND
Fund Summary
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Investment Goal
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Long-term capital appreciation |
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Investment Focus
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Common stocks |
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Share Price Volatility
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Moderate |
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Principal Investment Strategy
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Establish long and short positions in
equity securities of real estate
investment trusts (REITs) and
companies principally engaged in the
real estate industry using a
quantitative process |
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Investor Profile
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Investors who want an increase in the
value of their investment, are
willing to accept the increased risks
of real estate investing for the
possibility of higher returns, and
want exposure to a portfolio of real
estate related stocks |
Subadviser
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Alpha Equity Management LLC |
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Investment Strategy
Under normal circumstances, the Real Estate 130/30 Fund invests at least 80% of
its net assets in common stocks of REITs and companies principally engaged in
the real estate industry. The Subadviser considers a company to be principally
engaged in the real estate industry if it derives at least 50% of its revenues
from the ownership, construction, management, financing or sale of commercial,
industrial or residential real estate or has at least 50% of its assets in such
real estate. The Fund may invest in companies of any size and may also invest
in exchange-traded funds (ETFs).
In selecting investments, the Subadviser uses a proprietary quantitative process. The stock
selection model emphasizes characteristics such as relative value, analyst sentiment, earnings
quality, long-term price momentum, and short-term price reversal. Portfolio construction is driven
by the Subadvisers daily assessment of expected return, transaction costs, and risk for each of
the securities in the Funds investment universe. The Subadviser focuses on bottom-up stock
selection and does not emphasize macro forecasts of overall market returns, growth versus value
returns, or large capitalization versus small capitalization returns.
The Fund pursues its investment goal by establishing long and short positions in equity securities.
The Fund normally takes long positions in stocks that the Subadviser believes have the highest
utility and normally takes short positions in stocks that it believes have the lowest utility.
Utility is defined as an
individual securitys expected return from its exposure to the return
factors in the stock selection model less expected transaction costs and risk penalties. The Fund
normally holds long positions in equity securities with an aggregate value of approximately 130%
(within a range of 100% to 150%) of its net assets. In addition, the Fund normally establishes
short positions in equity securities with a market value of approximately 30% (within a range of 0%
to 50%) of its net assets. The Fund is generally managed to be 100% net long. When the Fund
establishes a long position, it purchases the security outright. When the Fund establishes a short
position, it sells a security that it does not own and settles the sale by borrowing the same stock
from a lender. To close out the short position, the Fund subsequently buys back the same security
in the market and returns it to the lender. The Fund makes money on a short position if the market
price of the security goes down after the short sale. Conversely, if the price of the stock goes up
after the short sale, the Fund will lose money because it will have to pay more to replace the
borrowed security that it received when it sold the security short. When borrowing a security for
delivery to a buyer, the Fund also may be required to pay a premium and other transaction costs,
which would increase the cost of the security sold short.
When the Fund settles a short sale, the broker effecting the short sale generally holds the
proceeds as part of the collateral securing the Funds obligation to cover the short position. The
Fund may use this cash to purchase additional securities, which will allow the Fund to maintain
long positions in excess of 100% of the Funds net assets. When the Fund does this, it is required
to pledge collateral as security to the broker. Alternatively, the Fund may achieve the same result
by borrowing money from banks and using the proceeds to purchase additional securities. Each of
these investment techniques is known as leverage.
Because companies tend to shift in relative attractiveness, the Fund may buy and sell securities
frequently, which may result in higher transaction costs, additional capital gains tax liabilities
and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, to a limited extent,
derivative instruments (such as futures, options and swaps) to use as a substitute for a purchase
or sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as market risk.
What are the principal risks of investing in this Fund?
An investment in the Fund may be subject to many of the same risks as a direct
investment in real estate. These risks include changes in economic conditions,
interest rates, property values, property tax increases, overbuilding and
increased competition, environmental contamination, zoning and natural
disasters. This is due to the fact that the value of the Funds investments may
be affected by the value of the real estate owned by the companies in which it
invests. To the extent the Fund invests in companies that make loans to real
estate companies, the Fund also may be subject to increased interest rate and
credit risk.
Because the Fund concentrates its investments in real estate securities, it may be subject to
greater risks and market fluctuations than a portfolio investing in a broader range of securities.
Because the Fund concentrates its assets in the real estate industry, an investment in the Fund
will be closely linked to the performance of the real estate markets. Property values may fall due to
increasing vacancies or declining rents resulting from economic, legal, cultural or technological
developments.
Since it purchases equity securities, the Fund is subject to the risk that stock prices will fall
over short or extended periods of time. Historically, the equity market has moved in cycles, and
the value of the Funds securities may fluctuate drastically from day to day. Individual companies
may report poor results or be
negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a decline in response.
These factors contribute to price volatility, which is the principal risk of investing in the Fund.
With a long position, the Fund purchases a stock outright; with a short position, the Fund sells a
security that it does not own and must borrow to meet its settlement obligations. To close the
short position, the Fund buys the same stock in the market and returns it to the lender. The Fund
makes money if the market price of the stock goes down after the short sale is executed.
Conversely, if the price of the stock goes up after the short sale, the Fund will lose money
because it will have to pay more to replace the borrowed stock than it received when it sold the
stock short. Short positions may be used to hedge against the volatility of the long portion of the
overall portfolio and/or to garner returns from declines in security prices. The Fund may take long
and short positions in the same sector/industry.
The Funds short sales effectively leverage the Funds assets. It is possible that the Fund may
lose money on both long and short positions at the same time. The Funds assets that are used as
collateral to secure the short sales may decrease in value while the short positions are
outstanding, which may force the Fund to use its other assets to increase the collateral. Leverage
also creates interest expense that may decrease the Funds overall returns.
If the Fund borrows money from banks for investment purposes, the Funds borrowing activities will
amplify any increase or decrease in the Funds net asset value. In addition, the interest which the
Fund must pay on borrowed money will reduce or eliminate any net investment profits.
Small and mid-cap stocks may perform differently from other segments of the equity market or the
equity market as a whole and may be more volatile than stocks of larger companies.
Large cap stocks can perform differently from other segments of the equity market or the equity
market as a whole. Large capitalization companies may be less flexible in evolving markets or
unable to implement change as quickly as smaller capitalization companies. Accordingly, the value
of large cap stocks may not rise to the same extent as the value of small or mid-cap stocks under
certain market conditions.
The risks of owning shares of an ETF generally reflect the risks of owning the underlying
securities the ETF is designed to track, although lack of liquidity in an ETF could result in being
more volatile than the underlying portfolio of securities. In addition, because of ETF management
expenses, compared to owning the underlying securities directly, it may be more costly to own an
ETF.
Due to its trading strategies, the Fund may experience a portfolio turnover rate of over 100%.
Portfolio turnover measures the amount of trading the Fund does during the year. Funds with high
turnover rates (over 100%) often have higher transaction costs (which are paid by the Fund) and
may generate short-term capital gains (on which you will pay taxes, even if you do not sell any
shares by year-end). Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
The Fund is non-diversified, which means that it may invest in the securities of relatively few
issuers. As a result, the Fund may be more susceptible to a single adverse economic or regulatory
occurrence affecting one or more of these issuers, and may experience increased volatility due to
its investments in those securities.
For further information about these and other risks, see More Information About Risk.
Performance Information
The Fund is new and therefore does not have performance history for a full
calendar year.
After the Fund has been in operation for one full calendar year, such
performance information will be available. The performance information and bar
charts help to illustrate the risks of investing in the Fund by showing changes
in the Funds performance from year to year and by showing how the Funds
average annual returns for 1, 5, and 10 years (or the life of the Fund, if
shorter) compare with those of a broad measure of market performance.
Fund Fees and Expenses
This table describes the Funds fees and expenses that you may pay if you buy
and hold Fund shares.
Annual Fund Operating Expenses (expenses deducted from Fund assets)
|
|
|
|
|
|
|
I Shares |
|
Investment Advisory Fees |
|
|
1.25 |
% |
Other Expenses |
|
|
|
|
Dividend Expense on Short Sales1 |
|
|
[0.96] |
% |
Other Operating Expenses |
|
|
[0.20] |
% |
Total Other Expenses |
|
|
[1.16] |
% |
|
|
|
|
|
|
|
|
|
Total Annual Operating Expenses2 |
|
|
[2.41] |
% |
|
|
|
1 |
|
This expense reflects the estimate of amounts to be paid as substitute dividend
expenses on securities borrowed for the settlement of short sales. Short sale
dividends generally reduce the market value of the securities by the amount of
the dividend declared; thus increasing the Funds unrealized gain or reducing the
Funds unrealized loss on the securities sold short. Short sale dividends are
treated as an expense, and increase the Funds total expense ratio, although no
cash is received or paid by the Fund. |
|
|
|
Excluding dividend expense on short sales, the Total Annual Operating Expenses for the Fund would
be 1.45%. |
|
2 |
|
The Adviser and Subadviser have contractually agreed to
waive fees and reimburse expenses until at least August 1,
2009 in order to keep Total Annual Operating Expenses
(excluding taxes, brokerage commissions, substitute dividend
expenses on securities sold short, extraordinary expenses
and estimated indirect expenses attributable to the Funds
investment in other funds, such as ETFs) from exceeding
1.45%. If at any point before August 1, 2011, Total Annual
Operating Expenses are less than the applicable expense cap,
the Adviser and Subadviser may retain the difference to
recapture any of the prior waivers or reimbursements. In
addition, the Adviser and/or other service providers may
voluntarily waive a portion of their fees in order to limit
Total Annual Operating Expenses. These voluntary waivers may
be discontinued at any time. |
Example
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
1 Year |
|
3 Years |
$ [ ] |
|
$ |
[ ] |
|
Fund Expenses
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
U.S. EQUITY 130/30 FUND
Fund Summary
|
|
|
Investment Goal
|
|
Long-term capital appreciation |
|
|
|
|
Investment Focus
|
|
Equity securities of U.S. companies |
|
|
|
|
Share Price Volatility
|
|
Moderate |
|
|
|
|
Principal Investment Strategy
|
|
Establish long and short positions
in equity securities of U.S.
companies using a quantitative
process |
|
|
|
|
Investor Profile
|
|
Investors who want an increase in
the value of their investment
without regard to income |
Subadviser
|
|
Alpha Equity Management LLC |
|
Investment Strategy
Under normal circumstances, the U.S. Equity 130/30 Fund invests at least 80% of
its net assets in common stocks and other U.S. traded equity securities. U.S.
traded equity securities may include American Depositary Receipts (ADRs). The
Fund may invest in companies of any size and may also invest in exchange-traded
funds (ETFs).
In selecting investments, the Subadviser uses a proprietary quantitative process. The stock
selection model emphasizes characteristics such as relative value, analyst sentiment, earnings
quality, long-term price momentum, and short-term price reversal. The Fund holds a diversified
portfolio to reduce stock-specific risk. Portfolio construction is driven by the Subadvisers daily
assessment of expected return, transaction cost, and risk for each of the securities in the Funds
investment universe. The Subadviser focuses on bottom-up stock selection and does not emphasize
macro forecasts of overall market returns, growth versus value returns, or large capitalization
versus small capitalization returns.
The Fund pursues its investment goal by establishing long and short positions in equity securities.
The Fund normally takes long positions in stocks that the Subadviser believes have the highest
utility and normally takes short positions in stocks that it believes have the lowest utility.
Utility is defined as an individual securitys expected return from its exposure to the return
factors in the stock selection model less expected transaction costs and risk penalties. The Fund
normally holds long positions in equity securities with an aggregate value of approximately 130%
(within a range of 100% to 150%) of its net assets. In addition, the Fund normally establishes
short positions in equity securities with a market value of approximately 30% (within a range of 0%
to 50%) of its net assets. When the Fund establishes a long position, it purchases the security
outright. The Fund is generally managed to be 100% net long. When the Fund establishes a short position, it sells a
security that it does not own and settles the sale by borrowing the same stock from a lender. To
close out the short position, the Fund subsequently buys back
the same security in the market and
returns it to the lender. The Fund makes money on a short position if the market price of the
security goes down after the short sale. Conversely, if the price of the stock goes up after the
short sale, the Fund will lose money because it will have to pay more to replace the borrowed
security that it received when it sold the security short. When borrowing a security for delivery
to a buyer, the Fund also may be required to pay a premium and other transaction costs, which would
increase the cost of the security sold short.
When the Fund settles a short sale, the broker effecting the short sale generally holds the
proceeds as part of the collateral securing the Funds obligation to cover the short position. The
Fund may use this cash to purchase additional securities, which will allow the Fund to maintain
long positions in excess of 100% of the Funds net assets. When the Fund does this, it is required
to pledge collateral as security to the broker. Alternatively, the Fund may achieve the same result
by borrowing money from banks and using the proceeds to purchase additional securities. Each of
these investment techniques is known as leverage.
Because companies tend to shift in relative attractiveness, the Fund may buy and sell securities
frequently, which may result in higher transaction costs, additional capital gains tax liabilities
and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, to a limited extent,
derivative instruments (such as futures, options and swaps) to use as a substitute for a purchase
or sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as market risk.
What are the principal risks of investing in this Fund?
Since it purchases equity securities, the Fund is subject to the risk that
stock prices will fall over short or extended periods of time. Historically,
the equity market has moved in cycles, and the value of the Funds securities
may fluctuate drastically from day to day. Individual companies may report poor
results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.
With a long position, the Fund purchases a stock outright; with a short position, the Fund sells a
security that it does not own and must borrow to meet its settlement obligations. To close the
short position, the Fund buys the same stock in the market and returns it to the lender. The Fund
makes money if the market price of the stock goes down after the short sale is executed.
Conversely, if the price of the stock goes up after the short sale, the Fund will lose money
because it will have to pay more to replace the borrowed stock than it received when it sold the
stock short. Short positions may be used to hedge against the volatility of the long portion of the
overall portfolio and/or to garner returns from declines in security prices. The Fund may take long
and short positions in the same sector/industry.
The Funds short sales effectively leverage the Funds assets. It is possible that the Fund may
lose money on both long and short positions at the same time. The Funds assets that are used as
collateral to secure the short sales may decrease in value while the short positions are
outstanding, which may force the Fund to use its other assets to increase the collateral. Leverage
also creates interest expense that may decrease the Funds overall returns.
If the Fund borrows money from banks for investment purposes, the Funds borrowing activities will
amplify any increase or decrease in the Funds net asset value. In addition, the interest which the
Fund must pay on borrowed money will reduce or eliminate any net investment profits.
Small and mid-cap stocks may perform differently from other segments of the equity market or the
equity market as a whole and may be more volatile than stocks of larger companies.
Large cap stocks can perform differently from other segments of the equity market or the equity
market as a whole. Large capitalization companies may be less flexible in evolving markets or
unable to implement change as quickly as smaller capitalization companies. Accordingly, the value
of large cap stocks may not rise to the same extent as the value of small or mid-cap stocks under
certain market conditions.
Because the Fund may invest in ADRs, it is subject to some of the same risks as direct investments
in foreign companies. These include the risk that political and economic events unique to a country
or region will affect those markets and their issuers. These events will not necessarily affect the
U.S. economy or similar issuers located in the United States.
The risks of owning shares of an ETF generally reflect the risks of owning the underlying
securities the ETF is designed to track, although lack of liquidity in an ETF could result in being
more volatile than the underlying portfolio of securities. In addition, because of ETF management
expenses, compared to owning the underlying securities directly, it may be more costly to own an
ETF.
Due to its trading strategies, the Fund may experience a portfolio turnover rate of over 100%.
Portfolio turnover measures the amount of trading the Fund does during the year. Funds with high
turnover rates (over 100%) often have higher transaction costs (which are paid by the Fund) and may
generate short-term capital gains (on which you will pay taxes, even if you do not sell any shares
by year-end).
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
Performance Information
The Fund is new and therefore does not have performance history for a full
calendar year.
After the Fund has been in operation for one full calendar year, such performance information will
be available. The performance information and bar charts help to illustrate the risks of investing
in the Fund by showing changes in the Funds performance from year to year and by showing how the
Funds average annual returns for 1, 5, and 10 years (or the life of the Fund, if shorter) compare
with those of a broad measure of market performance.
Fund Fees and Expenses
This table describes the Funds fees and expenses that you may pay if you buy
and hold Fund shares.
Annual Fund Operating Expenses (expenses deducted from Fund assets)
|
|
|
|
|
|
|
I Shares |
|
Investment Advisory Fees |
|
|
1.10 |
% |
Other Expenses |
|
|
|
|
Dividend Expense on Short Sales1 |
|
|
[0.55] |
% |
Other Operating Expenses |
|
|
[0.16] |
% |
Total Other Expenses |
|
|
[0.71] |
% |
|
|
|
|
|
|
|
|
|
Total Annual Operating Expenses2 |
|
|
[1.81] |
% |
|
|
|
1 |
|
This expense reflects the estimate of amounts to be paid as substitute dividend expenses
on securities borrowed for the settlement of short sales. Short sale dividends generally
reduce the market value of the securities by the amount of the dividend declared; thus
increasing the Funds unrealized gain or reducing the Funds unrealized loss on the
securities sold short. Short sale dividends are treated as an expense, and increase the
Funds total expense ratio, although no cash is received or paid by the Fund. |
|
|
|
Excluding dividend expense on short sales, the Total Annual Operating Expenses for the Fund would
be 1.26%. |
|
2 |
|
The Adviser and Subadviser have contractually agreed to
waive fees and reimburse expenses until at least August 1,
2009 in order to keep Total Annual Operating Expenses
(excluding taxes, brokerage commissions, substitute dividend
expenses on securities sold short, extraordinary expenses
and estimated indirect expenses attributable to the Funds
investment in other funds, such as ETFs) from exceeding
1.30%. If at any point before August 1, 2011, Total Annual
Operating Expenses are less than the applicable expense cap,
the Adviser and Subadviser may retain the difference to
recapture any of the prior waivers or reimbursements. In
addition, the Adviser and/or other service providers may
voluntarily waive a portion of their fees in order to limit
Total Annual Operating Expenses. These voluntary waivers may
be discontinued at any time. |
Example
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and returns might be different, your approximate costs of investing $10,000 in the Fund would
be:
|
|
|
|
|
1 Year |
|
3 Years |
$ [ ] |
|
$ |
[ ] |
|
Fund Expenses
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
MORE INFORMATION ABOUT RISK
More Information
About Risk
Borrowing Risk
All Funds
A Fund may borrow cash and/or securities subject to certain limits. Borrowing may amplify the
effect of any increase of decrease in the value of portfolio securities or the net asset value of a
Fund, and money borrowed will be subject to interest costs. Interest costs on borrowings may
fluctuate with changing market rates of interest and may partially offset or exceed the return
earned on borrowed funds. Under adverse market conditions, a Fund may have to sell portfolio
securities to meet interest or principal payments at a time when fundamental investment
considerations would not favor such sales.
Derivatives Risk
All Funds
Derivatives may involve risks different from, and possibly greater than, those of traditional
investments. A derivative is a financial contract whose value depends on changes in the value of
one or more underlying assets, reference rates or indices. A Fund may use derivatives (such as
futures, options, and swaps) to attempt to achieve its investment objective and offset certain
investment risks, while at the same time attempting to maintain liquidity. These positions may be
established for hedging or speculation purposes. Hedging involves making an investment (e.g. in a
futures contract) to reduce the risk of adverse price movements in an already existing investment
position.
|
|
The success of a hedging strategy may depend on an ability to predict
movements in the prices of individual securities, fluctuations in
markets, and movements in interest rates. |
|
|
|
A Fund experiencing losses over certain ranges in the market that
exceed losses experienced by a fund that does not use derivatives. |
|
|
|
There may be an imperfect or no correlation between the changes in
market value of the securities held by a Fund and the prices of
derivatives. |
|
|
|
There may not be a liquid secondary market for derivatives. |
|
|
|
Trading restrictions or limitations may be imposed by an exchange. |
|
|
|
Government regulations may restrict trading in derivatives. |
|
|
|
The other party to an agreement (e.g., options or swaps) may default;
however, in certain circumstances, such counter-party risk may be
reduced by having an organization with very good credit act as
intermediary. |
Because options premiums paid or received by a Fund are small in relation to the market value of
the investments underlying the options, buying and selling put and call options can be more
speculative than investing directly in securities. In addition, many types of derivatives have
limited investment lives and may expire or necessitate being sold at inopportune times.
The use of derivatives may cause a Fund to recognize higher amounts of short-term capital gains,
which are generally taxed to shareholders at ordinary income tax rates.
To limit leveraging risk, a Fund observes asset segregation requirements to cover its obligations
under derivative instruments. By setting aside assets equal only to its net obligations under
certain derivative instruments, a Fund will have the ability to employ leverage to a greater extent
than if it were required to segregate assets equal to the full notional value of such derivative
instruments.
Emerging Markets Risk
International Equity 130/30 Fund
Emerging market countries are countries that the World Bank or the United Nations considers to be
emerging or developing. Most countries or regions are included in this category, except for
Australia, Canada, Hong Kong, Japan, New Zealand, Singapore, the United Kingdom, the United States
and most of the countries located in Western Europe. Emerging markets may be more likely to
experience political turmoil or rapid changes in market or economic conditions than more developed
countries. In addition, the financial stability of issuers (including governments) in emerging
market countries may be more precarious than in other countries. As a result, there will tend to be
an increased risk of price volatility associated with a Funds investments in emerging market
countries, which may be magnified by currency fluctuations relative to the U.S. dollar. Governments
of some emerging market countries have defaulted on their bonds and may do so in the future.
Equity Risk
All Funds
Equity securities include public and privately issued equity securities, common and preferred
stocks, warrants, rights to subscribe to common stock and convertible securities, as well as
instruments that attempt to track the price movement of equity indices. Investments in equity
securities and equity derivatives in general are subject to market risks that may cause their
prices to fluctuate over time. The value of securities convertible into equity securities, such as
warrants or convertible debt, is also affected by prevailing interest rates, the credit quality of
the issuer and any call provision. Fluctuations in the value of equity securities in which a mutual
fund invests will cause a funds net asset value to fluctuate. An investment in a portfolio of
equity securities may be more suitable for long-term investors who can bear the risk of these share
price fluctuations.
Exchange Traded Fund Risk
All Funds
The Funds may purchase shares of exchange-traded funds (ETFs) to temporarily gain exposure to a
particular portion of the market while awaiting an opportunity to purchase securities directly.
ETFs are investment companies that are bought and sold on a securities exchange. An ETF holds a
portfolio of securities designed to track a particular market segment or index. ETFs, like mutual
funds, have expenses associated with their operation, including advisory fees. When the Fund
invests in an ETF, in addition to directly bearing expenses associated with its own operations, it
will bear a pro rata portion of the ETFs expense. The risks of owning shares of an ETF generally
reflect the risks of owning the underlying securities the ETF is designed to track, although lack
of liquidity in an ETF could result in being more volatile than the underlying portfolio of
securities. In addition, because of ETF management expenses, compared to owning the underlying
securities directly, it may be more costly to own an ETF.
Foreign Security Risk
All Funds
Investments in securities of foreign companies or governments can be more volatile than investments
in U.S. companies or governments. Political and economic events unique to a country or region will
affect those markets and their issuers. These events will not necessarily affect the U.S. economy
or similar issuers located in the United States. Diplomatic, political, or economic developments,
including nationalization or appropriation, could affect investments in foreign countries. Foreign
securities markets generally have less trading volume and less liquidity than U.S. markets.
The value of securities denominated in foreign currencies, and of dividends from such securities,
can change significantly when foreign currencies strengthen or weaken relative to the U.S. dollar.
As a result, changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Funds investment. Certain foreign currencies may be
particularly volatile, and foreign governments may intervene in the currency markets, causing a
decline in value or liquidity in a Funds foreign currency holdings. These currency movements may
happen separately from and in response to events that do not otherwise affect the value of the
security in the issuers home country.
Foreign companies or governments generally are not subject to uniform accounting, auditing, and
financial reporting standards comparable to those applicable to domestic U.S. companies or
governments. Transaction costs are generally higher than those in the U.S. and expenses for
custodial arrangements of foreign securities may be somewhat greater than typical expenses for
custodial arrangements of similar U.S. securities. Some foreign governments levy withholding taxes
against dividend and interest income. Although in some countries a portion of these taxes are
recoverable, the non-recovered portion will reduce the income received from the securities
comprising the portfolio.
Large Company Risk
All Funds
Large cap stocks can perform differently from other segments of the equity market or the equity
market as a whole. Companies with large capitalizations tend to go in and out of favor based on
market and economic conditions and, while they can be less volatile than companies with smaller
market capitalizations, they may also be less flexible in evolving markets or unable to implement
change as quickly as their smaller counterparts. Accordingly, the value of large cap stocks may not
rise to the same extent as the value of small or mid-cap companies.
Leverage Risk
All Funds
Leverage occurs when a Fund increases its assets available for investment using borrowings or
similar transactions. Due to the fact that short sales involve borrowing securities and then
selling them, a Funds short sales effectively leverage the Funds assets. It is possible that the
Fund may lose money on both long positions and short positions at the same time. The use of
leverage may make any change in a Funds net asset value even greater and thus result in increased
volatility of returns. A Funds assets that are used as collateral to secure the short sales may
decrease in value while the short positions are outstanding, which may force the Fund to use its
other assets to increase the collateral. Leverage also creates interest expense that may lower a
Funds overall returns. Lastly, there is no guarantee that a leveraging strategy will be
successful.
Real Estate Risk
Real Estate 130/30 Fund
Investments in real estate related securities are subject to risks similar to those associated with
direct ownership of real estate, including losses from casualty or condemnation, changes in local and general
economic conditions, supply and demand, interest rates, zoning laws, regulatory
limitations on rents, property taxes and operating expenses. A Real Estate Investment Trust
(REIT) invest primarily in income-producing real estate or market loans to persons involved in the
real estate industry. Some REITs, called equity REITs, buy real estate, and investors receive
income from the rents received and from any profits on the sale of its properties. Other REITs,
called mortgage REITs, lend money to building developers and other real estate companies, and
receive income from interest paid on those loans. There are also hybrid REITs, which engage in both
owning real estate and making loans. If a REIT meets certain requirements, it is not taxed on the
income it distributes to its investors, however, such distributions are taxable to investors in the
REIT. To the extent the fund invests in mortgage REITs, it will be subject to credit risk and
interest rate risk with respect to the loans made by the REITs in which it invests. Credit risk is
the risk that the borrower will not be able to make interest and principal payments on the loan to
the REIT when they are due. Interest rate risk is the risk that a change in the prevailing interest
rate will cause the value of the loan portfolio held by the REIT to rise or fall. Generally, when
interest rates rise, the value of the loan portfolio will decline. The opposite is true when
interest rates decline. The degree to which interest rate changes affect the funds performance
varies and is related to the specific characteristics of the loan portfolios of the mortgage REITs
in which the fund invests. In addition, an investment in a REIT is subject to additional risks,
such as poor performance by the manager of the REIT, adverse changes to the tax laws or failure by
the REIT to qualify for tax-free pass-through of income under the Internal Revenue Code of 1986, as
amended (the Code). In addition, some REITs have limited diversification because they invest in a
limited number of properties, a narrow geographic area, or a single type of property. Also, the
organizational documents of a REIT may contain provisions that make changes in control of the REIT
difficult and time-consuming. As a shareholder in a REIT, the Fund and its shareholders, would bear
their ratable share of the REITs expenses and would at the same time continue to pay its own fees
and expenses.
Real estate company share prices may drop because of the failure of borrowers to pay their loans
and poor management. Many real estate companies, including REITs, utilize leverage (and some may be
highly leveraged), which increases investment risk and could adversely affect a real estate
companys operations and market value in periods of rising interest rates. Financial covenants
related to real estate company leveraging may affect the companys ability to operate effectively.
Real estate risks may also arise where real estate companies fail to carry adequate insurance, or
where a real estate company may become liable for removal or other costs related to environmental
contamination.
Real estate companies tend to be small to medium-sized companies. Real estate company shares, like
other smaller company shares, can be more volatile than, and perform differently from, larger
company shares. There may be less trading in a smaller companys shares, which means that buy and
sell transactions in those shares could have a larger impact on the shares price than is the case
with larger company shares.
Securities Lending Risk
All Funds
A Fund may lend securities to broker-dealers to earn additional income. Risks include the potential
insolvency of the borrower that could result in delays in recovering securities and capital losses.
Additionally, losses could result from the reinvestment of collateral received on loaned securities
in investments that default or do not perform well. It is also possible that if a security on loan
is sold and a Fund is unable to timely recall the security, the Fund may be required to repurchase
the security in the market place, which may result in a potential loss to shareholders. As
securities on loan may not be voted by the Fund, there is a risk that the Fund may not be able to
recall the securities in sufficient time to vote on material proxy matters.
Short Sales Risk
All Funds
A short sale is the sale by a Fund of a security which has been borrowed from a third party on the
expectation that the market price will drop. Short sales involve additional costs and risk. If a
security sold short increases in price, the Fund may have to cover its short position at a higher
price than the short sale price, resulting in a loss. The Fund may not initiate a short sale unless
it is able to borrow the shares and must then deliver the shares to the buyer to complete the
transaction. The Fund may not be able to borrow a security that it wishes to short or the lender of
the shares may, at any time, recall the loaned shares which would force the Fund to purchase the
shares in the open market at the then current price. In addition, the Fund may not be able to close
out a short position at a profit or an acceptable price and may have to sell long positions to
cover accumulated losses in the short portfolio. Thus, the Fund may not be able to successfully
implement its short sale strategy due to the limited availability of desired securities or for
other reasons.
The Fund must normally repay to the lender an amount equal to any dividends or interest that
accrues while the loan is outstanding. The amount of any gain will be decreased, and the amount of
any loss increased, by the amount of the premium, dividends, interest or expenses the Fund may be
required to pay in connection with the short sale. Also, the lender of a security may terminate the
loan at a time when the Fund is unable to borrow the same security from another lender for
delivery. In that case, the Fund would need to purchase a replacement security at the then current
market price or buy in by paying the lender with securities purchases in the open market or with
an amount equal to the cost of purchasing the securities.
Until the Fund replaces a borrowed security, it is required to maintain a segregated account of
cash or liquid assets with a broker or custodian to cover the Funds short position. Securities
held in a segregated account cannot be sold while the position they are covering is outstanding,
unless they are replaced with similar securities. Additionally, the Fund must maintain sufficient
liquid assets (less any additional collateral held by the broker), marked-to-market daily, to cover
the short sale obligation. This may limit the Funds investment flexibility, as well as its ability
to meet redemption requests or other current obligations.
Smaller Company Risk
All Funds
Small and mid-capitalization stocks can perform differently from other segments of the equity
market or the equity market as a whole. The small and mid- capitalization companies the Fund
invests in may be more vulnerable to adverse business or economic events than larger, more
established companies. In particular, these companies may have limited product lines, markets and
financial resources, and may depend upon a relatively small management group. Also, there may be
less publicly available information about the issuers of the securities or less market interest in
such securities than in the case of larger companies. Therefore, small and mid-cap stocks can be
more volatile than those of larger companies. The securities of small and mid-capitalization
companies may be illiquid, restricted as to resale, or may trade less frequently and in smaller
volume than more widely held securities, which may make it more difficult for a Fund to establish
or close out a position in these securities at prevailing market prices. These securities may be
traded over-the-counter or listed on an exchange.
More Information About Fund Investments
This prospectus describes the Funds primary strategies, and the Funds will
normally invest in the types of securities described in this prospectus.
However, in addition to the investments and strategies described in this
prospectus, each Fund also may invest in other securities, use other strategies
and engage in other investment practices. These investments and strategies, as
well as those described in this prospectus, are described in detail in the
Statement of Additional Information.
The investments and strategies described in this prospectus are those that we use under normal
conditions. During unusual economic or market conditions, or for temporary defensive or liquidity
purposes, each Fund may invest up to 100% of its assets in cash, money market instruments,
repurchase agreements and short-term obligations. A Fund will do so only if the Adviser believes
that the risk of loss outweighs the opportunity for capital gains or higher income. Of course, a
Fund cannot guarantee that it will achieve its investment goal.
Each Fund may invest in other mutual funds for cash management purposes. When a Fund invests in
another mutual fund, in addition to directly bearing expenses associated with its own operations,
it will bear a pro rata portion of the other mutual funds expenses.
Information About Portfolio Holdings
A description of the Funds policies and procedures with respect to the circumstances under which
the Funds disclose their portfolio securities is available in the Statement of Additional
Information.
MANAGEMENT
The Board of Trustees is responsible for the overall supervision and management of the business and
affairs of RidgeWorth Funds. The Board of Trustees establishes policies that the Adviser and
Subadviser must follow in their of all fund related management activities. The day-to-day
operations of RidgeWorth Funds are the responsibilities of the officers and various service
organizations retained by RidgeWorth Funds.
INVESTMENT ADVISER
[LOGO] RidgeWorth Capital Management, Inc. (formerly, Trusco Capital Management, Inc.), 50 Hurt
Plaza, Suite 1400, Atlanta, Georgia 30303 (RidgeWorth or the Adviser), serves as the investment
adviser to the Funds. As of June 30, 2008, the Adviser had approximately $[73.3] billion in assets
under management. The Adviser is responsible for overseeing the Subadviser to ensure compliance
with each Funds investment policies and guidelines and monitors each Subadvisers adherence to its
investment style. The Adviser pays the Subadviser out of the fees it receives from the Funds.
An investment adviser has a fiduciary obligation to its clients when the adviser has authority to
vote their proxies. Under the current contractual agreement, the Adviser is authorized to vote
proxies on behalf of each Fund. Information regarding the Advisers, and thus each Funds, Proxy
Voting Policies and Procedures is provided in the Statement of Additional Information. A copy of
the Advisers Proxy Voting Policies and Procedures may be obtained by contacting the RidgeWorth
Funds at 1-888-784-3863, or by visiting www.ridgeworthfunds.com.
For its advisory services to the Funds, the Adviser is entitled to receive an annual advisory fee
based on each Funds average daily net assets as follows:
|
|
|
|
|
Fund |
|
Fee |
International Equity 130/30 Fund |
|
|
1.25 |
% |
Real Estate 130/30 Fund |
|
|
1.25 |
% |
U.S. Equity 130/30 Fund |
|
|
1.10 |
% |
The following breakpoints are used in computing the advisory fee:
|
|
|
|
|
Average Daily Net Assets |
|
Discount From Full Fee |
First $500 million |
|
None-Full Fee |
Next $500 million |
|
|
5 |
% |
Over $1 billion |
|
|
10 |
% |
The Adviser has contractually agreed to waive fees and reimburse expenses until at least August 1,
2009 in order to keep total annual operating expenses of each Fund from exceeding the expense cap.
If at any point before August 1, 2011, total annual operating expenses are less than the expense
cap, the Adviser may retain the difference to recapture any of the prior waivers or reimbursements.
A discussion regarding the basis for the Board of Trustees approval of the investment advisory
contracts with the Adviser will appear in the Funds annual report to shareholders for the period
ended March 31, 2008.
Information about the Subadvisers and the individual portfolio managers of the Funds is discussed
below. The Statement of Additional Information provides additional information regarding the
portfolio managers compensation, other accounts managed by the portfolio managers, potential
conflicts of interest and the portfolio managers ownership of securities in the Funds.
Investment Subadviser
The Subadviser is responsible for managing the portfolios of the Funds on a day-to-day basis. The
Subadviser selects, buys, and sells securities for the Funds under the supervision of the Adviser
and the Board of Trustees. A discussion regarding the basis for the Board of Trustees approval of
the investment subadvisory agreement appears in the Funds annual report to shareholders for the
period ended March 31, 2008.
Information about the Subadviser and the individual portfolio managers of the Funds is discussed
below. The Statement of Additional Information provides additional information regarding the
portfolio managers compensation, other accounts managed by the portfolio managers, potential
conflicts of interest and the portfolio managers ownership of securities in the Fund.
[LOGO] Alpha Equity Management LLC
www.alphaequitymgmt.com
Alpha Equity Management LLC, 90 State House Square, Suite 1100, Hartford, CT 06103 and 405 Park
Avenue, Suite 803, New York, NY, 10022, serves as the subadviser to the Funds. The Subadviser was
founded in 2007 through a transaction in which its predecessor organization, founded in 2000,
transferred all its investment advisory business to the Subadviser. The Subadviser is a
minority-owned subsidiary of the Adviser. The Subadviser specializes in quantitative strategies
and its client base is comprised of institutional investors and high net worth individuals. As of
June 30, 2008, the Subadviser had approximately $[ ] million in assets under management.
Alpha Equity, one of the pioneers in active extension (130/30) products, specializes in
quantitative strategies engineered to generate alpha through all market cycles. It has developed an
impressive six-year track record in international, real estate and domestic short-extension
strategies. Alpha Equity believes this long-term experience will be a great benefit for investors
seeking alternative investment strategies.
Portfolio Managers
The Subadviser employs a team approach in managing the Funds. Each of the individuals primarily
responsible for the day-to-day management of the Funds has an asset class specialty or an
investment process specialty. The following individuals are primarily responsible for the
day-to-day management of the Funds.
Kevin Means, CFA, is the founder of the Subadviser and its predecessor and has been Managing
Partner and Chief Investment Officer of the Subadviser and its predecessor since February 2000. As
Real Estate Portfolio Manager, he has been primarily responsible for stock selection in the Real
Estate 130/30 Fund since its inception. He has more than 20 years of investment experience.
Vincent Fioramonti, CFA, has been Partner and Director of Trading and Operations of the Subadviser
and its predecessor since November 2002. As Senior International Portfolio Manager, he has been
primarily responsible for stock selection in the International Equity 130/30 Fund since its
inception. He has more than 19 years of investment experience.
Don Townswick, CFA, has been Partner and Director of Research of the Subadviser and its predecessor
since August 2004. As U.S. Portfolio Manager, he has been primarily responsible for stock selection
in the U.S. Equity 130/30 Fund since its inception. Prior to joining the Subadviser, Mr. Townswick
served as Senior Portfolio Manager and Director of Quantitative Research with ING Aeltus Investment
Management Inc. from July 1994 until June 2004. He has more than 15 years of investment experience.
Neil Kochen, CFA, has been Partner and Chief Risk Officer of the Subadviser and its predecessor
since March, 2006. Mr. Kochen has monitored the risk characteristics of the International Equity
130/30 Fund, Real Estate 130/30 Fund and U.S. Equity 130/30 Fund since each Funds inception. As
Asset Allocation Strategist, he is also responsible for top-down country, currency, sector, and
industry exposures in each of the Funds. Prior to joining the Subadviser, Mr. Kochen served as
Chief Investment Officer Equities and Chief Risk Officer with ING Aeltus Investment Management
Inc. from January 2000 until June 2004. He has more than 22 years of investment experience.
The Statement of Additional Information provides additional information regarding the portfolio
managers compensation, other accounts managed by the portfolio managers, potential conflicts of
interest and the portfolio managers ownership of securities in the Funds.
Related Performance of the Subadviser
The following table sets forth the Subadvisers historical performance data (as of the dates
indicated) relating to the three actual, fee-paying, discretionary private limited partnerships
(hedge funds) managed by the Subadviser, that have investment objectives, policies, strategies
and risks substantially similar to those of each of the Funds. The data is provided to illustrate
the past performance of the Subadviser in managing substantially similar accounts as measured
against a specified market index or indices and does not represent the performance of each of
the Funds. Investors should not rely upon this information for investing purposes and should
not consider this performance data as an indication of future performance of the each of the Funds
or of the Subadviser. Nor is the performance representative of what the Funds may have achieved
had the Subadviser managed the Funds during that period.
The Subadvisers composite performance data shown below was calculated on a time weighted basis and
includes all dividends and interest, accrued income and realized and unrealized gains and losses.
Brokerage commissions and other execution costs, borrowing costs, and interest expenses on margin
are all included in the returns presented. Net returns also reflect the deduction of an investment
advisory fee of 1%, and an incentive allocation (fee) of 20% of the profits above the benchmark
index return. Returns do not reflect any provision for federal or state income taxes or custody
fees. Securities transactions are accounted for on trade date and accrual accounting is utilized.
Cash and equivalents are included in performance returns. Returns are calculated by geometrically
linking monthly returns. Each of the private partnerships utilized some degree of leverage which
may have more positively benefited performance in a given year as compared to its unleveraged
benchmark. Furthermore, as international investing also involves additional risks and volatility
that include (but are not limited to) market inefficiencies, accounting dissimilarities,
availability of company specific information, time zone differences, economic and political
instability, and fluctuating interest and currency exchange rates, future international fund
returns may differ to a greater degree from those shown below.
The three private partnerships presented are not subject to the same types of expenses to which
each of the Funds is subject, nor to the diversification requirements, specific tax restrictions,
cash flows and investment limitations imposed on each of the Funds by the 1940 Act or Subchapter M
of the Internal Revenue Code of 1986, as amended (the Code). Consequently, the performance
results for the private partnerships could have been adversely affected if they had been regulated
as investment companies under the federal securities laws. Cash flows in private limited
partnerships are fairly stable and can be reasonably anticipated. The Funds cash flows cannot be
comparatively predicted and thus may also negatively affect future returns. In addition, the
performance results for the private partnerships may have been lower if the expenses to which each
of the Funds is subject were applied. The investment results of the private partnerships were not
calculated pursuant to the methodology established by the SEC that will be used to calculate
performance results of the Fund. The use of a methodology different from that used below to
calculate performance could potentially result in significantly different and/or lower performance
returns.
All information set forth in the tables below relies on data supplied by the Subadviser or from
statistical services, reports or other sources believed by the Subadviser to be reliable. The
Adviser did not participate in and is not responsible for these calculations.
The private partnerships have been subject to an annual audit of their year-end net asset values
since their inception. However, the percentage return information presented has not been audited.
Please refer to the Subadvisers Form ADV Part II for additional information regarding the
Subadvisers fee structure and other material information.
RELATED PERFORMANCE OF THE SUBADVISER
International Equity 130/30 Fund Related Performance to be updated
Real Estate 130/30 Fund Related Performance to be updated
U.S. Equity 130/30 Fund Related Performance to be updated
Prospectus 21
PURCHASING AND SELLING FUND SHARES
Purchasing and Selling Fund Shares
This section tells you how to purchase and sell (sometimes called redeem) I Shares of the Funds.
How to Purchase Fund Shares
The Funds offer I Shares to financial institutions and intermediaries for their own accounts or for
the accounts of customers for whom they may act as fiduciary agent, investment adviser, or
custodian. These accounts primarily consist of:
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|
assets of a bona fide trust, |
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|
|
assets of a business entity possessing a tax identification number, |
|
|
|
assets of an employee benefit plan, |
|
|
|
assets held within select fee-based programs, or |
|
|
|
assets held within certain non-discretionary intermediary no-load platforms. |
Employee benefit plans generally include profit sharing, 401(k) and 403(b) plans. Employee benefit
plans generally do not include IRAs; SIMPLE, SEP, SARSEP plans; plans covering self-employed
individuals and their employees or health savings accounts unless you, as a customer of a financial
institution or intermediary, meet the Funds established criteria as described above.
As a result, you, as a customer of a financial institution or intermediary, may, under certain
circumstances that meet the Funds established criteria, be able to purchase I Shares through
accounts made with select financial institutions or intermediaries. I Shares will be held of record
by (in the name of) your financial institution or intermediary. Depending upon the terms of your
account, you may have, or be given, the right to vote your I Shares. Financial institutions or
intermediaries may impose eligibility requirements for each of their clients or customers investing
in the Funds, including investment minimum requirements, which may differ from those imposed by the
Funds. Please contact your financial institution or intermediary for complete details for
purchasing I Shares.
I Shares may also be purchased directly from the Funds by officers, directors or trustees, and
employees and their immediate families (strictly limited to current spouses/domestic partners and
dependent children) of:
|
|
RidgeWorth Funds, |
|
|
|
Subadvisers to the RidgeWorth Funds, or |
|
|
|
SunTrust Banks, Inc. and its subsidiaries. |
Validation of current employment/service will be required upon establishment of the account. The
Funds, in their sole discretion, may determine if an applicant qualifies for this program.
When Can You Purchase Shares?
The Funds are open for business on days when the New York Stock Exchange (the NYSE) is open for
regular trading (a Business Day).
Each Fund calculates its net asset value per share (NAV) once each Business Day at the close of
regular trading on the NYSE (normally 4:00 p.m. Eastern Time.)
If a Fund or its authorized agent receives your purchase or redemption request in proper form
before 4:00 p.m., Eastern Time, your transaction will be priced at that Business Days NAV. If your
request is received after 4:00 p.m., it will be priced at the next Business Days NAV.
The time at which transactions and shares are priced and the time until which orders are accepted
may be changed if the NYSE closes early.
The Funds will not accept orders that request a particular day or price for the transaction or any
other special conditions.
You may have to transmit your purchase and sale orders to your financial institution or
intermediary at an earlier time for your transaction to become effective that day. This allows the
financial institution or intermediary time to process your order and transmit it to the transfer
agent in time to meet the above stated fund cut-off times. For more information about how to
purchase or sell Fund shares, including a specific financial institutions or intermediarys
internal order entry cut-off time, please contact your financial institution or intermediary
directly.
A Fund may reject any purchase order.
How the Funds Calculate NAV
NAV is calculated by adding the total value of a Funds investments and other assets, subtracting
its liabilities, and then dividing that figure by the number of outstanding shares of the Fund.
In calculating NAV, each Fund generally values its investment portfolio at market price. If market
prices are not readily available or the Fund reasonably believes that they are unreliable, such as
in the case of a security value that has been materially affected by events occurring after the
relevant market closes, a Fund is required to price those securities at fair value as determined in
good faith using methods approved by the Board of Trustees. A Funds determination of a securitys
fair value price often involves the consideration of a number of subjective factors, and is
therefore subject to the unavoidable risk that the value that a Fund assigns to a security may be
higher or lower than the securitys value would be if a reliable market quotation for the security
was readily available.
When valuing fixed income securities with remaining maturities of more than 60 days, the Funds use
the value of the security provided by pricing services. The values provided by a pricing service
may be based upon market quotations for the same security, securities expected to trade in a
similar manner, or a pricing matrix. When valuing fixed income securities with remaining maturities
of 60 days or less, the Funds use the securitys amortized cost. Amortized cost and the use of a
pricing matrix in valuing fixed income
securities are forms of fair value pricing. Fair value
prices may be determined in good faith using methods approved by the Board of Trustees.
Although the Funds, except the International Equity 130/30 Fund invests primarily in the stocks of
companies that are traded on U.S. exchanges, there may be limited circumstances in which a Fund
would price securities at fair value for example, if the exchange on which a portfolio security
is principally traded closed early or if trading in a particular security was halted during the day
and did not resume prior to the time a Fund calculated its NAV.
With respect to non-U.S. securities held by a Fund, the Fund may take factors influencing specific
markets or issues into consideration in determining the fair value of a non-U.S. security.
International securities markets may be open on days when the U.S. markets are closed. In such
cases, the value of any international securities owned by a Fund may be significantly affected on
days when investors cannot buy or sell shares. In addition, due to the difference in times between
the close of the international markets and the time a Fund prices its shares, the value the Fund
assigns to securities generally will not be the same as the primary markets or exchanges. In
determining fair value prices, a Fund may consider the performance of securities on their primary
exchanges, foreign currency appreciation/depreciation, securities market movements in the U.S., or
other relevant information as related to the securities.
In-Kind Purchases
Payment for shares of a Fund may, in the discretion of the Adviser, be made in the form of
securities that are permissible investments for such Fund. In connection with an in-kind securities
payment, a Fund will require, among other things, that the securities (a) meet the investment
objectives and policies of the Fund; (b) are acquired for investment and not for resale; (c) are
liquid securities that are not restricted as to transfer either by law or liquidity of markets;
(d) have a value that is readily ascertainable (e.g., by a listing on a nationally recognized
securities exchange); and (e) are valued on the day of purchase in accordance with the pricing
methods used by the Fund. For further information about this form of payment, please call
1-888-784-3863.
Customer Identification
Foreign Investors
The Funds do not generally accept investments in I Shares by non-U.S. citizens or entities.
Customer Identification and Verification
To help the government fight the funding of terrorism and money laundering activities, federal law
requires all financial institutions to obtain, verify, and record information that identifies each
person who opens an account.
When you open an account, you will be asked to provide your name, residential street address, date
of birth, Social Security number or tax identification number. You may also be asked for other
information that will allow us to identify you. Entities are also required to provide additional
documentation. This information will be verified to ensure the identity of all persons opening a
mutual fund account.
In certain instances, the Funds are required to collect documents to fulfill their legal
obligation. Documents provided in connection with your application will be used solely to establish
and verify a customers identity.
The Funds are required by law to reject your new account application if the required identifying
information is not provided. Attempts to collect the missing information required on the
application will be performed by either contacting you or, if applicable, your broker. If this
information is unable to be obtained within a timeframe established in the sole discretion of the
Funds, your application will be rejected.
Upon receipt of your application in proper form (or upon receipt of all identifying information
required on the application), your investment will be accepted and your order will be processed at
the NAV next determined.
However, the Funds reserve the right to close your account at the then-current days price if the
Funds are unable to verify your identity. Attempts to verify your identity will be performed within
a timeframe established in the sole discretion of the Funds. If the Funds are unable to verify your
identity, the Funds reserve the right to liquidate your account at the then-current days price and
remit proceeds to you via check. The Funds reserve the further right to hold your proceeds until
your original check clears the bank. In such an instance, you may be subject to a gain or loss on
Fund shares and will be subject to corresponding tax implications.
Anti-Money Laundering Program
Customer identification and verification is part of the Funds overall obligation to deter money
laundering under federal law. The Funds have adopted an anti-money laundering compliance program
designed to prevent the Funds from being used for money laundering or the financing of terrorist
activities. In this regard, the Funds reserve the right to (i) refuse, cancel or rescind any
purchase or exchange order, (ii) freeze any account and/or suspend account services, or
(iii) involuntarily redeem your account in cases of threatening conduct or suspected fraudulent or
illegal activity. These actions will be taken when, in the sole discretion of Fund management, they
are deemed to be in the best interest of the Funds or in cases when the Funds are requested or
compelled to do so by governmental or law enforcement authority.
How to Sell Your Fund Shares
You may sell your shares on any Business Day by contacting your financial institution or
intermediary. Your financial institution or intermediary will give you information about how to
sell your shares including any specific cut-off times required.
Holders of I Shares may sell shares by following the procedures established when they opened their
account or accounts with the Funds or with their financial institution or intermediary. The sale
price of each share will be the NAV next determined after the Funds receive your request in proper
form.
A Medallion Signature Guaranteet by a bank or other financial institution (a notarized signature is
not sufficient) is required to redeem shares:
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made payable to someone other than the registered shareholder; |
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sent to an address or bank account other than the address or bank account of record; or |
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sent to an address or bank account of record that has been changed within the last 15 calendar days. |
Other documentation may be required depending on the registration of the account.
t |
|
Medallion Signature Guarantee: A Medallion Signature Guarantee
verifies the authenticity of your signature and helps ensure that
changes to your account are in fact authorized by you. A Medallion |
|
|
Signature Guarantee may be obtained from a domestic bank or trust
company, broker, dealer, clearing agency, savings association or other
financial institution participating in a Medallion Program recognized
by the Securities Trading Association. Signature guarantees from
financial institutions that do not reflect one of the following are
not part of the program and will not be accepted. The acceptable
Medallion programs are Securities Transfer Agents Medallion Program,
(STAMP), Stock Exchange Medallion Program, (SEMP), or the New York
Stock Exchange, Inc. Medallion Program, (NYSE MSP). Contact your local
financial adviser or institution for further assistance. |
Receiving Your Money
Normally, the Funds will send your sale proceeds within five Business Days after the Funds receive
your request, but a Fund may take up to seven days to pay the sale proceeds if making immediate
payment would adversely affect the Fund (for example, to allow the Fund to raise capital in the
case of a large redemption).
Redemptions In Kind
The Funds generally pay redemption proceeds in cash. However, under unusual conditions that make
the payment of cash unwise (and for the protection of the Funds remaining shareholders), the Funds
might pay all or part of your redemption proceeds in liquid securities with a market value equal to
the redemption price (redemption in kind). It is highly unlikely that your shares would ever be
redeemed in kind, but if they were you would probably have to pay transaction costs to sell the
securities distributed to you, as well as taxes on any capital gains from the sale as with any
redemption.
Suspension of Your Right to Sell Your Shares
A Fund may suspend your right to sell your shares if the NYSE restricts trading, the SEC declares
an emergency or for other reasons approved by the SEC. More information about this is in the
Statement of Additional Information.
Telephone Transactions
Purchasing and selling Fund shares over the telephone is extremely convenient, but not without
risk. Although the Funds have certain safeguards and procedures to confirm the identity of callers
and the authenticity of instructions, the Funds are not responsible for any losses or costs
incurred by following telephone instructions the Funds reasonably believe to be genuine. If you or
your financial institution or intermediary transact with the Funds over the telephone, you will
generally bear the risk of any loss. The Funds reserve the right to modify, suspend or terminate
telephone transaction privileges at any time.
To redeem shares by telephone:
|
|
redemption checks must be made payable to the registered shareholder; and |
|
|
|
redemption checks must be mailed to an address or wired to a bank
account of record that has been associated with the shareholder account
for at least 15 calendar days. |
Market Timing Policies and Procedures
The Funds are intended for long-term investment purposes only and discourage shareholders from
engaging in market timing or other types of excessive short-term trading. This frequent trading
into and out of the Funds may present risks to the Funds long-term shareholders, all of which
could adversely affect shareholder returns. The risks posed by frequent trading include interfering
with the efficient implementation of the Funds investment strategies, triggering the recognition
of taxable gains and losses on the sale of Fund investments, requiring the Funds to maintain higher
cash balances to meet redemption
requests, and experiencing increased transaction costs. A Fund
that invests a significant amount of its assets in overseas markets is particularly susceptible to
the risk of certain investors using a strategy known as time-zone arbitrage. Investors using this
strategy attempt to take advantage of the differences in value of foreign securities that might
result from events that occur between the close of the foreign securities market on which a foreign
security is traded and the time at which the Fund calculates its NAV.
The Funds and/or their service providers will take steps reasonably designed to detect and deter
frequent trading by shareholders pursuant to the Funds policies and procedures described in this
prospectus and approved by the Funds Board of Trustees. For purposes of applying these policies,
the Funds service providers may consider the trading history of accounts under common ownership or
control. The Funds policies and procedures include:
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|
Shareholders are restricted from making more than one (1) round trip
into or out of a Fund within 14 days or more than two (2) round
trips within any continuous 90 day period. If a shareholder exceeds
either round trip restriction, he or she may be deemed a Market
Timer, and the Funds and/or their service providers may, at their
discretion, reject any additional purchase orders. The Funds define a
round trip as a purchase into a Fund by a shareholder, followed by a
subsequent redemption out of the Fund. Anyone considered to be a
Market Timer by the Funds, their manager(s) or a shareholder servicing
agent may be notified in writing of their designation as a Market
Timer. |
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The Funds reserve the right to reject any purchase request by any
investor or group of investors for any reason without prior notice,
including, in particular, if the Funds or their Adviser reasonably
believes that the trading activity would be harmful or disruptive to
the Funds. |
The Funds and/or their service providers seek to apply these policies to the best of their
abilities uniformly and in a manner they believe is consistent with the interests of the Funds
long-term shareholders.
Although these policies are designed to deter frequent trading, none of these measures alone nor
all of them taken together eliminate the possibility that frequent trading in the Funds will occur,
particularly with respect to trades placed by shareholders that invest in the Funds through omnibus
arrangements maintained by brokers, retirement plan accounts and other financial intermediaries.
Purchase and redemption transactions submitted to the Funds by these intermediaries reflect the
transactions of multiple beneficial owners whose individual transactions are not automatically
disclosed to the Funds. Therefore, the Funds rely in large part on the intermediaries who maintain
omnibus arrangements (which may represent a majority of Fund shares) to aid in the Funds efforts
to detect and deter short-term trading. The Funds monitor trading activity at the omnibus account
level and look for activity that indicates potential short-term trading. If they detect suspicious
trading activity, the Funds contact the intermediaries to determine whether the short-term trading
policy has been violated and may request and receive personal identifying information and
transaction histories for some or all beneficial owners to make this determination. If a Fund
believes that a shareholder has violated the short-term trading policy, it will take further steps
to prevent any future short-term trading by such shareholder in accordance with the policy. The
Funds cannot guarantee the accuracy of the information provided by the intermediaries and may not
always be able to track short-term trading effected through these intermediaries. A Fund has the
right to terminate an intermediarys ability to invest in a Fund if excessive trading activity
persists and a Fund or its Adviser or Subadviser reasonably believes that such termination would be
in the best interests of long-term shareholders. Further, the Funds seek to discourage short-term
trading by using fair value pricing procedures to fair value certain investments under some
circumstances. In addition to the Funds market timing policies and procedures described above,
you may be subject to the market timing
policies and procedures of the intermediary through which
you invest. Please consult with your intermediary for additional information regarding its frequent
trading restrictions.
Distribution of Fund Shares
From its own assets, the Adviser, the Subadviser or their affiliates may make payments based on
gross sales and current assets to selected brokerage firms or institutions. The amount of these
payments may be substantial. The minimum aggregate sales required for eligibility for such
payments, and the factors in selecting the brokerage firms and institutions to which they will be
made, are determined from time to time by the Adviser or Subadviser. Furthermore, in addition to
the fees that may be paid by the Fund, the Adviser, the Subadviser or their affiliates may pay fees
from their own capital resources to brokers, banks, financial advisers, retirement plan service
providers and other financial intermediaries, including affiliates, for providing
distribution-related or shareholder services.
The Adviser, the Subadviser or their affiliates may pay fees from their own capital resources to
financial intermediaries to compensate them for marketing expenses they incur or to pay for the
opportunity to have them distribute the Funds. The amount of these payments is determined by the
Adviser or the Subadviser and may differ among financial intermediaries. Such payments may provide
incentives for financial intermediaries to make shares of the Funds available to their customers,
and may allow the Funds greater access to such financial intermediaries and their customers than
would be the case if no payments were made. You may wish to consider whether such arrangements
exist when evaluating any recommendation to purchase shares of the Funds.
Please refer to the Statement of Additional Information for more information regarding these
arrangements.
Dividends and Distributions
The Real Estate 130/30 Fund and the U.S. Equity 130/30 Fund distributes their net investment income
quarterly and the International Equity 130/30 Fund distributes its net investment income annually.
Each Fund makes distributions of its net realized capital gains, if any, at least annually. If you
own Fund shares on a Funds record date, you will be entitled to receive the distribution.
You will receive dividends and distributions in the form of additional Fund shares unless you elect
to receive payment in cash. To elect cash payment, you must notify the Fund in writing prior to the
date of the distribution. Your election will be effective for dividends and distributions paid
after the Fund receives your written notice. To cancel your election, simply send the Fund written
notice.
Taxes
Please consult your tax advisor regarding your specific questions about federal, state and local
taxes.
Below the Funds have summarized some important tax issues that affect the Funds and their
shareholders. This summary is based on current tax laws, which may change, possibly with
retroactive effect.
Each Fund will distribute substantially all of its net investment income and its net realized
capital gains, if any, at least annually. The dividends and distributions you receive may be
subject to federal, state and local taxation, depending upon your tax situation. Distributions you
receive from a Fund may be taxable whether or not you reinvest them. Income distributions are
generally taxable either as ordinary income or as qualified dividend income. Dividends that are
qualified dividend income are eligible for the reduced maximum rate to individuals of 15% (5% for
individuals in lower tax brackets) to the extent that the Fund receives qualified dividend income.
Capital gains distributions are generally taxable at the rates applicable to long-term capital
gains. Long-term capital gains are currently taxed at a maximum rate of 15%. Absent further
legislation, the maximum 15% tax rate on qualified dividend income and long-term capital gains
will
cease to apply to taxable years beginning after December 31, 2010. Because the Funds will have both
long and short positions in equity securities, the Funds anticipate that a smaller portion of its
income dividends will be qualified dividend income eligible for taxation a the long-term capital
gains rate than if the Funds held only long positions in equity securities.
With respect to the Real Estate 130/30 Fund, dividends received by the Fund from a REIT may be
treated as qualified dividend income only to the extent the dividends are attributable to qualified
dividend income received by such REIT. Certain types of income received by the Fund from REITs,
real estate mortgage investment conduits (REMICs), taxable mortgage pools or other investments
may cause the Fund to designate some or all of its distributions as excess inclusion income. To
Fund shareholders such excess inclusion income may (1) constitute taxable income, as unrelated
business taxable income (UBTI) for those individual retirement accounts, 401(k) accounts, Keogh
plans, pension plans and certain charitable entities; (2) not be offset against net operating
losses for tax purposes; (3) not be eligible for reduced US withholding for non-US shareholders
even from tax treaty countries; and (4) cause the fund to be subject to tax if certain
disqualified organizations are fund shareholders.
The Fund will inform you of the amount of your ordinary income dividends, qualified dividend
income, and capital gains distributions shortly after the close of each calendar year.
With respect to the Real Estate 130/30 Fund, the Fund may at times find it necessary to reclassify
income after it issues your tax reporting statement. This can result from rules in the Code that
effectively prevent regulated investment companies such as the Fund and REITS in which the Fund
invests from ascertaining with certainty until after the calendar year end, the final amount and
character of distributions the Fund has received on its investments during the prior calendar year.
Prior to issuing your statement, the Fund makes every effort to search for reclassified income to
reduce the number of corrected forms mailed to shareholders. However, when necessary, the Fund will
send you a corrected Form 1099-DIV on or about February 28 to reflect reclassified information. If
you receive a corrected Form 1099-DIV, use the information on this Form, and not the information on
your original statement, in completing your tax returns.
For non-US investors in the Real Estate 130/30 Fund, such investors may also be subject to U.S.
estate tax on their investment in the Fund. They also have special certification requirements that,
if not met, can subject them to backup withholding on any dividends, distributions and redemption
proceeds that they receive from the Fund. Each of these subjects is discussed in greater detail in
the Distributions and Taxes Non-U.S. investors section of the Statement of Additional
Information.
The Real Estate 130/30 Fund may invest in equity securities of corporations that invest in U.S.
real property, including REITs. The Foreign Investment in Real Property Tax Act of 1980
(FIRPTA) makes a non-U.S. person subject to U.S. tax on disposition of a U.S. real property
interest as if he or she were a U.S. person. Under a look-through rule, if the Fund is classified
as a qualified investment entity, Fund distributions from short- or long-term capital gains that
are attributable to gain from the sale or disposition of a U.S. real property interest and which
are paid to non-U.S. investors that own more than 5% of a class of Fund shares at any time during
the one-year period ending on the date of the distribution may be subject to U.S. withholding tax
at a rate of 35%. You might also, in this case, be required to file a nonresident U.S. income tax
return. Even if you do not own more than 5% of a class of Fund shares, Fund distributions to you
that are attributable to gain from the sale or disposition of a U.S. real property interest will be
taxable as ordinary dividends (rather than as short- or long-term capital gains) subject to
withholding at a 30% or lower treaty rate. The Fund will be classified as a qualified investment
entity if, in general, more than 50% of its assets consist of interests in U.S. REITs and U.S.
real property holding corporations (e.g., a U.S. corporation more than 50% of the assets of which
are interests in U.S. real estate).
For a more detailed discussion on investment in U.S. real property, including the circumstances
under which a sale or redemption of Fund shares may result in FIRPTA gain to you, see the section,
Distributions and Taxes Non-U.S. investors Investments in U.S. real property in the Statement
of Additional Information.
If you have a tax-advantaged or other retirement account you will generally not be subject to
federal taxation on income and capital gain distributions until you begin receiving your
distributions from your retirement account. You should consult your tax advisor regarding the rules
governing your own retirement plan.
The International Equity 130/30 Fund may be able to pass along a tax credit for foreign income
taxes it pays. In such event, the Fund will provide you with the information necessary to reflect
such foreign taxes on your federal income tax return.
Each sale of fund shares may be a taxable event. For tax purposes, an exchange of fund shares for
shares of a different RidgeWorth Fund is treated the same as a sale. A transfer from one share
class to another share class in the same RidgeWorth Fund should not be a taxable event.
More information about taxes is in the statement of Additional Information.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Funds financial performance
for the past 5 years. Certain information reflects financial results for a single Fund share. The
total returns in the table represent the rate that an investor would have earned (or lost) on an
investment in the Fund (assuming reinvestment of all dividends and distributions). This financial
information has been audited by [ ]. The Report of Independent Registered Public Accounting
Firm for each period shown, along with the Funds financial statements and related notes, are
included in the Annual Reports to Shareholders for such periods. The 2008 Annual Report is
available upon request and without charge by calling 1-888-784-3863 or on the Funds website at
www.ridgeworthfunds.com.
[insert financial highlights here]
This page intentionally left blank.
Investment
Adviser:
RidgeWorth Capital Management, Inc.
50 Hurt Plaza, Suite 1400
Atlanta, Georgia 30303
Investment Subadviser:
Alpha Equity Management LLC
90 State House Square
Suite 1100
Hartford, CT 06103
More information about the RidgeWorth Funds is available without charge
through the following:
Statement of Additional Information (SAI):
The SAI includes detailed information about the RidgeWorth Funds.
The SAI is on file with the SEC and is incorporated by reference into
this prospectus. This means that the SAI, for legal purposes, is a part
of this prospectus.
Annual and Semi-Annual Reports:
These reports list each Funds holdings and contain information from the
Funds managers about strategies and recent market conditions and trends
and their impact on Fund performance. The reports also contain detailed
financial information about the Funds.
To Obtain an SAI, Annual or Semi-Annual Report,
or More Information:
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Telephone:
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Shareholder Services |
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1-888-784-3863 |
Mail:
RidgeWorth Funds
3435 Stelzer Road
Columbus, Ohio 43219
Website: www.ridgeworthfunds.com
SEC:
You can also obtain the SAI or the Annual and Semi-Annual reports, as
well as other information about the RidgeWorth Funds, from the EDGAR
Database on the SECs website at http://www.sec.gov. You may review
and copy documents at the SEC Public Reference Room in Washington, DC
(for information on the operation of the Public Reference Room, call
202-551-8090). You may request documents by mail from the SEC,
upon payment of a duplicating fee, by writing to: Securities and Exchange
Commission, Public Reference Section, Washington, DC 20549-0102.
You may also obtain this information, upon payment of a duplicating fee,
by e-mailing the SEC at publicinfo@sec.gov.
The RidgeWorth Funds Investment Company Act registration number is 811-06557.
RIDGEWORTH FUNDS
I Shares
PROSPECTUS
RIDGEWORTH (formerly, STI Classic)
FIXED INCOME AND MONEY MARKET FUNDS
FIXED INCOME FUNDS
Georgia Tax-Exempt Bond Fund
High Grade Municipal Bond Fund
High Income Fund
Intermediate Bond Fund
Investment Grade Bond Fund
Investment Grade Tax-Exempt Bond Fund
Limited Duration Fund
Limited-Term Federal Mortgage Securities Fund
Maryland Municipal Bond Fund
North Carolina Tax-Exempt Bond Fund
Seix Floating Rate High Income Fund
Seix High Yield Fund
Short-Term Bond Fund
Short-Term U.S. Treasury Securities Fund
Strategic Income Fund
Total Return Bond Fund
Ultra-Short Bond Fund
U.S. Government Securities Fund
U.S. Government Securities Ultra-Short Bond Fund
Virginia Intermediate Municipal Bond Fund
MONEY MARKET FUNDS
Prime Quality Money Market Fund
Tax-Exempt Money Market Fund
U.S. Government Securities Money Market Fund
U.S. Treasury Money Market Fund
Virginia Tax-Free Money Market Fund
Investment Adviser: RidgeWorth Capital Management, Inc. (formerly, Trusco Capital Management, Inc.)
(the Adviser)
August 1, 2008
The Securities and Exchange Commission has not approved or disapproved these securities or passed
upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.
ABOUT THIS PROSPECTUS
RidgeWorth Funds is a mutual fund family that offers shares in separate investment portfolios that
have individual investment goals and strategies. This prospectus gives you important information
about the I Shares of the Fixed Income and Money Market Funds (Funds) that you should know before
investing. Please read this prospectus and keep it for future reference.
This prospectus has been arranged into different sections so that you can easily review this
important information. On the next page, there is some general information you should know about
risk and return that is common to each of the Funds. For more detailed information about each Fund,
please see:
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INSIDE BACK COVER |
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PRIVACY POLICY |
BACK COVER |
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HOW TO OBTAIN
MORE INFORMATION ABOUT THE STI CLASSIC FUNDS |
AUGUST 1, 2008
4
CUSIP/TICKER SYMBOLS
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FUND NAME CUSIP |
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CLASS |
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INCEPTION* |
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TICKER |
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FIXED INCOME FUNDS |
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Georgia Tax-Exempt Bond Fund
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I Shares
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1/18/94
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SGATX |
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High Grade Municipal Bond Fund
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I Shares
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1/25/94
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SCFTX |
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High Income Fund
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I Shares
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10/3/01
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STHTX |
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Intermediate Bond Fund
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I Shares
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10/11/04
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SAMIX |
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Investment Grade Bond Fund
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I Shares
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7/16/92
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STIGX |
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Investment Grade Tax-Exempt Bond Fund
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I Shares
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10/21/93
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STTBX |
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Limited Duration Fund
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I Shares
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10/11/04
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SAMLX |
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Limited-Term Federal Mortgage Securities Fund
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I Shares
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6/6/94
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SLMTX |
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Maryland Municipal Bond Fund
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I Shares
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3/1/96
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CMDTX |
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North Carolina Tax-Exempt Bond Fund
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I Shares
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3/21/05
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CNCFX |
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Seix Floating Rate High Income Fund
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I Shares
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3/2/06
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SAMBX |
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Seix High Yield Fund
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I Shares
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10/11/04
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SAMHX |
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Short-Term Bond Fund
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I Shares
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3/15/93
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SSBTX |
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Short-Term U.S. Treasury Securities Fund
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I Shares
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3/15/93
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SUSTX |
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Strategic Income Fund
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I Shares
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11/30/01
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STICX |
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Total Return Bond Fund
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I Shares
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10/11/04
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SAMFX |
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Ultra-Short Bond Fund
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I Shares
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4/15/02
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SISSX |
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U.S. Government Securities Fund
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I Shares
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8/1/94
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SUGTX |
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U.S. Government Securities Ultra-Short Bond Fund
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I Shares
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4/11/02
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SIGVX |
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Virginia Intermediate Municipal Bond Fund
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I Shares
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1/11/93
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CRVTX |
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MONEY MARKET FUNDS |
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Prime Quality Money Market Fund
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I Shares
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6/8/92
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SQTXX |
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Tax-Exempt Money Market Fund
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I Shares
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6/8/92
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STTXX |
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U.S. Government Securities Money Market Fund
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I Shares
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6/8/92
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STUXX |
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U.S. Treasury Money Market Fund
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I Shares
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2/18/87
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CUSXX |
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Virginia Tax-Free Money Market Fund
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I Shares
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6/15/89
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CFMXX |
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* |
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The performance included under Performance Information may include the performance of other
classes of the Fund and/or predecessors of the Fund. |
5
RISK/RETURN INFORMATION COMMON TO THE STI CLASSIC FUNDS
Each Fund is a mutual fund. A mutual fund pools shareholders money and, using professional
investment managers, invests it in securities.
Each Fund has its own investment goal and strategies for reaching that goal. The Subadviser (under
the supervision of the Adviser) invests Fund assets in a way that it believes will help a Fund
achieve its goal. Still, investing in each Fund involves risk and there is no guarantee that a Fund
will achieve its goal. The Subadvisers judgments about the markets, the economy or companies may
not anticipate actual market movements, economic conditions or company performance, and these
judgments may affect the return on your investment. In fact, no matter how good a job the
Subadviser does, you could lose money on your investment in the Fund, just as you could with other
investments. A FUND SHARE IS NOT A BANK DEPOSIT AND IT IS NOT INSURED OR GUARANTEED BY THE FDIC OR
ANY GOVERNMENT AGENCY.
The value of your investment in a Fund (other than a money market fund) is based on the market
prices of the securities the Fund holds. These prices change daily due to economic and other events
that affect particular companies and other issuers. These price movements, sometimes called
volatility, may be greater or lesser depending on the types of securities a Fund owns and the
markets in which they trade. The effect on a Fund of a change in the value of a single security
will depend on how widely the Fund diversifies its holdings.
Each Funds investment goal may be changed without shareholder approval. Before investing, make
sure that the Funds goal matches your own.
6
GEORGIA TAX-EXEMPT BOND FUND
(SUITCASE ICON)
FUND SUMMARY
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INVESTMENT GOAL
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Current income exempt from federal and state income taxes
for Georgia residents without undue risk |
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INVESTMENT FOCUS
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Georgia municipal securities |
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SHARE PRICE VOLATILITY
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Moderate |
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PRINCIPAL INVESTMENT STRATEGY
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Attempts to invest more Fund assets in undervalued
sectors
and less in overvalued ones |
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INVESTOR PROFILE
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Georgia residents who want income exempt from federal and
state income taxes |
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SUBADVISER
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StableRiver Capital Management LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
The Georgia Tax-Exempt Bond Fund invests at least 80% of its net assets in municipal securities
with income exempt from federal and Georgia income taxes. Issuers of these securities can be
located in Georgia, Puerto Rico and other U.S. territories and possessions. In addition, the Fund
may invest up to 20% of its assets in securities subject to the alternative minimum tax or in
certain taxable debt securities.
In selecting investments for the Fund, the Adviser tries to limit risk as much as possible. Based
on the Subadvisers analysis of municipalities, credit risk, market trends and investment cycles,
the Subadviser attempts to invest more of the Funds assets in undervalued market sectors and less
in overvalued sectors. The Subadviser tries to diversify the Funds holdings within Georgia. The
Subadviser also tries to identify and invest in municipal issuers with improving credit and avoid
those with deteriorating credit.
Because economic, industry and sector conditions tend to shift in relative attractiveness, the Fund
may buy and sell securities frequently, which may result in higher transaction costs, additional
capital gains tax liabilities and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, derivative instruments
(such as futures, options, swaps and inverse floaters) to use as a substitute for a purchase or
sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as interest rate risk.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
Debt securities will generally lose value if interest rates increase. Interest rate risk is
generally higher for investments with longer maturities or durations.
7
Debt securities are subject to the risk that an issuer will fail to make timely payments of
interest or principal, or go bankrupt, reducing the Funds return. The lower the rating of a debt
security, the higher its credit risk.
There may be economic or political changes that impact the ability of municipal issuers to repay
principal and to make interest payments on municipal securities. Changes in the financial condition
or credit rating of municipal issuers also may adversely affect the value of the Funds securities.
The Funds concentration of investments in securities of issuers located in Georgia subjects the
Fund to economic conditions and government policies within Georgia.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
(TARGET ICON)
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
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1998 |
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5.79 |
% |
1999 |
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-2.26 |
% |
2000 |
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9.43 |
% |
2001 |
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4.32 |
% |
2002 |
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9.17 |
% |
2003 |
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3.85 |
% |
2004 |
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2.84 |
% |
2005 |
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2.76 |
% |
2006 |
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4.32 |
% |
2007 |
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[ ] |
% |
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BEST
QUARTER |
|
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WORST QUARTER |
|
[ ]%
|
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[ ] |
% |
( )
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( ) |
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8
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* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was [ ]%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the Lehman Brothers 10-Year Municipal Bond Index. These returns assume
shareholders redeem all of their shares at the end of the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
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I SHARES |
|
1 YEAR |
|
5 YEARS |
|
10 YEARS |
Fund Returns
Before Taxes |
|
|
[ ] |
% |
|
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[ ] |
% |
|
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[ ] |
% |
|
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Fund Returns
After Taxes on
Distributions |
|
|
[ ] |
% |
|
|
[ ] |
% |
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[ ] |
% |
|
|
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Fund Returns
After Taxes on
Distributions and Sale
of Fund Shares |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
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|
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|
|
|
|
|
|
|
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Lehman Brothers 10-Year
Municipal Bond Index
(reflects no deduction for
fees, expenses or taxes) |
|
|
[ ] |
% |
|
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[ ] |
% |
|
|
[ ] |
% |
9
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Lehman Brothers 10-Year Municipal Bond Index is a widely-recognized
index of long-term investment grade tax-exempt bonds. The Index includes general obligation bonds,
revenue bonds, insured bonds and prefunded bonds with maturities between 8 and 12 years. The Index
represents various market sectors and geographic locations.
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
0.55 |
% |
Other Expenses |
|
|
[0.05 |
%] |
|
|
|
|
|
Total Annual Operating Expenses(1) |
|
|
[0.60 |
%] |
|
|
|
(1) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at
any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
10
|
|
|
|
|
|
|
1 YEAR |
|
3 YEARS |
|
5 YEARS |
|
10 YEARS |
$[ ]
|
|
$[ ]
|
|
$[ ]
|
|
$[ ] |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
11
HIGH GRADE MUNICIPAL BOND FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL:
|
|
Yield driven by seeking current income exempt from federal income tax other than the alternative minimum tax while preserving capital |
|
|
|
INVESTMENT FOCUS:
|
|
Insured investment grade municipal securities |
|
|
|
SHARE PRICE VOLATILITY:
|
|
Moderate |
|
|
|
PRINCIPAL INVESTMENT STRATEGY:
|
|
Invest in investment grade municipal securities |
|
|
|
INVESTOR PROFILE:
|
|
Investors who want income exempt from federal income taxes |
|
|
|
SUBADVISER
|
|
StableRiver Capital Management LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
Under normal circumstances, the High Grade Municipal Bond Fund invests at least 80% of its net
assets in investment grade municipal securities, including securities subject to the alternative
minimum tax, with income exempt from regular federal income tax. The Fund may invest up to 20% of
its assets in securities rated below investment grade by either Moodys Investor Services, Inc. or
Standard and Poors Rating Services or unrated securities that the Subadviser believes are of
comparable quality. Up to 20% of the Funds assets may also be invested in certain taxable debt
securities.
In selecting investments for the Fund, the Subadviser tries to limit risk as much as possible.
Based on the Subadvisers analysis of municipalities, credit risk, market trends and investment
cycles, the Subadviser attempts to invest more of the Funds assets in undervalued market sectors
and less in overvalued sectors. The Subadviser tries to diversify the Funds holdings within the
investment grade municipal securities market, however the Subadviser may invest greater than 25% of
the Funds assets in Florida municipal securities. The Subadviser anticipates that the Funds
average weighted maturity will range from 5 to 25 years.
Under normal circumstances, the Fund will invest at least 65% of its assets in municipal securities
insured as to timely payment of principal and interest. Municipal bond insurance is issued by a
municipal bond insurance company that insures the Fund will receive payment of principal and
interest due on a bond in a timely manner. Municipal bond insurance reduces (but does not
eliminate) credit risk.
Because economic, industry and sector conditions tend to shift in relative attractiveness, the Fund
may buy and sell securities frequently, which may result in higher transaction costs, additional
capital gains tax liabilities and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell derivative instruments
(such as futures, options, swaps and inverse floaters) to use as a substitute for a purchase or
sale
12
of a position in the underlying assets and/or as part of a strategy designed to reduce exposure to
other risks, such as interest rate risk.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
Debt securities will generally lose value if interest rates increase. Interest rate risk is
generally higher for investments with longer maturities or durations.
Debt securities are subject to the risk that an issuer will fail to make timely payments of
interest or principal, or go bankrupt, reducing the Funds return. The lower the rating of a debt
security, the higher its credit risk.
There may be economic or political changes that impact the ability of municipal issuers to repay
principal and to make interest payments on municipal securities. Changes in the financial condition
or credit rating of municipal issuers also may adversely affect the value of the Funds securities.
Below investment grade securities (sometimes referred to as junk bonds) involve greater risk of
default or downgrade and are more volatile than investment grade securities. Below investment grade
securities may also be less liquid than higher quality securities.
The Funds concentration of investments in securities of issuers located in Florida subjects the
Fund to economic and government policies within Florida.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
(TARGET ICON)
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
1998 |
|
|
6.25 |
% |
1999 |
|
|
-2.31 |
% |
2000 |
|
|
11.64 |
% |
2001 |
|
|
3.68 |
% |
2002 |
|
|
10.57 |
% |
13
|
|
|
|
|
2003 |
|
|
4.11 |
% |
2004 |
|
|
2.17 |
% |
2005 |
|
|
2.45 |
% |
2006 |
|
|
3.64 |
% |
2007 |
|
|
[ ] |
% |
|
BEST QUARTER |
|
|
WORST QUARTER |
|
[ ]%
|
|
|
[ ] |
% |
( )
|
|
|
( ) |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was -0.24%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the Lehman Brothers 10-Year Municipal Bond Index. These returns assume
shareholders redeem all of their shares at the end of the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
I SHARES |
|
1 YEAR |
|
5 YEARS |
|
10 YEARS |
Fund Returns
Before Taxes |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
Fund Returns
After Taxes on
Distributions |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
Fund Returns
After Taxes on
Distributions and Sale
of Fund Shares |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
14
|
|
|
|
|
|
|
|
|
|
|
|
|
I SHARES |
|
1 YEAR |
|
5 YEARS |
|
10 YEARS |
Lehman Brothers 10-Year
Municipal Bond Index
(reflects no deduction for
fees, expenses or taxes) |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Lehman Brothers 10-Year Municipal Bond Index is a widely-recognized
index of long-term investment grade tax-exempt bonds. The Index includes general obligation bonds,
revenue bonds, insured bonds and prefunded bonds with maturities between 8 and 12 years. The Index
represents various market sectors and geographic locations.
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
0.55 |
% |
Other Expenses(1) |
|
|
[0.08 |
%] |
|
|
|
|
|
Total Annual Operating Expenses(2) |
|
|
[0.63 |
%] |
|
|
|
(1) |
|
Adjusted to reflect expected changes in Other Expenses for the current fiscal year. |
|
(2) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at
any time. |
EXAMPLE
15
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
1 YEAR |
|
3 YEARS |
|
5 YEARS |
|
10 YEARS |
$
|
|
$
|
|
$
|
|
$ |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
16
HIGH INCOME FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOALS |
|
|
|
|
|
PRIMARY
|
|
High current income |
|
|
|
SECONDARY
|
|
Total return |
|
|
|
INVESTMENT FOCUS
|
|
High yield corporate and other debt instruments of U.S. and non-U.S. issuers |
|
|
|
SHARE PRICE VOLATILITY
|
|
High |
|
|
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Attempts to identify lower-rated securities offering high current income of issuers generating adequate cash flow to meet their obligations |
|
|
|
INVESTOR PROFILE
|
|
Investors who seek high current income and who are willing to accept greater share price volatility through investment in high yield, below investment grade debt instruments |
|
|
|
SUBADVISER:
|
|
Seix Investment Advisors LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
The High Income Fund invests primarily in a diversified portfolio of higher yielding, lower-rated
income producing debt instruments, including corporate obligations, floating rate loans and other
debt obligations. The Fund may invest in debt obligations of U.S. and non-U.S. issuers, including
emerging market debt. The Fund will invest at least 65%, and may invest up to 100%, of its assets
in securities rated below investment grade by either Moodys Investor Services, Inc. or Standard &
Poors Rating Services or in unrated securities that the Subadviser believes are of comparable
quality. Such securities are commonly known as junk bonds and offer greater risks than investment
grade debt securities. The Fund may also invest a portion of its assets in securities that are
restricted as to resale.
In selecting securities for the Fund, the Subadviser employs a research driven process designed to
identify value areas within the high yield market. The Subadviser seeks to identify securities
which meet the following criteria: (1) industries that have strong fundamentals; (2) companies that
have good business prospects and increasing credit strength; and (3) issuers with stable or growing
cash flows and effective management.
Because economic, industry and sector conditions tend to shift in relative attractiveness, the Fund
may buy and sell securities frequently, which may result in higher transaction costs, additional
capital gains tax liabilities and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell derivative instruments
(such as futures, options and swaps) to use as a substitute for a purchase or sale of a position in
17
the underlying assets and/or as part of a strategy designed to reduce exposure to other risks, such
as interest rate or credit risks. The Fund may count the value of certain derivatives with below
investment grade fixed income characteristics towards its policy to invest, under normal
circumstances, at least 65% of its net assets in non-investment grade fixed income securities.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
Debt securities will generally lose value if interest rates increase. Interest rate risk is
generally higher for investments with longer maturities or durations.
Debt securities are subject to the risk that an issuer will fail to make timely payments of
interest or principal, or go bankrupt, reducing the Funds return. The lower the rating of a debt
security, the higher its credit risk.
Below investment grade securities (sometimes referred to as junk bonds) involve greater risk of
default or downgrade and are more volatile than investment grade securities. Below investment grade
securities may also be less liquid than higher quality securities.
The risks associated with floating rate loans are similar to the risks of below investment grade
securities. In addition, the value of the collateral securing the loan may decline, causing a loan
to be substantially unsecured. Difficulty in selling a floating rate loan may result in a loss.
Borrowers may pay back principal before the scheduled due date when interest rates decline, which
may require the Fund to replace a particular loan with a lower-yielding security. There may be less
extensive public information available with respect to loans than for rated, registered or exchange
listed securities. The Fund may assume the credit risk of the primary lender in addition to the
borrower, and investments in loan assignments may involve the risks of being a lender.
Foreign securities involve special risks such as currency fluctuations, economic or financial
instability, lack of timely or reliable financial information and unfavorable political or legal
developments. These risks are increased for investments in emerging markets.
Restricted securities may increase the level of illiquidity in the Fund during any period that
qualified institutional buyers become uninterested in purchasing these restricted securities. The
Subadviser intends to invest only in restricted securities that it believes present minimal
liquidity risk.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
(TARGET ICON)
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future. This bar chart shows changes in the performance of the Funds I Shares from year to
year.*
(BAR CHART)
18
|
|
|
|
|
2002 |
|
|
-3.34 |
% |
2003 |
|
|
25.81 |
% |
2004 |
|
|
10.32 |
% |
2005 |
|
|
4.21 |
% |
2006 |
|
|
12.43 |
% |
2007 |
|
|
[ ] |
% |
|
BEST QUARTER |
|
|
WORST QUARTER |
|
[ ]%
|
|
|
[ ] |
% |
( )
|
|
|
( ) |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was [ ]%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the Lehman Brothers U.S. Corporate High Yield Bond Index. These returns assume
shareholders redeem all of their shares at the end of the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SINCE |
I SHARES |
|
1 YEAR |
|
5 YEARS |
|
INCEPTION* |
Fund Returns
Before Taxes |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Returns
After Taxes on
Distributions |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Returns
After Taxes on
Distributions and Sale
of Fund Shares |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SINCE |
I SHARES |
|
1 YEAR |
|
5 YEARS |
|
INCEPTION* |
Lehman Brothers U.S.
Corporate High Yield
Bond Index (reflects no
deduction for fees,
expenses or taxes) |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
* |
|
Since inception of the I Shares on October 3, 2001. Benchmark returns since September 30, 2001
(benchmark returns available only on a month end basis). |
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Lehman Brothers U.S. Corporate High Yield Bond Index is a
widely-recognized, market value-weighted (higher market value bonds have more influence than lower
market value bonds) index which covers the universe of fixed rate, non-investment grade debt.
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
0.60 |
% |
|
Other Expenses |
|
|
[0.11 |
%] |
|
|
|
|
|
|
Total Annual Operating Expenses(1) |
|
|
[0.71 |
%] |
|
|
|
(1) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses to the level shown below. These
waivers may be discontinued at any time. |
|
|
|
|
|
|
|
I SHARES |
High Income Fund |
|
|
[0.70%] |
|
20
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
1 YEAR |
|
3 YEARS |
|
5 YEARS |
|
10 YEARS |
$
|
|
$
|
|
$
|
|
$ |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
21
INTERMEDIATE BOND FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
Total return that consistently exceeds the total return of
the broad U.S. dollar denominated, investment grade market
of intermediate term government and corporate bonds |
|
|
|
INVESTMENT FOCUS
|
|
Intermediate term investment grade debt securities |
|
|
|
SHARE PRICE VOLATILITY
|
|
Moderate |
|
|
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Invest in intermediate term fixed income securities with an
emphasis on corporate and mortgage backed securities |
|
|
|
INVESTOR PROFILE
|
|
Investors who want to receive income from their investment,
as well as an increase in the value of the investment |
|
|
|
SUBADVISER:
|
|
Seix Investment Advisors LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
The Intermediate Bond Fund invests in various types of income producing debt securities including
mortgage and asset backed securities, government and agency obligations, corporate obligations and
floating rate loans. The Fund may invest in debt securities of U.S. and non U.S. issuers, including
emerging market debt. Under normal circumstances, the Fund invests at least 80% of its net assets
in fixed income securities. These securities will be chosen from the broad universe of available
intermediate term fixed income securities rated investment grade by at least one national
securities rating agency or unrated securities that the Subadviser believes are of comparable
quality. The Fund may invest up to 20% of its net assets in below investment grade, high yield
debt obligations. The Fund may also invest a portion of its assets in securities that are
restricted as to resale.
The Subadviser anticipates that the Fund will maintain an average weighted maturity of 3 to 10
years and the Fund will be managed with a duration that is close to that of its comparative
benchmark, the Lehman Brothers Intermediate Government/Credit Bond Index, which is generally
between 3 to 4 years. In selecting investments for the Fund, the Subadviser generally selects a
greater weighting in obligations of domestic corporations and mortgage backed securities relative
to the Funds comparative benchmark, and a lower relative weighting in U.S. Treasury and government
agency issues.
Because economic, industry and sector conditions tend to shift in relative attractiveness, the Fund
may buy and sell securities frequently, which may result in higher transaction costs, additional
capital gains tax liabilities and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell derivative instruments
(such as futures, options and swaps) to use as a substitute for a purchase or sale of a position in
the underlying assets and/or as part of a strategy designed to reduce exposure to other risks, such
as interest rate or credit risks. The Fund may count the value of certain derivatives with
investment grade intermediate-term fixed income characteristics towards its policy to invest, under
normal circumstances, at least 80% of its net assets in fixed income securities.
(LIFE PRESERVER ICON)
22
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
Debt securities will generally lose value if interest rates increase. Interest rate risk is
generally higher for investments with longer maturities or durations.
Debt securities are subject to the risk that an issuer will fail to make timely payments of
interest or principal, or go bankrupt, reducing the Funds return. The lower the rating of a debt
security, the higher its credit risk.
Mortgage-backed and asset-backed investments involve risk of loss due to prepayments and, like any
bond, due to default. Because of the sensitivity of mortgage-related securities to changes in
interest rates, the Funds performance may be more volatile than if it did not hold these
securities.
Foreign securities involve special risks such as currency fluctuations, economic or financial
instability, lack of timely or reliable financial information and unfavorable political or legal
developments. These risks are increased for investments in emerging markets.
Below investment grade securities (sometimes referred to as junk bonds) involve greater risk of
default or downgrade and are more volatile than investment grade securities. Below investment grade
securities may also be less liquid than higher quality securities.
The risks associated with floating rate loans are similar to the risks of below investment grade
securities. In addition, the value of the collateral securing the loan may decline, causing a loan
to be substantially unsecured. Difficulty in selling a floating rate loan may
result in a loss. Borrowers may pay back principal before the scheduled due date when interest
rates decline, which may require the Fund to replace a particular loan with a lower-yielding
security. There may be less extensive public information available with respect to loans than for
rated, registered or exchange listed securities. The Fund may assume the credit risk of the primary
lender in addition to the borrower, and investments in loan assignments may involve the risks of
being a lender.
U.S. government securities can exhibit price movements resulting from changes in interest rates.
Treasury inflation protected securities (TIPS) can also exhibit price movements as a result of
changing inflation expectations and seasonal inflation patterns. Certain U.S. government securities
are backed by the full faith and credit of the U.S. Government, while others are backed by the
ability of the issuing entity to borrow from the U.S. Treasury or by the issuing entitys own
resources.
Restricted securities may increase the level of illiquidity in the Fund during any period that
qualified institutional buyers become uninterested in purchasing these restricted securities. The
Subadviser intends to invest only in restricted securities that it believes present minimal
liquidity risk.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
(TARGET ICON)
PERFORMANCE INFORMATION
23
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future. The Fund began operating on October 11, 2004. Performance prior to October 11, 2004 is
that of the Class I Shares of the Seix Intermediate Bond Fund, the Funds predecessor, which began
operations on June 30, 1999.
This bar chart shows changes in the performance of the Funds I Shares from year to year.
(BAR CHART)
|
|
|
|
|
2000 |
|
|
10.19 |
% |
2001 |
|
|
7.03 |
% |
2002 |
|
|
7.18 |
% |
2003 |
|
|
4.03 |
% |
2004 |
|
|
3.69 |
% |
2005 |
|
|
1.38 |
% |
2006 |
|
|
3.83 |
% |
2007 |
|
|
[ ] |
% |
|
BEST QUARTER |
|
|
WORST QUARTER |
|
[ ]% |
|
|
[ ] |
% |
( ) |
|
|
( ) |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was [ ]%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the Lehman Brothers Intermediate Government/Credit Bond Index. These returns
assume shareholders redeem all of their shares at the end of the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SINCE |
I SHARES* |
|
1 YEAR |
|
5 YEARS |
|
INCEPTION** |
Fund Returns
Before Taxes |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Returns
After Taxes
on Distributions |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Returns After
Taxes on Distributions
and Sale of Fund Shares |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Lehman Brothers
Intermediate Government/
Credit Bond Index
(reflects no deduction
for fees, expenses or
taxes) |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
* |
|
Performance prior to October 11, 2004 is that of the predecessor funds Class I Shares. |
|
** |
|
Since inception of the predecessor fund on June 30, 1999. |
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Lehman Brothers Intermediate Government/Credit Bond Index is a
widely-recognized, market-value weighted (higher market value bonds have more influence than lower
market value bonds) index of U.S. Treasury and agency securities, corporate bond issues and
mortgage-backed securities having maturities of 10 years or less.
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
25
|
|
|
|
|
|
|
I SHARES |
|
Investment Advisory Fees |
|
|
0.25 |
% |
Other Expenses |
|
|
[0.06 |
%] |
|
|
|
|
Total Annual Operating Expenses(1) |
|
|
[ 0.31 |
%] |
|
|
|
(1) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at
any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
1 YEAR
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
$
|
|
$
|
|
$
|
|
$ |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
26
INVESTMENT GRADE BOND FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
High total return through current income and capital
appreciation, while preserving the principal amount invested |
|
|
|
INVESTMENT FOCUS
|
|
Investment grade U.S. government and corporate debt
securities |
|
|
|
SHARE PRICE VOLATILITY
|
|
Moderate |
|
|
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Attempts to identify relatively inexpensive securities in a
selected market index |
|
|
|
INVESTOR PROFILE
|
|
Investors who want to receive income from their investment,
as well as an increase in the value of the investment |
|
|
|
SUBADVISER:
|
|
Seix Investment Advisors LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
Under normal circumstances, the Investment Grade Bond Fund invests at least 80% of its net assets
in fixed income securities rated investment grade by at least one national securities rating agency
or unrated securities that the Subadviser believes are of comparable quality. The Subadviser
focuses on corporate debt securities, U.S. Treasury obligations, mortgage backed securities and
other asset-backed securities. The Fund may invest in debt obligations of U.S. and non U.S.
issuers. The Fund may invest up to 20% of its net assets in below investment grade, high yield debt
obligations, including emerging market debt and floating rate loans. The Fund may also invest a
portion of its assets in securities that are restricted as to resale.
In selecting investments for the Fund, the Subadviser tries to minimize risk while attempting to
outperform selected market indices. Currently, the Subadvisers selected index is the Lehman
Brothers U.S. Government/Credit Index, a widely recognized, unmanaged index of investment grade
government and corporate debt securities. The Subadviser seeks to invest more in portions of the
Index that seem relatively inexpensive, and less in those that seem expensive. The Subadviser
allocates the Funds investments among various market sectors based on the Subadvisers analysis of
historical data, yield information and credit ratings.
Because economic, industry and sector conditions tend to shift in relative attractiveness, the Fund
may buy and sell securities frequently, which may result in higher transaction costs, additional
capital gains tax liabilities and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell derivative instruments
(such as futures, options and swaps) to use as a substitute for a purchase or sale of a position in
the underlying assets and/or as part of a strategy designed to reduce exposure to other risks, such
as interest rate or credit risks. The Fund may count the value of certain derivatives with
investment grade fixed income characteristics towards its policy to invest, under normal
circumstances, at least 80% of its net assets in investment grade fixed income securities.
27
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
Debt securities will generally lose value if interest rates increase. Interest rate risk is
generally higher for investments with longer maturities or durations.
Debt securities are subject to the risk that an issuer will fail to make timely payments of
interest or principal, or go bankrupt, reducing the Funds return. The lower the rating of a debt
security, the higher its credit risk.
Mortgage-backed and asset-backed investments involve risk of loss due to prepayments and, like any
bond, due to default. Because of the sensitivity of mortgage-related securities to changes in
interest rates, the Funds performance may be more volatile than if it did not hold these
securities.
U.S. government securities can exhibit price movements resulting from changes in interest rates.
Treasury inflation protected securities (TIPS) can also exhibit price movements as a result of
changing inflation expectations and seasonal inflation patterns. Certain U.S. government securities
are backed by the full faith and credit of the U.S. Government, while others are backed by the
ability of the issuing entity to borrow from the U.S. Treasury or by the issuing entitys own
resources.
Foreign securities involve special risks such as currency fluctuations, economic or financial
instability, lack of timely or reliable financial information and unfavorable political or legal
developments. These risks are increased for investments in emerging markets.
Below investment grade securities (sometimes referred to as junk bonds) involve greater risk of
default or downgrade and are more volatile than investment grade securities. Below investment grade
securities may also be less liquid than higher quality securities.
The risks associated with floating rate loans are similar to the risks of below investment grade
securities. In addition, the value of the collateral securing the loan may decline, causing a loan
to be substantially unsecured. Difficulty in selling a floating rate loan may result in a loss.
Borrowers may pay back principal before
the scheduled due date when interest rates decline, which may require the Fund to replace a
particular loan with a lower-yielding security. There may be less extensive public information
available with respect to loans than for rated, registered or exchange listed securities. The Fund
may assume the credit risk of the primary lender in addition to the borrower, and investments in
loan assignments may involve the risks of being a lender.
Restricted securities may increase the level of illiquidity in the Fund during any period that
qualified institutional buyers become uninterested in purchasing these restricted securities. The
Subadviser intends to invest only in restricted securities that it believes present minimal
liquidity risk.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
(TARGET ICON)
28
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
1998 |
|
|
9.19 |
% |
1999 |
|
|
-1.53 |
% |
2000 |
|
|
6.57 |
% |
2001 |
|
|
9.06 |
% |
2002 |
|
|
7.42 |
% |
2003 |
|
|
3.70 |
% |
2004 |
|
|
4.09 |
% |
2005 |
|
|
2.16 |
% |
2006 |
|
|
4.72 |
% |
2007 |
|
|
[ ] |
% |
|
BEST QUARTER |
|
|
WORST QUARTER |
|
[ ]% |
|
|
[ ] |
% |
( ) |
|
|
( ) |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was 0.93%. |
29
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the Lehman Brothers U.S. Government/Credit Index.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
I SHARES |
|
1 YEAR |
|
5 YEARS |
|
10 YEARS |
Fund Returns
Before Taxes |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Returns
After Taxes on
Distributions |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Returns
After Taxes on
Distributions and Sale
of Fund Shares |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Lehman Brothers U.S.
Government/Credit Index
(reflects no deduction for
fees, expenses or taxes) |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Lehman Brothers U.S. Government/Credit Index is a widely-recognized
composite made up of the Lehman Brothers U.S. Government Index and
30
the Lehman Brothers U.S. Credit Index, which include U.S. government, Treasury and agency
securities, as well as high grade corporate bonds.
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
|
Investment Advisory Fees |
|
|
0.50 |
% |
Other Expenses(1) |
|
|
[0.06 |
%] |
|
|
|
|
Total Annual Operating Expenses(2) |
|
|
[0.56 |
%] |
|
|
|
(1) |
|
Adjusted to reflect expected changes in Other Expenses for the current fiscal year. |
|
(2) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at
any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
1 YEAR
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
$
|
|
$
|
|
$
|
|
$ |
31
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
32
INVESTMENT GRADE TAX-EXEMPT BOND FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
High total return through (i) current income that is
exempt
from federal income taxes and (ii) capital appreciation,
while preserving the principal amount invested |
|
|
|
INVESTMENT FOCUS
|
|
Investment grade municipal securities |
|
|
|
SHARE PRICE VOLATILITY
|
|
Moderate |
|
|
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Attempts to invest more Fund assets in undervalued
sectors
and less in overvalued ones |
|
|
|
INVESTOR PROFILE
|
|
Investors who want to receive tax free current income
and an
increase in the value of their investment |
|
|
|
SUBADVISER
|
|
StableRiver Capital Management LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
The Investment Grade Tax-Exempt Bond Fund invests at least 80% of its net assets in investment
grade tax-exempt obligations, like municipal securities. The issuers of these securities may be
located in any U.S. state, territory or possession. In addition, the Fund may invest up to 20% of
its assets in securities subject to the alternative minimum tax or in certain taxable debt
securities.
In selecting investments for the Fund, the Subadviser tries to limit risk as much as possible.
Based on the Subadvisers analysis of municipalities, credit risk, market trends and investment
cycles, the Subadviser attempts to invest more of the Funds assets in undervalued market sectors
and less in overvalued sectors. The Subadviser also tries to identify and invest in municipal
issuers with improving credit and avoid those with deteriorating credit. The Subadviser anticipates
that the Funds average weighted maturity will range from 4 to 10 years. The Fund invests in
securities rated investment grade by at least one national securities rating agency or unrated
securities that the Subadviser believes are of comparable quality. The Subadviser may retain
securities if the rating of the security falls below investment grade and the Subadviser deems
retention of the security to be in the best interests of the Fund.
Because economic, industry and sector conditions tend to shift in relative attractiveness, the Fund
may buy and sell securities frequently, which may result in higher transaction costs, additional
capital gains tax liabilities and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, derivative instruments
(such as futures, options, swaps and inverse floaters) to use as a substitute for a purchase or
sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as interest rate risk.
(LIFE PRESERVER ICON)
33
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
Debt securities will generally lose value if interest rates increase. Interest rate risk is
generally higher for investments with longer maturities or durations.
Debt securities are subject to the risk that an issuer will fail to make timely payments of
interest or principal, or go bankrupt, reducing the Funds return. The lower the rating of a debt
security, the higher its credit risk.
There may be economic or political changes that impact the ability of municipal issuers to repay
principal and to make interest payments on municipal securities. Changes in the financial condition
or credit rating of municipal issuers also may adversely affect the value of the Funds securities.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
(TARGET ICON)
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
1998 |
|
|
7.06 |
% |
1999 |
|
|
-0.26 |
% |
2000 |
|
|
10.87 |
% |
2001 |
|
|
5.51 |
% |
2002 |
|
|
10.38 |
% |
2003 |
|
|
4.41 |
% |
2004 |
|
|
3.49 |
% |
2005 |
|
|
2.22 |
% |
2006 |
|
|
3.80 |
% |
2007 |
|
|
[ ] |
% |
|
BEST QUARTER |
|
|
WORST QUARTER |
|
[ ]% |
|
|
[ ] |
% |
( ) |
|
|
( ) |
|
34
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was [ ]%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average total returns for the periods ended December 31, 2007, to
those of the Lehman Brothers 5-Year Municipal Bond Index. These returns assume shareholders redeem
all of their shares at the end of the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
I SHARES |
|
1 YEAR |
|
5 YEARS |
|
10 YEARS |
Fund Returns
Before Taxes |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Returns
After Taxes on
Distributions |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Returns
After Taxes on
Distributions and Sale
of Fund Shares |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Lehman Brothers 5-Year
Municipal Bond Index
(reflects no deduction for
fees, expenses or taxes) |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
35
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Lehman Brothers 5-Year Municipal Bond Index is a widely-recognized
index of intermediate investment grade tax-exempt bonds. The Index includes general obligation
bonds, revenue bonds, insured bonds and prefunded bonds with maturities between 4 and 6 years.
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
|
Investment Advisory Fees |
|
|
0.50 |
% |
Other Expenses(1) |
|
|
[0.06 |
%] |
|
|
|
|
Total Annual Operating Expenses(2) |
|
|
[0.56 |
%] |
|
|
|
(1) |
|
Adjusted to reflect expected changes in Other Expenses for the current fiscal year. |
|
(2) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at
any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
36
|
|
|
|
|
|
|
1 YEAR
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
$
|
|
$
|
|
$
|
|
$ |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
37
LIMITED DURATION FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
Current income, while preserving liquidity and principal |
|
|
|
INVESTMENT FOCUS
|
|
Short-term U.S. dollar-denominated, investment grade fixed
income securities |
|
|
|
SHARE PRICE VOLATILITY
|
|
Low |
|
|
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Attempts to identify U.S. dollar-denominated, investment
grade fixed income securities that offer high current income
while preserving liquidity and principal |
|
|
|
INVESTOR PROFILE
|
|
Investors who want to receive income from their investment |
|
|
|
SUBADVISER:
|
|
Seix Investment Advisors LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
The Limited Duration Fund invests in U.S. dollar-denominated, investment grade fixed income
securities, including corporate and bank obligations, government securities, and mortgage-and
asset-backed securities of U.S. and non-U.S. issuers, rated A or better by at least one national
securities rating agency or unrated securities that the Subadviser believes are of comparable
quality.
The Fund will maintain an average credit quality of AA or Aa and all securities held in the Fund
will have interest rate durations of 180 days or less. For floating rate notes, the interest rate
duration will be based on the next interest rate reset date. In deciding which securities to buy
and sell, the Subadviser emphasizes securities that are within the targeted segment of the U.S.
dollar-denominated, fixed income securities markets and will generally focus on investments that
have good business prospects, credit strength, stable cash flows and effective management. The
Subadviser may retain securities if the rating of the security falls below investment grade and the
Subadviser deems retention of the security to be in the best interests of the Fund.
Because economic, industry and sector conditions tend to shift in relative attractiveness, the Fund
may buy and sell securities frequently, which may result in higher transaction costs, additional
capital gains tax liabilities and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, to a limited extent,
derivative instruments (such as futures, options and swaps) to use as a substitute for a purchase
or sale of a position in the underlying asset and/or as part of a strategy designed to reduce
exposure to other risks, such as interest rate risk.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
Debt securities will generally lose value if interest rates increase. Interest rate risk is
generally higher for investments with longer maturities or durations.
38
Debt securities are subject to the risk that an issuer will fail to make timely payments of
interest or principal, or go bankrupt, reducing the Funds return. The lower the rating of a debt
security, the higher its credit risk.
Mortgage-backed and asset-backed investments involve risk of loss due to prepayments and, like any
bond, due to default. Because of the sensitivity of mortgage-related securities to changes in
interest rates, the Funds performance may be more volatile than if it did not hold these
securities.
Foreign securities involve special risks such as economic or financial instability, lack of timely
or reliable financial information and unfavorable political or legal developments.
U.S. government securities can exhibit price movements resulting from changes in interest rates.
Treasury inflation protected securities (TIPS) can also exhibit price movements as a result of
changing inflation expectations and seasonal inflation patterns. Certain U.S. government securities
are backed by the full faith and credit of the U.S. Government, while others are backed by the
ability of the issuing entity to borrow from the U.S. Treasury or by the issuing entitys own
resources.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
(TARGET ICON)
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future. The Fund began operating on October 11, 2004. Performance prior to October 11, 2004 is
that of the Class I Shares of the Seix Limited Duration Fund, the Funds predecessor, which began
operations on October 25, 2002.
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
2003 |
|
|
0.97 |
% |
2004 |
|
|
1.20 |
% |
2005 |
|
|
3.20 |
% |
2006 |
|
|
4.90 |
% |
2007 |
|
|
[ ] |
% |
|
BEST QUARTER |
|
|
WORST QUARTER |
|
[ ]% |
|
|
[ ] |
% |
( ) |
|
|
( ) |
|
39
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was [ ]%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the Merrill Lynch 3-Month Treasury Bill Index. These returns assume shareholders
redeem all of their shares at the end of the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SINCE |
I SHARES* |
|
1 YEAR |
|
5 YEAR |
|
INCEPTION** |
Fund Returns
Before Taxes |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Returns After
Taxes on Distributions |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Returns After
Taxes on Distributions
and Sale of Fund Shares |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Merrill Lynch 3-Month
Treasury Bill Index
(reflects no deduction for
fees, expenses or taxes) |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
* |
|
Performance prior to October 11, 2004 is that of the predecessor funds Class I Shares. |
|
** |
|
Since inception of the predecessor fund on October 25, 2002. Benchmark returns since September
30, 2002 (benchmark returns available only on a month end basis). |
(LINE GRAPH ICON)
40
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Merrill Lynch 3-Month Treasury Bill Index is a widely-recognized
index based on the 3 month U.S. Treasury bills.
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
|
Investment Advisory Fees |
|
|
0.10 |
% |
Other Expenses(1) |
|
|
[0.08 |
%] |
|
|
|
|
Total Annual Operating Expenses(2) |
|
|
[0.18 |
%] |
|
|
|
(1) |
|
Adjusted to reflect expected changes in Other Expenses for the current fiscal year. |
|
(2) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at
any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
1 YEAR
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
$
|
|
$
|
|
$
|
|
$ |
41
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
42
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
High current income, while preserving capital |
|
INVESTMENT FOCUS
|
|
Mortgage backed securities |
|
SHARE PRICE VOLATILITY
|
|
Low |
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Attempts to identify securities that are less prone to prepayment risk |
|
INVESTOR PROFILE
|
|
Conservative investors who want to receive income from their investment |
|
SUBADVISER:
|
|
Seix Investment Advisors LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
Under normal circumstances, the Limited-Term Federal Mortgage Securities Fund invests at least 80%
of its net assets in U.S. government agency mortgage backed securities, such as Fannie Mae, GNMA
and collateralized mortgage obligations.
In selecting investments for the Fund, the Subadviser tries to identify securities that the
Subadviser expects to perform well in rising and falling markets. The Subadviser also attempts to
reduce the risk that the underlying mortgages are prepaid by focusing on securities that it
believes are less prone to this risk. For example, Fannie Mae or GNMA securities that were issued
years ago may be less prone to prepayment risk because there have been many opportunities for
prepayment, but few have occurred.
Because economic, industry and sector conditions tend to shift in relative attractiveness, the Fund
may buy and sell securities frequently, which may result in higher transaction costs, additional
capital gains tax liabilities and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, to a limited extent,
derivative instruments (such as futures, options and swaps) to use as a substitute for a purchase
or sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as interest rate risk.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
Debt securities will generally lose value if interest rates increase. Interest rate risk is
generally higher for investments with longer maturities or durations.
Debt securities are subject to the risk that an issuer will fail to make timely payments of
interest or principal, or go bankrupt, reducing the Funds return. The lower the rating of a debt
security, the higher its credit risk.
43
Mortgage backed investments involve risk of loss due to prepayments and, like any bond, due to
default. Because of the sensitivity of mortgage related securities to changes in interest rates,
the Funds performance may be more volatile than if it did not hold these securities.
U.S. government securities can exhibit price movements resulting from changes in interest rates.
Treasury inflation protected securities (TIPS) can also exhibit price movements as a result of
changing inflation expectations and seasonal inflation patterns. Certain U.S. government
securities are backed by the full faith and credit of the U.S. Government, while others are backed
by the ability of the issuing entity to borrow from the U.S. Treasury or by the issuing entitys
own resources.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
(TARGET ICON)
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
1998 |
|
|
6.90 |
% |
1999 |
|
|
1.25 |
% |
2000 |
|
|
8.59 |
% |
2001 |
|
|
7.41 |
% |
2002 |
|
|
7.50 |
% |
2003 |
|
|
1.42 |
% |
2004 |
|
|
2.36 |
% |
2005 |
|
|
1.55 |
% |
2006 |
|
|
4.06 |
% |
2007 |
|
|
[ ] |
% |
|
BEST QUARTER |
|
|
WORST QUARTER |
[ ]% |
|
|
[ ] |
% |
( ) |
|
|
( ) |
|
44
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was [ ]%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the Lehman MBS Index and the Merrill Lynch 1-5 Year AAA U.S. Treasuries/ Agencies
Index. These returns assume shareholders redeem all of their shares at the end of the period
indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
I SHARES |
|
1 YEAR |
|
5 YEARS |
|
10 YEARS |
Fund Returns Before Taxes |
|
[ ]% |
|
[ ]% |
|
[ ]% |
|
|
|
|
|
|
|
Fund Returns After Taxes on
Distributions |
|
[ ]% |
|
[ ]% |
|
[ ]% |
|
|
|
|
|
|
|
Fund Returns
After Taxes on
Distributions and Sale of
Fund Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
Merrill Lynch 1-5 Year AAA
U.S. Treasuries/Agencies
Index (reflects no
deduction for fees,
expenses or taxes) |
|
[ ]% |
|
[ ]% |
|
[ ]% |
|
|
|
|
|
|
|
Lehman MBS Index
Index (reflects no
deduction for fees,
expenses or taxes) |
|
[ ]% |
|
[ ]% |
|
[ ]% |
45
|
|
|
* |
|
Effective March 31, 2008, the Fund transitioned its benchmark from the Merrill Lynch
1-5 Year AAA
U.S. Treasuries/Agencies Index to the Merrill Lynch 1-5 Year AAA U.S. Treasuries/Agencies Index in
order to better reflect the Funds receipt of dividends from the securities it holds. |
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Lehman MBS Index is [TO BE COMPLETED]. The Merrill Lynch 1-5 Year
AAA U.S. Treasuries/Agencies Index includes U.S. government and agency bonds that have a minimum
issue size of $150 million.
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
|
Investment Advisory Fees |
|
|
0.50 |
% |
Other Expenses(1) |
|
|
[0.09 |
%] |
|
|
|
|
Total Annual Operating Expenses(2) |
|
|
[0.59 |
%] |
|
|
|
(1) |
|
Adjusted to reflect expected changes in Other Expenses for the current fiscal year. |
|
(2) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at
any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual
46
costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
|
|
|
|
|
|
1 YEAR |
|
3 YEARS |
|
5 YEARS |
|
10 YEARS |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
47
MARYLAND MUNICIPAL BOND FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
High current income exempt from regular federal income tax
and Maryland income tax, consistent with preservation of
capital |
|
INVESTMENT FOCUS
|
|
Maryland municipal securities |
|
SHARE PRICE VOLATILITY
|
|
Moderate |
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Invests primarily in investment grade municipal securities
|
|
INVESTOR PROFILE
|
|
Maryland residents who want income exempt from federal and
state income taxes |
|
SUBADVISER
|
|
StableRiver Capital Management LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
Under normal circumstances, the Maryland Municipal Bond Fund invests at least 80% of its net assets
in municipal securities, including securities subject to the alternative minimum tax, with income
exempt from regular federal income tax and Maryland income tax. In addition, the Fund may invest up
to 20% of its assets in certain taxable debt securities. Issuers of these securities can be located
in Maryland, Puerto Rico and other U.S. territories and possessions.
In selecting investments for the Fund, the Subadviser tries to limit risk by buying primarily
investment grade securities. There are no limits on the Funds average weighted maturity or on the
remaining maturities of individual securities.
Because economic, industry and sector conditions tend to shift in relative attractiveness, the Fund
may buy and sell securities frequently, which may result in higher transaction costs, additional
capital gains tax liabilities and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, derivative instruments
(such as futures, options, swaps and inverse floaters) to use as a substitute for a purchase or
sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as interest rate risk.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
Debt securities will generally lose value if interest rates increase. Interest rate risk is
generally higher for investments with longer maturities or durations.
Debt securities are subject to the risk that an issuer will fail to make timely payments of
interest or principal, or go bankrupt, reducing the Funds return. The lower the rating of a debt
security, the higher its credit risk.
There may be economic or political changes that impact the ability of municipal issuers to repay
principal and to make interest payments on municipal securities. Changes in the financial
48
condition
or credit rating of municipal issuers also may adversely affect the value of the Funds securities.
The Funds concentration of investments in securities of issuers located in Maryland subjects the
Fund to economic and government policies of Maryland.
The Fund is non-diversified, which means that it may invest in the securities of relatively few
issuers. As a result, the Fund may be more susceptible to a single adverse economic or regulatory
occurrence affecting one or more of these issuers, and may experience increased volatility due to
its investments in those securities.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
(TARGET ICON)
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future. This bar chart shows changes in the performance of the Funds I Shares from year to
year.*
(BAR CHART)
|
|
|
|
|
1998 |
|
|
5.87 |
% |
1999 |
|
|
-3.33 |
% |
2000 |
|
|
11.31 |
% |
2001 |
|
|
4.54 |
% |
2002 |
|
|
8.91 |
% |
2003 |
|
|
4.22 |
% |
2004 |
|
|
3.33 |
% |
2005 |
|
|
2.62 |
% |
49
|
|
|
|
|
2006 |
|
|
4.32 |
% |
2007 |
|
|
[ ] |
% |
|
BEST QUARTER |
|
|
WORST QUARTER |
[ ]% |
|
|
[ ] |
% |
( ) |
|
|
( ) |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was [ ]%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the Lehman Brothers 10-Year Municipal Bond Index. These returns assume
shareholders redeem all of their shares at the end of the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
I SHARES |
|
1 YEAR |
|
5 YEARS |
|
10 YEARS |
Fund Returns Before Taxes |
|
[ ]% |
|
[ ]% |
|
[ ]% |
|
|
|
|
|
|
|
Fund Returns After Taxes on
Distributions |
|
[ ]% |
|
[ ]% |
|
[ ]% |
|
|
|
|
|
|
|
Fund Returns After Taxes on
Distributions and Sale of
Fund Shares |
|
[ ]% |
|
[ ]% |
|
[ ]% |
|
|
|
|
|
|
|
Lehman Brothers 10-Year
Municipal Bond Index
(reflects no deduction for
fees, expenses or taxes) |
|
[ ]% |
|
[ ]% |
|
[ ]% |
(LINE GRAPH ICON)
WHAT IS AN INDEX?
50
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Lehman Brothers 10-Year Municipal Bond Index is a widely-recognized
index of long-term investment grade tax-exempt bonds. The Index includes general obligation bonds,
revenue bonds, insured bonds and prefunded bonds with maturities between 8 and 12 years. The Index
represents various market sectors and geographic locations.
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
|
Investment Advisory Fees |
|
|
0.55 |
% |
|
Other Expenses(1) |
|
|
[0.09 |
%] |
|
|
|
|
|
Total Annual Operating Expenses(2) |
|
|
[0.64 |
%] |
|
|
|
(1) |
|
Adjusted to reflect expected changes in Other Expenses for the current fiscal year. |
|
(2) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at
any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
|
|
|
|
|
|
1 YEAR |
|
3 YEARS |
|
5 YEARS |
|
10 YEARS |
51
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
52
NORTH CAROLINA TAX-EXEMPT BOND FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
Current income exempt from federal and state income taxes
for North Carolina residents without undue risk |
|
INVESTMENT FOCUS
|
|
North Carolina municipal securities |
|
SHARE PRICE VOLATILITY
|
|
Moderate |
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Attempts to invest more Fund assets in undervalued sectors
and less in overvalued ones |
|
INVESTOR PROFILE
|
|
North Carolina residents who want income exempt from federal
and state income taxes |
|
SUBADVISER
|
|
StableRiver Capital Management LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
Under normal circumstances, the North Carolina Tax-Exempt Bond Fund invests at least 80% of its net
assets in municipal securities with income exempt from federal and North Carolina income taxes.
Issuers of these securities can be located in North Carolina, Puerto Rico and other U.S.
territories and possessions. In addition, the Fund may invest up to 20% of its assets in securities
subject to the alternative minimum tax or in certain taxable debt securities.
In selecting investments for the Fund, the Subadviser tries to limit risk as much as possible.
Based on the Subadvisers analysis of municipalities, credit risk, market trends and investment
cycles, the Subadviser attempts to invest more of the Funds assets in undervalued market sectors
and less in overvalued sectors. The Subadviser tries to diversify the Funds holdings within North
Carolina. The Subadviser also tries to identify and invest in municipal issuers with improving
credit and avoid those with deteriorating credit.
Because economic, industry and sector conditions tend to shift in relative attractiveness, the Fund
may buy and sell securities frequently, which may result in higher transaction costs, additional
capital gains tax liabilities and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, derivative instruments
(such as futures, options, swaps and inverse floaters) to use as a substitute for a purchase or
sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as interest rate risk.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?
Debt securities will generally lose value if interest rates increase. Interest rate risk is
generally higher for investments with longer maturities or durations.
Debt securities are subject to the risk that an issuer will fail to make timely payments of
interest or principal, or go bankrupt, reducing the Funds return. The lower the rating of a debt
security, the higher its credit risk.
53
There may be economic or political changes that impact the ability of municipal issuers to repay
principal and to make interest payments on municipal securities. Changes in the financial condition
or credit rating of municipal issuers also may adversely affect the value of the Funds securities.
The Fund is non-diversified, which means that it may invest in the securities of relatively few
issuers. As a result, the Fund may be more susceptible to a single adverse economic or regulatory
occurrence affecting one or more of these issuers, and may experience increased volatility due to
its investments in those securities. The Funds concentration of investments in securities of
issuers located in North Carolina subjects the Fund to economic and government policies of North
Carolina.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
(TARGET ICON)
PERFORMANCE INFORMATION
The bar chart and performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future. The Fund commenced operations on March 21, 2005. Performance between January 8, 2004
and March 21, 2005 is that of the CCMI Tax-Exempt North Carolina Bond Fund, the Funds predecessor.
This bar chart shows the performance of the Funds I Shares for the last year.*
(BAR CHART)
|
|
|
|
|
2005 |
|
|
2.29 |
% |
2006 |
|
|
4.66 |
% |
2007 |
|
|
[ ] |
% |
|
BEST QUARTER |
|
|
WORST QUARTER |
[ ]% |
|
|
[ ] |
% |
( ) |
|
|
( ) |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was [ ]%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the Lehman Brothers 10-Year Municipal Bond Index. These returns assume
shareholders redeem all of their shares at the end of the periods indicated.
54
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
AVERAGE ANNUAL TOTAL RETURNS
|
|
|
|
|
I SHARES* |
|
1 YEAR |
|
SINCE INCEPTION** |
Fund Returns Before Taxes |
|
[ ]% |
|
[ ]% |
|
|
|
|
|
Fund Returns After Taxes on
Distributions |
|
[ ]% |
|
[ ]% |
|
|
|
|
|
Fund Returns After Taxes on
Distributions and Sale of
Fund Shares |
|
[ ]% |
|
[ ]% |
|
|
|
|
|
Lehman Brothers 10-Year
Municipal Bond Index
(reflects no deduction for
fees, expenses or taxes) |
|
[ ]% |
|
[ ]% |
|
|
|
* |
|
Performance between January 8, 2004 and March 21, 2005 is that of the predecessor fund. |
|
** |
|
Since inception of the predecessor fund on January 8, 2004. Benchmark returns since December 31,
2003 (benchmark returns available only on a month end basis.) |
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Lehman Brothers 10-Year Municipal Bond Index is a widely recognized
index of long-term investment grade tax-exempt bonds. The index includes general obligation bonds,
revenue bonds, insured bonds and prefunded bonds with maturities between 8 and 12 years.
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
55
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
|
Investment Advisory Fees |
|
|
0.55 |
% |
Other Expenses(1) |
|
|
[0.07 |
%] |
|
|
|
|
Total Annual Operating Expenses(2) |
|
|
[0.62 |
%] |
|
|
|
(1) |
|
Adjusted to reflect expected changes in Other Expenses for the current fiscal year. |
|
(2) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at
any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
|
|
|
|
|
|
1 YEAR |
|
3 YEARS |
|
5 YEARS |
|
10 YEARS |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Distribution of Fund Shares.
56
SEIX FLOATING RATE HIGH INCOME FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
To provide a high level of current income by investing
primarily in first and second lien senior floating rate
loans and other floating rate debt securities. |
|
|
|
INVESTMENT FOCUS
|
|
Senior floating rate loans and other floating rate debt
securities |
|
|
|
SHARE PRICE VOLATILITY
|
|
Moderate |
|
|
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Invest in a portfolio of interests in first and second lien
senior secured floating rate loans and other floating rate
debt securities |
|
|
|
INVESTOR PROFILE
|
|
Investors who seek: Current income and a hedge against
rising interest rates; Diversification by adding assets that
have traditionally exhibited low correlation to other asset
classes; Relatively high risk adjusted returns compared to
other short term investment vehicles. |
|
|
|
SUBADVISER:
|
|
Seix Investment Advisors LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
Under normal circumstances, the Seix Floating Rate High Income Fund invests at least 80% of its net
assets in a combination of first and second lien senior floating rate loans and other floating rate
debt securities.
These loans are loans made by banks and other large financial institutions to various companies and
are senior in the borrowing companies capital structure. Coupon rates are floating, not fixed and
are tied to a benchmark lending rate, the most popular of which is LIBOR (London Interbank Offered
Rate). LIBOR is based on rates that contributor banks in London charge each other for interbank
deposits and is typically used to set coupon rates on floating rate debt securities.
The interest rates of these floating rate debt securities vary periodically based upon a benchmark
indicator of prevailing interest rates. The Fund may invest all or substantially all of its assets
in floating rate loans and debt securities that are rated below investment grade, or in comparable
unrated securities. The Fund may also invest up to 20% of its total assets in any combination of
junior debt securities or securities with a lien on collateral lower than a senior claim on
collateral, high yield fixed rate bonds, investment grade fixed income debt obligations, asset
backed securities (such as special purpose trusts investing in bank loans), money market securities
and repurchase agreements.
57
In deciding which debt securities to buy and sell, the portfolio managers will emphasize securities
which are within the segment of the high yield market it has targeted, which are securities rated
either BB and B by Standard & Poors Rating Services or Ba and B by Moodys Investor
Services, Inc. or unrated securities that the Subadviser believes are of comparable quality.
The Fund may invest up to 20% of its total assets in senior loans made to non-U.S. borrowers
provided that no more than 5% of the portfolios loans are non-U.S. dollar denominated. The Fund
may also engage in certain hedging transactions.
Preservation of capital is considered when consistent with the Funds objective.
Some types of senior loans in which the Fund may invest require that an open loan for a specific
amount be continually offered to a borrower. These types of senior loans are commonly referred to
as revolvers. Because revolvers contractually obligate the lender (and therefore those with an
interest in the loan) to fund the loan at the borrowers discretion, the Fund must have funds
sufficient to cover its contractual obligation. Therefore the Fund will maintain, on a daily basis,
high-quality, liquid assets in an amount at least equal in value to its contractual obligation to
fulfill the revolving senior loan. The Fund will not encumber any assets that are otherwise
encumbered. The Fund will limit its investments in such obligations to no more than 25% of the
Funds total assets.
Because economic, industry and sector conditions tend to shift in relative attractiveness, the Fund
may buy and sell securities frequently, which may result in higher transaction costs, additional
capital gains tax liabilities and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell to a limited extent,
derivative instruments (such as futures, options and swaps) to use as a substitute for a purchase
or sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as interest rate or credit risks. The Fund may count the value of
certain derivatives with floating rate debt or high yield bond characteristics towards its policy
to invest, under normal circumstances, at least 80% of its net assets in a
combination of senior floating rate loans and other floating rate debt securities and high yield
bonds.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
Debt securities will generally lose value if interest rates increase. Interest rate risk is
generally higher for investments with longer maturities or durations.
Economic and other market events may reduce the demand for certain senior loans held by the Fund,
which may adversely impact the net asset value of the Fund.
Loans and other debt securities are subject to credit risk. Credit risk is the possibility that an
issuer will fail to make timely payments of interest or principal, or go bankrupt. The lower the
ratings of such debt securities, the greater their risks. In addition, lower rated securities have
higher risk characteristics, and changes in economic conditions are likely to cause issuers of
these securities to be unable to meet their obligations. Many floating rate loans are such lower
rated securities.
58
Below investment grade securities (sometimes referred to as junk bonds) involve greater risk of
default or downgrade and are more volatile than investment grade securities. Below investment grade
securities may also be less liquid than higher quality securities.
The risks associated with floating rate loans are similar to the risks of below investment grade
securities. In addition, the value of the collateral securing the loan may decline, causing a loan
to be substantially unsecured. Difficulty in selling a floating rate loan may result in a loss.
Borrowers may pay back principal before the scheduled due date when interest rates decline, which
may require the Fund to replace a particular loan with a lower-yielding security. There may be less
extensive public information available with respect to loans than for rated, registered or
exchange listed securities. The Fund may assume the credit risk of the primary lender in addition
to the borrower, and investments in loan assignments may involve the risks of being a lender.
Foreign securities involve special risks such as currency fluctuations, economic or financial
instability, lack of timely or reliable financial information and unfavorable political or legal
developments. These risks are increased for investments in emerging markets.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
(TARGET ICON)
PERFORMANCE INFORMATION
PERFORMANCE INFORMATION
The bar chart and performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future. This bar chart shows the performance of the Funds I Shares for the last year.*
(BAR CHART)
|
|
|
|
|
|
2006 |
|
|
4.66 |
% |
2007 |
|
|
[ ] |
% |
|
BEST QUARTER |
|
|
WORST QUARTER |
[ ]% |
|
|
[ ] |
% |
( ) |
|
|
( ) |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was [ ]%. |
AVERAGE ANNUAL TOTAL RETURNS
59
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the Lehman Brothers 10-Year Municipal Bond Index. These returns assume
shareholders redeem all of their shares at the end of the periods indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
AVERAGE ANNUAL TOTAL RETURNS
|
|
|
|
|
I SHARES |
|
1 YEAR |
|
SINCE INCEPTION |
Fund Returns Before Taxes |
|
[ ]% |
|
[ ]% |
Fund Returns After Taxes on
Distributions |
|
[ ]% |
|
[ ]% |
|
|
|
|
|
Fund Returns After Taxes on
Distributions and Sale of
Fund Shares |
|
[ ]% |
|
[ ]% |
|
|
|
|
|
CSFB Leveraged Loan Index
(reflects no deduction for
fees, expenses or taxes) |
|
[ ]% |
|
[ ]% |
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The CSFB Leveraged Loan Index [insert description here].
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
60
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees
|
|
|
0.45 |
% |
Other Expenses(1)
|
|
|
[0.10 |
%] |
|
|
|
|
|
Total Annual Fund Operating Expenses(2)
|
|
|
[0.55 |
%] |
|
|
|
(1) |
|
Adjusted to reflect expected changes in Other Expenses for the current fiscal year. |
|
(2) |
|
The Adviser has contractually agreed to waive fees and reimburse expenses until at least August
1, 2008 in order to keep Total Annual Operating Expenses from exceeding 0.55%. If at any point
before August 1, 2010, Total Annual Operating Expenses are less than the applicable expense cap,
the Adviser may retain the difference to recapture any of the prior waivers or reimbursements. In
addition, the Adviser and/or other service providers may voluntarily waive a portion of their fees
in order to limit Total Annual Operating Expenses. These voluntary waivers may be discontinued at
any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
|
|
|
|
|
|
1 YEAR |
|
3 YEARS |
|
5 YEARS |
|
10 YEARS |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
61
SEIX HIGH YIELD FUND
|
|
|
(SUITCASE ICON) |
|
|
FUND SUMMARY |
|
|
|
INVESTMENT GOAL |
|
|
PRIMARY
|
|
High income |
SECONDARY
|
|
Capital appreciation |
|
|
|
INVESTMENT FOCUS
|
|
High yield corporate and other debt instruments of U.S. and
non U.S. entities |
|
|
|
SHARE PRICE VOLATILITY
|
|
High |
|
|
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Attempts to identify lower rated, higher yielding bonds
offering above average total return |
|
|
|
INVESTOR PROFILE
|
|
Investors who seek above average total return |
|
|
|
SUBADVISER:
|
|
Seix Investment Advisors LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
The Seix High Yield Fund invests in various types of lower rated, higher yielding debt instruments,
including corporate obligations, floating rate loans and other debt obligations. The Fund may
invest in debt obligations of U.S. and non U.S. issuers, including emerging market debt. Under
normal circumstances, the Fund invests at least 80% of its net assets in high yield securities.
These securities will be chosen from the broad universe of available U.S. dollar denominated, high
yield securities rated below investment grade by either Moodys Investor Services, Inc. or Standard
& Poors Rating Services or unrated securities that the Subadviser believes are of comparable
quality. Such securities are commonly known as junk bonds and offer greater risks than investment
grade bonds. Although the Fund seeks to achieve its investment objective primarily through
investment in high yield securities, the Fund may invest up to 20% of its net assets in investment
grade securities. The Fund will be managed with a duration that is close to the Funds comparative
benchmark, the Merrill Lynch U.S. High Yield BB/B Rated Constrained Index, which is generally
between 3 and 6 years. The Fund may also invest a portion of its assets in securities that are
restricted as to resale.
In selecting securities for the Fund, the Subadviser employs a research driven process designed to
identify value areas within the high yield market. In deciding which securities to buy and sell,
the portfolio managers will emphasize securities which are within the segment of the high yield
market it has targeted for emphasis, which are BB and B rated issuers. The Subadviser seeks to
identify securities which meet the following criteria: (1) industries that have strong
fundamentals; (2) companies that have good business prospects and increasing credit strength; and
(3) issuers with stable or growing cash flows and effective management.
Because economic, industry and sector conditions tend to shift in relative attractiveness, the Fund
may buy and sell securities frequently, which may result in higher transaction costs, additional
capital gains tax liabilities and lower performance.
62
In addition, to implement its investment strategy, the Fund may buy or sell derivative instruments
(such as futures, options and swaps) to use as a substitute for a purchase or sale of a position in
the underlying assets and/or as part of a strategy designed to reduce exposure to other risks, such
as interest rate or credit risks. The Fund may count the value of certain derivatives with below
investment grade fixed income characteristics towards its policy to invest, under normal
circumstances, at least 80% of its net assets in high yield corporate securities rated as
non-investment grade.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
Debt securities will generally lose value if interest rates increase. Interest rate risk is
generally higher for investments with longer maturities or durations.
Debt securities are subject to the risk that an issuer will fail to make timely payments of
interest or principal, or go bankrupt, reducing the Funds return. The lower the rating of a debt
security, the higher its credit risk.
Below investment grade securities (sometimes referred to as junk bonds) involve greater risk of
default or downgrade and are more volatile than investment grade securities. Below investment grade
securities may also be less liquid than higher quality securities.
The risks associated with floating rate loans are similar to the risks of below investment grade
securities. In addition, the value of the collateral securing the loan may decline, causing a loan
to be substantially unsecured. Difficulty in selling a floating rate loan may result in a loss.
Borrowers may pay back principal before the scheduled due date when interest rates decline, which
may require the Fund to replace a particular loan with a lower-yielding security. There may be less
extensive public information available with respect to loans than for rated, registered or exchange
listed securities. The Fund may assume the credit risk of the primary lender in addition to the
borrower, and investments in loan assignments may involve the risks of being a lender.
Foreign securities involve special risks such as currency fluctuations, economic or financial
instability, lack of timely or reliable financial information and unfavorable
political or legal developments. These risks are increased for investments in emerging markets.
Restricted securities may increase the level of illiquidity in the Fund during any period that
qualified institutional buyers become uninterested in purchasing these restricted securities. The
Subadviser intends to invest only in restricted securities that it believes present minimal
liquidity risk. Because the Fund may invest in derivatives, it is exposed to additional volatility
and potential loss.
For further information about these and other risks, see More
Information About Risk.
(TARGET ICON)
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future. The Fund began operating on October 11, 2004. Performance prior to October 11, 2004 is
that of the Class I Shares of the Seix High Yield Fund, the Funds predecessor, which began
operations on December 29, 2000.
63
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
2001 |
|
|
11.33 |
% |
2002 |
|
|
6.34 |
% |
2003 |
|
|
15.56 |
% |
2004 |
|
|
8.34 |
% |
2005 |
|
|
2.62 |
% |
2006 |
|
|
7.00 |
% |
2007 |
|
|
[ ] |
% |
|
BEST QUARTER |
|
WORST QUARTER |
[ ]% |
|
|
[ ] |
% |
( ) |
|
|
( ) |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was [ ]%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the Merrill Lynch U.S. High Yield BB/B Rated Constrained Index and the Merrill
Lynch High Yield Master Index. These returns assume shareholders redeem all of their shares at the
end of the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SINCE |
I SHARES* |
|
1 YEAR |
|
5 YEARS |
|
INCEPTION** |
Fund Returns
Before Taxes |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
Fund Returns After
Taxes on Distributions |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Returns After
Taxes on Distributions
and Sale of Fund
Shares |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Merrill Lynch U.S.
High Yield BB/B Rated
Constrained Index
(reflects no deduction
for fees, expenses or
taxes)*** |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Merrill Lynch High
Yield Master Index
(reflects no deduction
for fees, expenses or
taxes) |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
* |
|
Performance prior to October 11, 2004 is that of the predecessor funds Class I Shares. |
|
** |
|
Since inception of the predecessor fund on December 29, 2000. Benchmark returns since November
30, 2000 (benchmark returns available only on a month end basis). |
|
*** |
|
Effective August 1, 2007, the Fund transitioned its benchmark from the Merrill Lynch High Yield
Master Index to the Merrill Lynch U.S. High Yield BB/B Rated Constrained Index to better reflect
the Funds investment strategy. |
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Merrill Lynch U.S. High Yield BB/B Rated Constrained Index tracks
the performance of BB/B rated U.S. dollar denominated corporate bonds publicly issued in the U.S.
domestic market. The Merrill Lynch High Yield Master Index is a widely-recognized index of U.S.
high yield corporate bond issues having maturities of at least one year.
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
65
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
0.43 |
% |
Other Expenses(1) |
|
|
[0.06 |
%] |
|
|
|
|
|
Total Annual Operating Expenses(2) |
|
|
[0.49 |
%] |
|
|
|
(1) |
|
Adjusted to reflect expected changes in Other Expenses for the current fiscal year. |
|
(2) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at
any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
1 YEAR
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
66
SHORT-TERM BOND FUND
|
|
|
(SUITCASE ICON) |
|
|
FUND SUMMARY |
|
|
|
INVESTMENT GOAL
|
|
High current income, while preserving capital |
|
|
|
INVESTMENT FOCUS
|
|
Short-term investment grade fixed income securities. |
|
|
|
SHARE PRICE VOLATILITY
|
|
Low |
|
|
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Attempts to identify securities that offer a comparably
better return than similar securities for a given level of
credit risk |
|
|
|
INVESTOR PROFILE
|
|
Income oriented investors who are willing to accept
increased risk for the possibility of returns greater than
money market investing |
|
|
|
SUBADVISER
|
|
StableRiver Capital Management LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
Under normal circumstances, the Short-Term Bond Fund invests at least 80% of its net assets in a
diversified portfolio of short- to medium-term investment grade U.S. Treasury, corporate debt,
mortgage-backed and asset-backed securities. These securities may be rated investment grade by at
least one national securities rating agency or unrated securities that the Subadviser believes are
of comparable quality. The Fund expects that it will normally maintain an effective maturity of 3
years or less. The Fund may invest in foreign securities.
In selecting investments for the Fund, the Subadviser attempts to identify securities that offer a
comparably better investment return for a given level of credit risk. For example, short-term bonds
generally have better returns than money market instruments, with a fairly modest increase in
credit risk and/or volatility. The Subadviser manages the Fund from a total return perspective.
That is, the Subadviser makes day-to-day investment decisions for the Fund with a view towards
maximizing returns. The Subadviser analyzes yields, market sectors and credit risk in an effort to
identify attractive investments with the best risk/reward trade-off.
Because economic, industry and sector conditions tend to shift in relative attractiveness, the Fund
may buy and sell securities frequently, which may result in higher transaction costs, additional
capital gains tax liabilities and lower performance. The Subadviser may retain securities if the
rating of the security falls below investment grade and the Subadviser deems retention of the
security to be in the best interests of the Fund.
In addition, to implement its investment strategy, the Fund may buy or sell, to a limited extent,
derivative instruments (such as futures, options and swaps) to use as a substitute for a purchase
or sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as interest rate risk.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
67
Debt securities will lose value because of increases in interest rates. Interest rate risk is
generally higher for investments with longer maturities or durations.
Debt securities are subject to the risk that an issuer will fail to make timely payments of
interest or principal, or go bankrupt, reducing the Funds return. The lower the rating of a debt
security, the higher its credit risk.
Mortgage-backed investments involve risk of loss due to prepayments and, like any bond, due to
default. Because of the sensitivity of mortgage-related securities to changes in interest rates,
the Funds performance may be more volatile than if it did not hold these securities.
Foreign securities involve special risks such as currency fluctuations, economic or financial
instability, lack of timely or reliable financial information and unfavorable political or legal
developments.
U.S. government securities can exhibit price movements resulting from changes in interest rates.
Treasury inflation protected securities (TIPS) can also exhibit price movements as a result of
changing inflation expectations and seasonal inflation patterns. Certain U.S. government securities
are backed by the full faith and credit of the U.S. Government, while others are backed by the
ability of the issuing entity to borrow from the U.S. Treasury or by the issuing entitys own
resources.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
(TARGET ICON)
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
1998 |
|
|
6.84 |
% |
1999 |
|
|
0.92 |
% |
2000 |
|
|
7.64 |
% |
2001 |
|
|
7.54 |
% |
2002 |
|
|
2.59 |
% |
2003 |
|
|
2.53 |
% |
68
|
|
|
|
|
2004 |
|
|
0.98 |
% |
2005 |
|
|
1.67 |
% |
2006 |
|
|
5.26 |
% |
2007 |
|
|
[ ] |
% |
|
BEST QUARTER |
|
WORST QUARTER |
[ ]% |
|
|
[ ] |
% |
( ) |
|
|
( ) |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was [ ]%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the Citigroup 1-3 Year Government/Credit Index. These returns assume shareholders
redeem all of their shares at the end of the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
I SHARES |
|
1 YEAR |
|
5 YEARS |
|
10 YEARS |
Fund Returns
Before Taxes |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Returns
After Taxes on
Distributions |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Returns
After Taxes on
Distributions and Sale
of Fund Shares |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Citigroup 1-3 Year
Government/Credit Index
(reflects no deduction for
fees, expenses or taxes) |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
69
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Citigroup 1-3 Year Government/ Credit Index is a widely-recognized
index of U.S. Treasury securities, government agency obligations, and corporate debt securities
rated at least investment grade (BBB). The securities in the Index have maturities of 1 year or
greater and less than 3 years.
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
0.40 |
% |
Other Expenses |
|
|
[ 0.06 |
%] |
|
|
|
|
|
Total Annual Operating Expenses(1) |
|
|
[0.46 |
%] |
(1) The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at
any time.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
1 YEAR
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
70
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
71
SHORT TERM U.S. TREASURY SECURITIES FUND
|
|
|
(SUITCASE ICON) |
|
|
FUND SUMMARY |
|
|
|
INVESTMENT GOAL
|
|
High current income, while preserving capital |
|
|
|
INVESTMENT FOCUS
|
|
Short term U.S. Treasury securities |
|
|
|
SHARE PRICE VOLATILITY
|
|
Low |
|
|
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Attempts to identify Treasury securities with maturities
that offer a comparably better return potential and yield
than either shorter maturity or longer maturity securities
for a given level of interest rate risk |
|
|
|
INVESTOR PROFILE
|
|
Income oriented investors who are willing to accept
increased risk for the possibility of returns greater than
money market investing |
|
|
|
SUBADVISER
|
|
StableRiver Capital Management LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
The Short Term U.S. Treasury Securities Fund invests exclusively in short term U.S. Treasury
securities (those with remaining maturities of 5 years or less) and shares of registered money
market funds that invest in the foregoing. The Fund intends to maintain an average weighted
maturity from 1 to 3 years.
The Fund offers investors the opportunity to capture the advantage of investing in short term bonds
over money market instruments. Generally, short term bonds offer a comparably better return than
money market instruments, with a modest increase in interest rate risk.
The Subadviser manages the Fund from a total return perspective. That is, the Subadviser makes day
to day investment decisions for the Fund with a view toward maximizing total return. The Subadviser
tries to select those U.S. Treasury securities that offer the best risk/reward trade off.
Because economic, industry and sector conditions tend to shift in relative attractiveness, the Fund
may buy and sell securities frequently, which may result in higher transaction costs, additional
capital gains tax liabilities and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, to a limited extent,
derivative instruments (such as futures, options and swaps) to use as a substitute for a purchase
or sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as interest rate risk.
(LIFE PRESERVER ICON)
72
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
Debt securities will lose value because of increases in interest rates. Interest rate risk is
generally higher for investments with longer maturities or durations.
Short-term U.S. Treasury securities may underperform other segments of the fixed income market or
the fixed income market as a whole.
U.S. Treasury securities are considered to be among the safest investments, however, they are not
guaranteed against price movements due to changing interest rates. Treasury inflation protected
securities (TIPS) can exhibit price movements as a result of changing inflation expectations and
seasonal inflation patterns.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
(TARGET ICON)
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
1998 |
|
|
6.24 |
% |
1999 |
|
|
2.71 |
% |
2000 |
|
|
6.65 |
% |
2001 |
|
|
6.55 |
% |
2002 |
|
|
4.61 |
% |
2003 |
|
|
1.37 |
% |
2004 |
|
|
0.18 |
% |
73
|
|
|
|
|
2005 |
|
|
1.38 |
% |
2006 |
|
|
3.43 |
% |
2007 |
|
|
[ ] |
% |
|
BEST QUARTER |
|
WORST QUARTER |
[ ]%
|
|
|
[ ] |
% |
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was [ ]%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the Citigroup 1-3 Year Treasury Index. These returns assume shareholders redeem
all of their shares at the end of the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
I SHARES |
|
1 YEAR |
|
5 YEARS |
|
10 YEARS |
Fund Returns
Before Taxes |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Returns
After Taxes on
Distributions |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Returns
After Taxes on
Distributions and Sale
of Fund Shares |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Citigroup 1-3 Year
Treasury Index (reflects
no deduction for fees,
expenses or taxes) |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
74
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Citigroup 1-3 Year Treasury Index is a widely-recognized index of
U.S. Treasury securities with maturities of one year or greater and less than three years.
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
0.40 |
% |
Other Expenses(1) |
|
|
[0.12 |
%] |
|
|
|
|
|
Total Annual Operating Expenses(2) |
|
|
[0.52 |
%] |
|
|
|
(1) |
|
Adjusted to reflect expected changes in Other Expenses for the current fiscal year. |
|
(2) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses to the level shown below. These
waivers may be discontinued at any time. |
|
|
|
|
|
|
|
I SHARES |
|
Short-Term U.S. Treasury Securities Fund |
|
|
[0.50%] |
|
EXAMPLE
75
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
1 YEAR
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
76
STRATEGIC INCOME FUND
|
|
|
(SUITCASE ICON) |
|
|
FUND SUMMARY |
|
|
|
INVESTMENT GOALS |
|
|
PRIMARY
|
|
Current income |
SECONDARY
|
|
Preservation of capital |
|
|
|
INVESTMENT FOCUS
|
|
High yield corporate, government, and other debt instruments
of U.S. and non U.S. issuers |
|
|
|
SHARE PRICE VOLATILITY
|
|
Moderate |
|
|
|
PRINCIPAL INVESTMENT STRATEGY
|
Attempts to increase income while reducing share price
volatility through diversification across three major
sectors of the fixed income market |
|
|
|
INVESTOR PROFILE
|
|
Investors who seek high current income with reduced risk of
share price volatility |
|
|
|
SUBADVISER:
|
|
Seix Investment Advisors LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
The Strategic Income Fund invests primarily in a diversified portfolio of high yield corporate
obligations, government securities, and floating rate loans. The Fund may invest in U.S. and
non-U.S. debt obligations, including emerging market debt. The minimum average credit quality of
the fixed income securities in which the Fund invests will be BBB as rated by at least one national
securities rating agency or unrated securities that the Subadviser believes are of comparable
quality. The Fund will invest at least 15%, but not more than 60%, of its assets in a particular
sector. The Fund may also invest a portion of its assets in securities that are restricted as to
resale.
In selecting corporate debt securities for the Fund, the Subadviser seeks out companies with good
fundamentals and performing prospects that are currently out of favor with investors. The primary
basis for security selection is the potential income offered by the security relative to the
Subadvisers assessment of the issuers ability to generate the cash flow required to meet its
obligation. The Subadviser employs a bottom-up approach, identifying investment opportunities
based on the underlying financial and economic fundamentals of the specific issuer.
Because economic, industry and sector conditions tend to shift in relative attractiveness, the Fund
may buy and sell securities frequently, which may result in higher transaction costs, additional
capital gains tax liabilities and lower performance.
77
In addition, to implement its investment strategy, the Fund may buy or sell derivative instruments
(such as futures, options and swaps) to use as a substitute for a purchase or sale of a position in
the underlying assets and/or as part of a strategy designed to reduce exposure to other risks, such
as interest rate or credit risks.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
Debt securities will generally lose value if interest rates increase. Interest rate risk is
generally higher for investments with longer maturities or durations.
Debt securities are subject to the risk that an issuer will fail to make timely payments of
interest or principal, or go bankrupt, reducing the Funds return. The lower the rating of a debt
security, the higher its credit risk.
Below investment grade securities (sometimes referred to as junk bonds) involve greater risk of
default or downgrade and are more volatile than investment grade securities. Below investment grade
securities may also be less liquid than higher quality securities.
The risks associated with floating rate loans are similar to the risks of below investment grade
securities. In addition, the value of the collateral securing the loan may decline, causing a loan
to be substantially unsecured. Difficulty in selling a floating rate loan may result in a loss.
Borrowers may pay back principal before the scheduled due date when interest rates decline, which
may require the Fund to replace a particular loan with a lower-yielding security. There may be less
extensive public information available with respect to loans than for rated, registered or exchange
listed securities. The Fund may assume the credit risk of the primary lender in addition to the
borrower, and investments in loan assignments may involve the risks of being a lender.
Foreign securities involve special risks such as currency fluctuations, economic or financial
instability, lack of timely or reliable financial information and unfavorable political or legal
developments. These risks are increased for investments in emerging markets.
Asset-backed investments involve risk of loss due to prepayments and, like any bond, due to
default. Because of the sensitivity of asset-backed securities to changes in interest rates, the
Funds performance may be more volatile than if it did not hold these securities.
Restricted securities may increase the level of illiquidity in the Fund during any period that
qualified institutional buyers become uninterested in purchasing these restricted securities. The
Subadviser intends to invest only in restricted securities that it believes present minimal
liquidity risk.
U.S. Treasury securities are considered to be among the safest investments, however, they are not
guaranteed against price movements due to changing interest rates. Treasury inflation protected
securities (TIPS) can exhibit price movements as a result of changing inflation expectations and
seasonal inflation patterns.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
78
(TARGET ICON)
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
2002 |
|
|
3.58 |
% |
2003 |
|
|
11.50 |
% |
2004 |
|
|
10.67 |
% |
2005 |
|
|
-1.53 |
% |
2006 |
|
|
5.98 |
% |
2007 |
|
|
[ ] |
% |
|
BEST QUARTER |
|
WORST QUARTER |
[ ]% |
|
|
[ ] |
% |
( ) |
|
|
( ) |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was [ ]%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of a Hybrid 34/33/33 Blend of the Merrill Lynch AAA U.S. Treasury/Agency Master
Index, Merrill Lynch U.S. High Yield Master II Index and the Merrill Lynch Global Government Bond
II ex U.S. Index. These returns assume shareholders redeem all of their shares at the end of the
period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
79
|
|
|
|
|
|
|
|
|
|
|
|
|
I SHARES |
|
1 YEAR |
|
5 YEARS |
|
SINCE INCEPTION* |
Fund Returns
Before Taxes |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
Fund Returns
After Taxes on Distributions |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
Fund Returns
After Taxes on
Distributions and Sale
of Fund Shares |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
Hybrid 34/33/33 Blend of
the Following Market
Benchmarks |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
Merrill Lynch AAA U.S.
Treasury/Agency Master
Index (reflects no
deduction for fees,
expenses or taxes) |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
Merrill Lynch U.S. High
Yield Master II Index
(reflects no deduction
for fees, expenses or
taxes) |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
Merrill Lynch Global
Government Bond II ex
U.S. Index (reflects no
deduction for fees,
expenses or taxes) |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
80
|
|
|
* |
|
Since inception of the I Shares on November 30, 2001. |
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Merrill Lynch AAA U.S. Treasury/Agency Master Index is a
widely-recognized index that tracks the performance of the combined U.S. Treasury and U.S. agency
markets. It includes U.S. dollar-denominated, U.S. Treasury and U.S. agency bonds, issued in the
U.S. domestic bond market, having at least one year remaining term to maturity, a fixed coupon
schedule and a minimum amount outstanding of $1 billion for U.S. Treasuries and $150 million for
U.S. agencies. The Merrill Lynch U.S. High Yield Master II Index is a widely-recognized,
market-value weighted (higher market value bonds have more influence than lower value bonds) index
that tracks the performance of below investment grade U.S. dollar-denominated corporate bonds
publicly issued in the U.S. domestic market. The Merrill Lynch Global Government Bond II ex U.S.
Index is a widely-recognized subset of the Merrill Lynch Global Government Bond Index including
Belgian, Danish, Irish, Italian, New Zealand, Portuguese, Spanish, and Swedish returns. The Merrill
Lynch Global Government Bond Index is a widely-recognized, broad-based index consisting of various
maturities comprising Australian, Canadian, Dutch, French, German, Japanese, Swiss, U.K., and U.S.
individual country returns.
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
0.60 |
% |
Other
Expenses (1) |
|
|
[0.15 |
%] |
|
|
|
|
|
Total Annual
Operating Expenses (2) |
|
|
[0.75 |
%] |
|
|
|
(1) |
|
Adjusted to reflect expected changes in Other Expenses for the current fiscal year. |
81
|
|
|
(2) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at
any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
|
1 YEAR
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
|
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
82
TOTAL RETURN BOND FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
Total return that consistently exceeds the total return of
the broad U.S. investment grade bond market |
|
INVESTMENT FOCUS
|
|
Investment grade debt securities |
|
SHARE PRICE VOLATILITY
|
|
Moderate |
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Invest in fixed income securities with an emphasis on
corporate and mortgage-backed securities |
|
INVESTOR PROFILE
|
|
Investors who want to receive income from their investment,
as well as an increase in the value of the investment |
|
SUBADVISER:
|
|
Seix Investment Advisors LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
The Total Return Bond Fund invests in various types of income producing debt securities including
mortgage- and asset-backed securities, government and agency obligations, corporate obligations and
floating rate loans. The Fund may invest in debt obligations of U.S. and non-U.S. issuers,
including emerging market debt. Under normal circumstances, the Fund invests at least 80% of its
net assets in fixed income securities. These securities will be chosen from the broad universe of
available fixed income securities rated investment grade by at least one national securities rating
agency or unrated securities that the Subadviser believes are of comparable quality. The Fund may
invest up to 20% of its net assets in below investment grade, high yield debt obligations. The Fund
may also invest a portion of its assets in securities that are restricted as to resale.
The Subadviser anticipates that the Funds modified adjusted duration will generally range from 3
to 6 years, similar to that of the Lehman Brothers Aggregate Bond Index, the Funds comparative
benchmark. In selecting investments for the Fund, the Subadviser generally selects a greater
weighting in obligations of domestic corporations and mortgage-backed securities relative to the
Funds comparative benchmark, and a lower relative weighting in U.S. Treasury and government agency
issues.
Because economic, industry and sector conditions tend to shift in relative attractiveness, the Fund
may buy and sell securities frequently, which may result in higher transaction costs, additional
capital gains tax liabilities and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell derivative instruments
(such as futures, options and swaps) to use as a substitute for a purchase or sale of a position in
the underlying assets and/or as part of a strategy designed to reduce exposure to other risks, such
as interest rate or credit risks. The Fund may count the value of certain derivatives with
investment grade fixed income characteristics towards its policy to invest, under normal
circumstances, at least 80% of its net assets in fixed income securities.
(LIFE PRESERVER ICON)
83
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
Debt securities will generally lose value if interest rates increase. Interest rate risk is
generally higher for investments with longer maturities or durations.
Debt securities are subject to the risk that an issuer will fail to make timely payments of
interest or principal, or go bankrupt, reducing the Funds return. The lower the rating of a debt
security, the higher its credit risk.
Mortgage-backed and asset-backed investments involve risk of loss due to prepayments and, like any
bond, due to default. Because of the sensitivity of mortgage-related securities to changes in
interest rates, the Funds performance may be more volatile than if it did not hold these
securities.
Foreign securities involve special risks such as currency fluctuations, economic or financial
instability, lack of timely or reliable financial information and unfavorable political or legal
developments. These risks are increased for investments in emerging markets.
Below investment grade securities (sometimes referred to as junk bonds) involve greater risk of
default or downgrade and are more volatile than investment grade securities. Below investment grade
securities may also be less liquid than higher quality securities.
The risks associated with floating rate loans are similar to the risks of below investment grade
securities. In addition, the value of the collateral securing the loan may decline, causing a loan
to be substantially unsecured. Difficulty in selling a floating rate loan may result in a loss.
Borrowers may pay back principal before the scheduled due date when interest rates decline, which
may require the Fund to replace a particular loan with a lower-yielding security. There may be less
extensive public information available with respect to loans than for rated, registered or exchange
listed securities. The Fund may assume the credit risk of the primary lender in addition to the
borrower, and investments in loan assignments may involve the risks of being a lender.
U.S. government securities can exhibit price movements resulting from changes in interest rates.
Treasury inflation protected securities (TIPS) can also exhibit price movements as a result of
changing inflation expectations and seasonal inflation patterns. Certain U.S. government securities
are backed by the full faith and credit of the U.S. Government, while others are backed by the
ability of the issuing entity to borrow from the U.S. Treasury or by the issuing entitys own
resources.
Restricted securities may increase the level of illiquidity in the Fund during any period that
qualified institutional buyers become uninterested in purchasing these restricted securities. The
Subadviser intends to invest only in restricted securities that it believes present minimal
liquidity risk.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
(TARGET ICON)
PERFORMANCE INFORMATION
84
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future. The Fund began operating on October 11, 2004. Performance prior to October 11, 2004 is
that of the Class I Shares of the Seix Core Bond Fund, the Funds predecessor, which began operations on December 30,
1997.
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
1998 |
|
|
7.81 |
% |
1999 |
|
|
-0.53 |
% |
2000 |
|
|
10.40 |
% |
2001 |
|
|
6.83 |
% |
2002 |
|
|
7.58 |
% |
2003 |
|
|
4.82 |
% |
2004 |
|
|
4.59 |
% |
2005 |
|
|
2.13 |
% |
2006 |
|
|
3.87 |
% |
2007 |
|
|
[ ] |
% |
|
BEST QUARTER |
|
WORST QUARTER |
[ ]% |
|
|
[ ] |
% |
( ) |
|
|
( ) |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was [ ]%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the Lehman Brothers U.S. Aggregate Index. These returns assume shareholders
redeem all of their shares at the end of the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SINCE |
I SHARES* |
|
1 YEAR |
|
5 YEARS |
|
INCEPTION** |
Fund Returns
Before Taxes |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
Fund Returns After
Taxes on
Distributions |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
Fund Returns After
Taxes on
Distributions and
Sale of Fund Shares |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
Lehman Brothers U.S.
Aggregate Index
(reflects no
deduction for fees,
expenses or taxes) |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
* |
|
Performance prior to October 11, 2004 is that of the predecessor funds Class I Shares. |
|
** |
|
Since inception of the predecessor fund on December 30, 1997. |
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Lehman Brothers U.S. Aggregate Index is a widely-recognized index
of U.S. Treasury and agency securities, corporate bond issues, mortgage-backed securities,
asset-backed securities and corporate mortgage-backed securities.
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
86
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
0.25 |
% |
Other Expenses |
|
|
[0.05 |
%] |
|
|
|
|
|
Total Annual Operating Expenses(1) |
|
|
[0.30 |
%] |
|
|
|
(1) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at
any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
|
1 YEAR
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
|
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
87
ULTRA-SHORT BOND FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
High current income consistent with preserving capital and
maintaining liquidity |
|
|
|
INVESTMENT FOCUS
|
|
Short duration investment grade money market and fixed
income securities |
|
|
|
SHARE PRICE VOLATILITY
|
|
Low |
|
|
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Attempts to identify short duration securities that offer a
comparably better return potential and yield than money
market funds |
|
|
|
INVESTOR PROFILE
|
|
Conservative investors seeking to maximize income consistent
with limited share price volatility |
|
|
|
SUBADVISER:
|
|
StableRiver Capital Management LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
Under normal circumstances, the Ultra-Short Bond Fund invests at least 80% of its net assets in
short duration, investment grade money market and fixed income securities including, but not
limited to, U.S. Treasury and agency securities, obligations of supranational entities and foreign
governments, domestic and foreign corporate debt obligations, taxable municipal debt securities,
mortgage-backed and asset-backed securities, repurchase agreements, and other mutual funds. The
Fund normally expects to maintain an average effective duration between 3 months and 1 year.
Individual purchases will generally be limited to securities with an effective duration of less
than 5 years.
In selecting investments for the Fund, the Subadviser attempts to maximize income by identifying
securities that offer an acceptable yield for a given level of credit risk and maturity. The
Subadviser may retain securities if the rating of the security falls below investment grade and the
Subadviser deems retention of the security to be in the best interests of the Fund.
Because economic, industry and sector conditions tend to shift in relative attractiveness, the Fund
may buy and sell securities frequently, which may result in higher transaction costs, additional
capital gains tax liabilities and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, to a limited extent,
derivative instruments (such as futures, options and swaps) to use as a substitute for a purchase
or sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as interest rate risk.
(LIFE PRESERVER ICON)
88
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
The price per share (net asset value or NAV) of the Fund will fluctuate depending on general
changes in interest rates as well as changes in the yields of the specific securities in the Fund.
General (or macro) changes in interest rates may be as a result of economic developments or Federal
Reserve policy while issuer specific changes in yield may be as a result of a change in
creditworthiness of a particular issuer or industry. In general, the NAV of the Fund will rise when
interest rates fall, and likewise, the NAV of the Fund will fall when interest rates rise. An
objective of the Fund is to minimize NAV fluctuation by (a) maintaining the Fund average weighted
duration between three months and one year and (b) diversifying the Fund among issuers and
industries.
Debt securities will generally lose value if interest rates increase. Interest rate risk is
generally higher for investments with longer maturities or durations.
Debt securities are subject to the risk that an issuer will fail to make timely payments of
interest or principal, or go bankrupt, reducing the Funds return. The lower the rating of a debt
security, the higher its credit risk.
Short-term U.S. government debt securities may underperform other segments of the fixed income
market or the fixed income market as a whole.
Mortgage-backed investments involve risk of loss due to prepayments and, like any bond, due to
default. Because of the sensitivity of mortgage-related securities to changes in interest rates,
the Funds performance may be more volatile than if it did not hold these securities.
Foreign securities involve special risks such as currency fluctuations, economic or financial
instability, lack of timely or reliable financial information and unfavorable political or legal
developments.
U.S. government securities can exhibit price movements resulting from changes in interest rates.
Treasury inflation protected securities (TIPS) can also exhibit price movements as a result of
changing inflation expectations and seasonal inflation patterns. Certain U.S. government securities
are backed by the full faith and credit of the U.S. Government, while others are backed by the
ability of the issuing entity to borrow from the U.S. Treasury or by the issuing entitys own
resources.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
(TARGET ICON)
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
89
(BAR CHART)
|
|
|
|
|
2003 |
|
|
1.16 |
% |
2004 |
|
|
1.22 |
% |
2005 |
|
|
3.00 |
% |
2006 |
|
|
4.77 |
% |
2007 |
|
|
[ ] |
% |
|
BEST QUARTER |
|
WORST QUARTER |
[ ]% |
|
|
[ ] |
% |
( ) |
|
|
( ) |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was [ ]%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the Citigroup 6-Month Treasury Bill Index. These returns assume shareholders
redeem all of their shares at the end of the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SINCE |
I SHARES |
|
1 YEAR |
|
INCEPTION* |
Fund Returns Before Taxes |
|
|
[ ] |
% |
|
|
[ ] |
% |
Fund Returns After Taxes
on Distributions |
|
|
[ ] |
% |
|
|
[ ] |
% |
Fund Returns After Taxes
on Distributions and Sale
of Fund Shares |
|
|
[ ] |
% |
|
|
[ ] |
% |
Citigroup 6-Month Treasury
Bill Index (reflects no
deductions for fees,
expenses or taxes) |
|
|
[ ] |
% |
|
|
[ ] |
% |
90
|
|
|
* |
|
Since inception of the I Shares on April 15, 2002. Benchmark returns since March 31, 2002
(benchmark returns available only on a month end basis). |
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Citigroup 6-Month Treasury Bill Index is a widely-recognized index
of the 6-month U.S. Treasury Bills.
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
I SHARES |
|
I SHARES |
Investment Advisory Fees |
|
|
0.22 |
% |
|
|
|
|
|
Other Expenses(1) |
|
|
[0.10 |
%] |
|
|
|
|
|
|
|
|
|
|
Total Annual Operating Expenses(2) |
|
|
[0.32 |
%] |
|
|
|
(1) |
|
Adjusted to reflect expected changes in Other Expenses for the current fiscal year. |
|
(2) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses to the level shown below. These
waivers may be discontinued at any time. |
|
|
|
|
|
|
|
I SHARES |
Ultra-Short Bond Fund |
|
|
[0.30%] |
|
91
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
|
1 YEAR
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
|
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
92
U.S. GOVERNMENT SECURITIES FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
High current income, while preserving capital |
|
|
|
INVESTMENT FOCUS
|
|
Mortgage backed securities and U.S. Treasury obligations |
|
|
|
SHARE PRICE VOLATILITY
|
|
Low to moderate |
|
|
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Attempts to increase income without adding undue risk |
|
|
|
INVESTOR PROFILE
|
|
Conservative investors who want to receive income from their
investment |
|
|
|
SUBADVISER:
|
|
Seix Investment Advisors LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
The U.S. Government Securities Fund invests at least 80% of its net assets in U.S. government debt
securities, such as mortgage-backed securities and U.S. Treasury obligations and shares of
registered money market mutual funds that invest in the foregoing. In an attempt to provide a
consistently high dividend without adding undue risk, the Fund focuses its investments in
mortgage-backed securities.
Because economic, industry and sector conditions tend to shift in relative attractiveness, the Fund
may buy and sell securities frequently, which may result in higher transaction costs, additional
capital gains tax liabilities and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, to a limited extent,
derivative instruments (such as futures, options and swaps) to use as a substitute for a purchase
or sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as interest rate risk.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
Debt securities will lose value because of increases in interest rates. Interest rate risk is
generally higher for investments with longer maturities or durations.
U.S. government debt securities may underperform other segments of the fixed income market or the
fixed income market as a whole.
Mortgage-backed investments involve risk of loss due to prepayments and, like any bond, due to
default. Because of the sensitivity of mortgage-related securities to changes in interest rates,
the Funds performance may be more volatile than if it did not hold these securities.
93
U.S. government securities can exhibit price movements resulting from changes in interest rates.
Treasury inflation protected securities (TIPS) can also exhibit price movements as a result of
changing inflation expectations and seasonal inflation patterns. Certain U.S. government securities
are backed by the full faith and credit of the U.S. Government, while others are backed by the
ability of the issuing entity to borrow from the U.S. Treasury or by the issuing entitys own
resources.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
(TARGET ICON)
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
1998 |
|
|
8.16 |
% |
1999 |
|
|
-0.97 |
% |
2000 |
|
|
10.98 |
% |
2001 |
|
|
6.92 |
% |
2002 |
|
|
9.68 |
% |
2003 |
|
|
1.30 |
% |
2004 |
|
|
3.42 |
% |
2005 |
|
|
2.02 |
% |
2006 |
|
|
3.74 |
% |
2007 |
|
|
[ ] |
% |
|
BEST QUARTER |
|
WORST QUARTER |
[ ]% |
|
|
[ ] |
% |
( ) |
|
|
( ) |
|
94
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was %. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average total returns for the periods ended December 31, 2007, to
those of the Lehman Government Index and the Merrill Lynch Government/Mortgage Custom Index. These
returns assume shareholders redeem all of their shares at the end of the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
I SHARES |
|
1 YEAR |
|
5 YEARS |
|
10 YEARS |
Fund Returns
Before Taxes |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
Fund Returns
After Taxes on
Distributions |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
Fund Returns
After Taxes on
Distributions and Sale of
Fund Shares |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
Lehman Government Index
(reflects no deduction for
fees, expenses or taxes) |
|
|
|
% |
|
|
|
% |
|
|
|
% |
Merrill Lynch Government/
Mortgage Custom Index
(reflects no deduction for
fees, expenses or taxes)* |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
* |
|
Effective March 1, 2008 the Fund transitioned its benchmark from the Merrill Lynch
Government/Mortgage Custom Index to the Lehman Government Index to better reflect the Funds
investment strategy. |
(LINE GRAPH ICON)
WHAT IS AN INDEX?
95
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The [Lehman Government Index] is [TO BE COMPLETED]The Merrill Lynch Government/ Mortgage Custom Index is a synthetic index created by combining, at their
respective market weights (i) the Merrill Lynch Government Master Index, which is a
widely-recognized index comprised of U.S. Treasury securities and U.S. government agency securities
with a maturity of at least 1 year; and (ii) the Merrill Lynch Mortgage Master Index, which is a
widely-recognized index comprised of mortgage-backed securities including 15 and 30 year single
family mortgages in addition to aggregated pooled mortgages. (COIN ICON)
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
0.50 |
% |
Other Expenses |
|
|
[0.05 |
%] |
|
|
|
|
|
Total Annual
Operating Expenses (1) |
|
|
[0.55 |
%] |
|
|
|
(1) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at
any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
|
1 YEAR
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
|
96
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
97
U.S. GOVERNMENT SECURITIES ULTRA-SHORT BOND FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
High current income consistent with preserving capital and
maintaining liquidity |
|
|
|
INVESTMENT FOCUS
|
|
Short duration U.S. government securities |
|
|
|
SHARE PRICE VOLATILITY
|
|
Low |
|
|
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Attempts to identify short duration U.S. government
securities that offer a comparably better return potential
and yield than money market funds |
|
|
|
INVESTOR PROFILE
|
|
Conservative investors seeking to maximize income consistent
with limited share price volatility and the relative safety
of U.S. government securities |
|
|
|
SUBADVISER
|
|
StableRiver Capital Management LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
Under normal circumstances, the U.S. Government Securities Ultra-Short Bond Fund invests at least
80% of its net assets in short duration U.S. Treasury securities, U.S. agency securities, U.S.
agency mortgage-backed securities, repurchase agreements, other U.S. government securities and
shares of registered money market mutual funds that invest in the foregoing. The Fund expects to
maintain an average effective duration between 3 months and 1 year. Individual purchases will
generally be limited to securities with an effective duration of less than 5 years. In selecting
investments for the Fund, the Subadviser attempts to maximize income by identifying securities that
offer an acceptable yield for a given maturity.
Because economic, industry and sector conditions tend to shift in relative attractiveness, the Fund
may buy and sell securities frequently, which may result in higher transaction costs, additional
capital gains tax liabilities and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, to a limited extent,
derivative instruments (such as futures, options and swaps) to use as a substitute for a purchase
or sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as interest rate risk.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
The price per share (net asset value or NAV) of the Fund will fluctuate depending on general
changes in interest rates as well as changes in the yields of the specific securities in the Fund.
General (or macro) changes in interest rates may be a result of economic developments or Federal
98
Reserve policy. In general, the NAV of the Fund will rise when interest rates fall, and likewise, the NAV of the Fund will fall
when interest rates rise. An objective of the Fund is to minimize NAV fluctuation by (a)
maintaining the Fund average weighted duration between three months and one year and (b) investing
the Fund in U.S. government and agency securities.
Debt securities will generally lose value if interest rates increase. Interest rate risk is
generally higher for investments with longer maturities or durations.
U.S. government debt securities may underperform other segments of the fixed income market or the
fixed income market as a whole.
Mortgage-backed investments involve risk of loss due to prepayments and, like any bond, due to
default. Because of the sensitivity of mortgage-related securities to changes in interest rates,
the Funds performance may be more volatile than if it did not hold these securities.
U.S. government securities can exhibit price movements resulting from changes in interest rates.
Treasury inflation protected securities (TIPS) can also exhibit price movements as a result of
changing inflation expectations and seasonal inflation patterns. Certain U.S. government securities
are backed by the full faith and credit of the U.S. Government, while others are backed by the
ability of the issuing entity to borrow from the U.S. Treasury or by the issuing entitys own
resources.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
(TARGET ICON)
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
2003 |
|
|
0.72 |
% |
2004 |
|
|
1.81 |
% |
2005 |
|
|
2.45 |
% |
2006 |
|
|
4.88 |
% |
2007 |
|
|
[ ] |
% |
|
BEST QUARTER |
|
WORST QUARTER |
[ ]% |
|
|
[ ] |
% |
( ) |
|
|
( ) |
|
99
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was [ ]%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the Citigroup 6 Month Treasury Bill Index. These returns assume shareholders
redeem all of their shares at the end of the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
I SHARES |
|
1 YEAR |
|
SINCE
INCEPTION* |
Fund Returns
Before Taxes |
|
|
[ ] |
% |
|
|
[ ] |
% |
Fund Returns
After Taxes
on Distributions |
|
|
[ ] |
% |
|
|
[ ] |
% |
Fund Returns After
Taxes on Distributions
and Sale of Fund Shares |
|
|
[ ] |
% |
|
|
[ ] |
% |
Citigroup 6 Month Treasury
Bill Index (reflects no
deductions for fees, expenses
or taxes) |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
* |
|
Since inception of the I Shares on April 11, 2002. Benchmark returns since March 31, 2002
(benchmark returns available only on a month end basis). |
(LINE GRAPH ICON)
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Citigroup 6 Month Treasury Bill Index is a widely-recognized index
of the 6 month U.S. Treasury Bills.
100
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
0.20 |
% |
|
|
|
|
|
Other
Expenses (1) |
|
|
[0.17 |
%] |
|
|
|
|
|
|
|
|
|
|
Total Annual
Operating Expenses (2) |
|
|
[ 0.37 |
%] |
|
|
|
(1) |
|
Adjusted to reflect expected changes in Other Expenses for the current fiscal year. |
|
(2) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses to the level shown below. These
waivers may be discontinued at any time. |
|
|
|
|
|
|
|
I SHARES |
U.S. Government Securities Ultra-Short Bond Fund |
|
|
[0.28%] |
|
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
|
1 YEAR
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
|
FUND EXPENSES
101
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
102
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
High current income exempt from regular federal income tax
and Virginia income tax, consistent with preservation of
capital |
|
|
|
INVESTMENT FOCUS
|
|
Virginia municipal securities |
|
|
|
SHARE PRICE VOLATILITY
|
|
Low |
|
|
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Attempts to limit risk by investing in investment grade
municipal securities with an intermediate average maturity |
|
|
|
INVESTOR PROFILE
|
|
Virginia residents who want income exempt from federal and
state income taxes |
|
|
|
SUBADVISER
|
|
StableRiver Capital Management LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
Under normal circumstances, the Virginia Intermediate Municipal Bond Fund invests at least 80% of
its net assets in municipal securities, including securities subject to the alternative minimum
tax, with income exempt from regular federal income tax and Virginia income tax. In addition, the
Fund may invest up to 20% of its net assets in certain taxable debt securities. Issuers of these
securities can be located in Virginia, Puerto Rico and other U.S. territories and possessions.
In selecting investments for the Fund, the Subadviser tries to limit risk by buying investment
grade securities. The Subadviser also considers stability and growth of principal. The Subadviser
expects that the Funds average weighted maturity will range from 5 to 10 years but there is no
limit on the maturities of individual securities.
Because economic, industry and sector conditions tend to shift in relative attractiveness, the Fund
may buy and sell securities frequently, which may result in higher transaction costs, additional
capital gains tax liabilities and lower performance.
In addition, to implement its investment strategy, the Fund may buy or sell, derivative instruments
(such as futures, options, swaps and inverse floaters) to use as a substitute for a purchase or
sale of a position in the underlying assets and/or as part of a strategy designed to reduce
exposure to other risks, such as interest rate risk.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
103
Debt securities will generally lose value if interest rates increase. Interest rate risk is
generally higher for investments with longer maturities or durations.
Debt securities are subject to the risk that an issuer will fail to make timely payments of
interest or principal, or go bankrupt, reducing the Funds return. The lower the rating of a debt
security, the higher its credit risk.
There may be economic or political changes that impact the ability of municipal issuers to repay
principal and to make interest payments on municipal securities. Changes in the financial condition
or credit rating of municipal issuers also may adversely affect the value of the Funds securities.
The Fund is non-diversified, which means that it may invest in the securities of relatively few
issuers. As a result, the Fund may be more susceptible to a single adverse economic or regulatory
occurrence affecting one or more of these issuers, and may experience increased volatility due to
its investments in those securities. The Funds concentration of investments in securities of
issuers located in Virginia subjects the Fund to economic and government policies of Virginia.
Because the Fund may invest in derivatives, it is exposed to additional volatility and potential
loss.
For further information about these and other risks, see More Information About Risk.
(TARGET ICON)
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
1998 |
|
|
5.21 |
% |
1999 |
|
|
-2.34 |
% |
2000 |
|
|
9.39 |
% |
2001 |
|
|
4.44 |
% |
2002 |
|
|
7.88 |
% |
2003 |
|
|
3.82 |
% |
2004 |
|
|
2.66 |
% |
2005 |
|
|
2.32 |
% |
104
|
|
|
|
|
2006 |
|
|
4.09 |
% |
2007 |
|
|
[ ] |
% |
|
BEST QUARTER |
|
WORST QUARTER |
[ ]% |
|
|
[ ] |
% |
(9/30/02) |
|
|
(6/30/04 |
) |
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was [ ]%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the Lehman Brothers 5-Year Municipal Bond Index. These returns assume
shareholders redeem all of their shares at the end of the period indicated.
After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns
will depend on your tax situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
I SHARES |
|
1 YEAR |
|
5 YEARS |
|
10 YEARS |
Fund Returns
Before Taxes |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Returns
After Taxes on
Distributions |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Returns
After Taxes on
Distributions and Sale
of Fund Shares |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Lehman Brothers 5-Year
Municipal Bond Index
(reflects no deduction for
fees, expenses or taxes) |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
(LINE GRAPH ICON)
105
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a particular market or
market sector. You cannot invest directly in an index. Unlike a mutual fund, an index does not have
an investment adviser and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Lehman Brothers 5-Year Municipal Bond Index is a widely-recognized
index composed of tax-exempt bonds with maturities ranging between 4 and 6 years.
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
|
Investment Advisory Fees |
|
|
0.55 |
% |
|
|
|
|
|
Other Expenses |
|
|
[0.05 |
%] |
|
|
|
|
|
|
|
|
|
Total Annual Operating Expenses(1) |
|
|
0.[60 |
%] |
|
|
|
(1) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at
any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
1 YEAR
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
106
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
107
PRIME QUALITY MONEY MARKET FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
As high a level of current income as is consistent with
preservation of capital and liquidity |
|
|
|
INVESTMENT FOCUS
|
|
Money market instruments |
|
|
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Attempts to identify money market instruments with the most
attractive risk/return trade-off |
|
|
|
INVESTOR PROFILE
|
|
Conservative investors seeking current income through a
liquid investment |
|
|
|
SUBADVISER
|
|
StableRiver Capital Management LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
The Prime Quality Money Market Fund invests exclusively in high quality U.S. money market
instruments and foreign money market instruments denominated in U.S. dollars. The Fund may invest a
portion of its assets in securities that are restricted as to resale.
In selecting investments for the Fund, the Subadviser tries to increase income without adding undue
risk. The Subadviser analyzes maturity, yields, market sectors and credit risk. Investments are
made in money market instruments with the most attractive risk/return trade-off. As a money market
fund, the Fund follows strict rules about credit risk, maturity and diversification of its
investments.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
An investment in the Fund is subject to income risk, which is the possibility that the Funds yield
will decline due to falling interest rates. A Fund share is not a bank deposit and is not insured
or guaranteed by the FDIC or any government agency. In addition, although a money market fund seeks
to keep a constant price per share of $1.00, you may lose money by investing in the Fund.
Debt securities are subject to the risk that an issuer will fail to make timely payments of
interest or principal, or go bankrupt, reducing the Funds return. The lower the rating of a debt
security, the higher its credit risk.
Foreign securities involve special risks such as economic or financial instability, lack of timely
or reliable financial information and unfavorable political or legal developments.
Restricted securities may increase the level of illiquidity in the Fund during any period that
qualified institutional buyers become uninterested in purchasing these restricted securities. The
108
Subadviser intends to invest only in restricted securities that it believes present minimal
liquidity risk.
For further information about these and other risks, see More Information About Risk.
(TARGET ICON)
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
1998 |
|
|
5.10 |
% |
1999 |
|
|
4.74 |
% |
2000 |
|
|
6.04 |
% |
2001 |
|
|
3.72 |
% |
2002 |
|
|
1.44 |
% |
2003 |
|
|
0.67 |
% |
2004 |
|
|
0.85 |
% |
2005 |
|
|
2.74 |
% |
2006 |
|
|
4.60 |
% |
2007 |
|
|
[ ] |
% |
|
BEST QUARTER |
|
WORST QUARTER |
[ ]% |
|
|
[ ] |
% |
( ) |
|
|
( ) |
|
109
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was . |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the iMoneyNet, Inc. First Tier Retail Average. These returns assume shareholders
redeem all of their shares at the end of the period indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
I SHARES |
|
1 YEAR |
|
5 YEARS |
|
10 YEARS |
Prime Quality Money Market
Fund |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
iMoneyNet, Inc. First Tier
Retail Average |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
To obtain information about the Funds current yield, call 1-888-784-3863
(LINE GRAPH ICON)
WHAT IS AN AVERAGE?
An average is a composite of mutual funds with similar investment goals. The iMoneyNet, Inc. First
Tier Retail Average is a widely-recognized composite of money market funds that invest in
securities rated in the highest category by at least two recognized rating agencies. The number of
funds in the Average varies.
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
110
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
|
Investment Advisory Fees |
|
|
0.48 |
% |
|
|
|
|
|
Other Expenses |
|
|
[0.05 |
%] |
|
|
|
|
|
|
|
|
|
Total Annual Operating Expenses(1) |
|
|
[0.53 |
%] |
|
|
|
(1) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at
any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
1 YEAR
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
111
TAX-EXEMPT MONEY MARKET FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
High current interest income exempt from federal income
taxes, while preserving capital and liquidity |
|
|
|
INVESTMENT FOCUS
|
|
Municipal money market instruments |
|
|
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Attempts to increase income without added risk by analyzing
credit quality |
|
|
|
INVESTOR PROFILE
|
|
Conservative investors who want to receive current
tax-exempt income from their investment |
|
|
|
SUBADVISER
|
|
StableRiver Capital Management LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
The Tax-Exempt Money Market Fund invests at least 80% of its net assets in money market instruments
issued by municipalities and issuers that pay income exempt from federal income taxes. In addition,
the Fund may invest up to 20% of its net assets in securities subject to the alternative minimum
tax. The Fund may invest a portion of its assets in securities that are restricted as to resale.
In selecting investments for the Fund, the Subadviser analyzes the credit quality and structure of
each security to minimize risk. The Subadviser actively manages the Funds average maturity based
on current interest rates and the Subadvisers outlook of the market. As a money market fund, the
Fund follows strict rules about credit risk, maturity and diversification of its investments.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
An investment in the Fund is subject to income risk, which is the possibility that the Funds yield
will decline due to falling interest rates. A Fund share is not a bank deposit and is not insured
or guaranteed by the FDIC or any government agency. In addition, although a money market fund seeks
to keep a constant price per share of $1.00, you may lose money by investing in the Fund.
Debt securities are subject to the risk that an issuer will fail to make timely payments of
interest or principal, or go bankrupt, reducing the Funds return. The lower the rating of a debt
security, the higher its credit risk.
There may be economic or political changes that impact the ability of municipal issuers to repay
principal and to make interest payments on municipal securities. Changes in the financial
112
condition or credit rating of municipal issuers also may adversely affect the value of the Funds securities.
Restricted securities may increase the level of illiquidity in the Fund during any period that
qualified institutional buyers become uninterested in purchasing these restricted securities. The
Subadviser intends to invest only in restricted securities that it believes present minimal
liquidity risk.
For further information about these and other risks, see More Information About Risk.
(TARGET ICON)
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
1998 |
|
|
3.02 |
% |
1999 |
|
|
2.80 |
% |
2000 |
|
|
3.69 |
% |
2001 |
|
|
2.26 |
% |
2002 |
|
|
0.92 |
% |
2003 |
|
|
0.55 |
% |
2004 |
|
|
0.77 |
% |
2005 |
|
|
1.95 |
% |
2006 |
|
|
3.02 |
% |
2007 |
|
|
[ ] |
% |
|
BEST QUARTER |
|
WORST QUARTER |
[ ]% |
|
|
[ ] |
% |
[ ] |
|
|
( ) |
% |
113
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was [ ]%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the iMoneyNet, Inc. Tax-Free Retail Average. These returns assume shareholders
redeem all of their shares at the end of the period indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
I SHARES |
|
1 YEAR |
|
5 YEARS |
|
10 YEARS |
Tax-Exempt Money Market
Fund |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
iMoneyNet, Inc. Tax-Free
Retail Average |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
To obtain information about the Funds current yield, call 1-888-784-3863
(LINE GRAPH ICON)
WHAT IS AN AVERAGE?
An average is a composite of mutual funds with similar investment goals. The iMoneyNet, Inc.
Tax-Free Retail Average is a widely-recognized composite of money market funds that invest in
short-term municipal securities, the income of which is exempt from federal taxation. The number of
funds in the Average varies.
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
114
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
0.44 |
% |
Other Expenses(1) |
|
|
[0.05 |
%] |
|
|
|
|
|
|
|
|
|
|
Total Annual Operating Expenses(2) |
|
|
[0.49 |
%] |
|
|
|
(1) |
|
Adjusted to reflect expected changes in Other Expenses for the current fiscal year. |
|
(2) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at
any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
1 YEAR
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
115
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
High current income to the extent consistent with the preservation of
capital and the maintenance of liquidity. |
|
|
|
INVESTMENT FOCUS
|
|
U.S. Treasury and government agency securities, and repurchase agreements |
|
|
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Attempts to increase income without adding undue risk by analyzing yields |
|
|
|
INVESTOR PROFILE
|
|
Conservative investors seeking current income through a liquid investment. |
|
|
|
SUBADVISER
|
|
StableRiver Capital Management LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
The U.S. Government Securities Money Market Fund invests exclusively in U.S. Treasury obligations,
obligations issued or guaranteed as to principal and interest by agencies or instrumentalities of
the U.S. Government, repurchase agreements involving these securities, and shares of registered
money market funds that invest in the foregoing.
In selecting investments for the Fund, the Subadviser tries to increase income without adding undue
risk by analyzing yields. The Subadviser actively manages the maturity of the Fund and its
portfolio to maximize the Funds yield based on current market interest rates and the Subadvisers
outlook on the market. As a money market fund, the Fund follows strict rules about credit risk,
maturity and diversification of its investments.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
An investment in the Fund is subject to income risk, which is the possibility that the Funds yield
will decline due to falling interest rates. A Fund share is not a bank deposit and is not insured
or guaranteed by the FDIC or any government agency. In addition, although a money market fund seeks
to keep a constant price per share of $1.00, you may lose money by investing in the Fund.
Although the Funds U.S. government securities are considered to be among the safest investments,
they are not guaranteed against price movements due to changing interest rates.
For further information about these and other risks, see More Information About Risk.
(TARGET ICON)
PERFORMANCE INFORMATION
116
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
1998 |
|
|
4.88 |
% |
1999 |
|
|
4.41 |
% |
2000 |
|
|
5.71 |
% |
2001 |
|
|
3.67 |
% |
2002 |
|
|
1.35 |
% |
2003 |
|
|
0.55 |
% |
2004 |
|
|
0.77 |
% |
2005 |
|
|
2.57 |
% |
2006 |
|
|
4.38 |
% |
2007 |
|
|
[ ] |
% |
|
BEST QUARTER |
|
WORST QUARTER |
[ ]% |
|
|
[ ] |
% |
( ) |
|
|
( ) |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was [ ]%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the iMoneyNet, Inc. Government & Agencies Retail Average. These returns assume
shareholders redeem all of their shares at the end of the period indicated.
117
|
|
|
|
|
|
|
|
|
|
|
|
|
I SHARES |
|
1 YEAR |
|
5 YEARS |
|
10 YEARS |
U.S. Government Securities
Money Market Fund |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
iMoneyNet, Inc.
Government & Agencies
Retail Average |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
To obtain information about the Funds yield, call 1-888-784-3863
(LINE GRAPH ICON)
WHAT IS AN AVERAGE?
An average is a composite of mutual funds with similar investment goals. The iMoneyNet, Inc.
Government & Agencies Retail Average is a widely-recognized composite of all money market funds
that invest in U.S. Treasury bills, repurchase agreements or securities issued by agencies of the
U.S. Government. The number of funds in the Average varies.
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
Investment Advisory Fees |
|
|
0.55 |
% |
|
|
|
|
|
Other Expenses |
|
|
[0.04 |
%] |
|
|
|
|
|
|
|
|
|
|
Total Annual Operating Expenses(1) |
|
|
[0.59 |
%] |
|
|
|
(1) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at
any time. |
EXAMPLE
118
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
1 YEAR
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
119
U.S. TREASURY MONEY MARKET FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
As high a level of current income as is consistent with preservation of
capital and liquidity |
|
|
|
INVESTMENT FOCUS
|
|
Money market instruments issued and guaranteed by the U.S. Treasury |
|
|
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Attempts to increase income without adding undue risk by analyzing yields |
|
|
|
INVESTOR PROFILE
|
|
Conservative investors seeking current income through a liquid investment |
|
|
|
SUBADVISER
|
|
StableRiver Capital Management LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
The U.S. Treasury Money Market Fund invests exclusively in U.S. Treasury obligations, repurchase
agreements collateralized by obligations issued or guaranteed by the U.S. Treasury, and shares of
registered money market funds that invest in the foregoing. The Fund limits its investments so as
to obtain the highest investment quality rating by a nationally recognized statistical rating
organization (AAAm by Standard and Poors Corporation).
In selecting investments for the Fund, the Subadviser tries to increase income without adding undue
risk by analyzing yields for various maturities. The Subadviser actively manages the maturity of
the Fund to maximize the Funds yield based on current market interest rates and the Subadvisers
outlook on the market. As a money market fund, the Fund follows strict rules about credit risk,
maturity and diversification of its investments.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
An investment in the Fund is subject to income risk, which is the possibility that the Funds yield
will decline due to falling interest rates. A Fund share is not a bank deposit and is not insured
or guaranteed by the FDIC or any government agency. In addition, although a money market fund seeks
to keep a constant price per share of $1.00, you may lose money by investing in the Fund.
Although the Funds U.S. Treasury securities are considered to be among the safest investments,
they are not guaranteed against price movements due to changing interest rates.
For further information about these and other risks, see More Information About Risk.
(TARGET ICON)
120
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
1998 |
|
|
4.82 |
% |
1999 |
|
|
4.38 |
% |
2000 |
|
|
5.63 |
% |
2001 |
|
|
3.32 |
% |
2002 |
|
|
1.17 |
% |
2003 |
|
|
0.50 |
% |
2004 |
|
|
0.69 |
% |
2005 |
|
|
2.48 |
% |
2006 |
|
|
4.38 |
% |
2007 |
|
|
[ ] |
% |
|
BEST QUARTER |
|
WORST QUARTER |
[ ]% |
|
|
[ ] |
% |
( ) |
|
|
( ) |
|
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was2.30%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the iMoneyNet, Inc. Treasury & Repo Retail Average. These returns assume
shareholders redeem all of their shares at the end of the period indicated.
121
|
|
|
|
|
|
|
|
|
|
|
|
|
I SHARES |
|
1 YEAR |
|
5 YEARS |
|
10 YEARS |
U.S. Treasury Money Market Fund |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
iMoneyNet, Inc. Treasury & Repo Retail Average |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
To obtain information about the Funds current yield, call 1-888-STI-FUND.
(LINE GRAPH ICON)
WHAT IS AN AVERAGE?
An average is a composite of mutual funds with similar investment goals. The iMoneyNet, Inc.
Treasury & Repo Retail Average is a widely- recognized composite of money market funds that invest
in U.S. Treasury bills and repurchase agreements backed by these securities. The number of funds in
the Average varies.
(COIN ICON)
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
I SHARES |
|
Investment Advisory Fees |
|
|
0.55 |
% |
|
|
|
|
|
Other Expenses |
|
|
[0.04 |
%] |
|
|
|
|
|
|
|
|
|
Total Annual Operating Expenses(1) |
|
|
[0.59 |
%] |
|
|
|
(1) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These waivers may be discontinued at
any time. |
EXAMPLE
122
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
1 YEAR
|
|
3 YEARS
|
|
5 YEARS
|
|
10 YEARS |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
123
VIRGINIA TAX-FREE MONEY MARKET FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
High current income exempt from federal and
Virginia income taxes, while preserving
capital and liquidity |
|
|
|
INVESTMENT FOCUS
|
|
Virginia municipal money market instruments |
|
|
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Attempts to increase income without added
risk by analyzing credit quality |
|
|
|
INVESTOR PROFILE
|
|
Virginia residents who want to receive
current income exempt from federal and state
income taxes |
|
|
|
SUBADVISER
|
|
StableRiver Capital Management LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
The Virginia Tax-Free Money Market Fund invests at least 80% of its assets in money market
instruments issued by municipalities and issuers that pay income exempt from federal and Virginia
income taxes. Issuers of these securities can be located in Virginia, Puerto Rico and other U.S.
territories and possessions. In addition, the Fund may invest up to 20% of its net assets in money
market instruments subject to the alternative minimum tax. The Fund may invest a portion of its
assets in securities that are restricted as to resale.
In selecting investments for the Fund, the Subadviser analyzes the credit quality and structure of
each security to minimize risk. The Subadviser actively manages the Funds average maturity based
on current interest rates and the Subadvisers outlook of the market. As a money market fund, the
Fund follows strict rules about credit risk, maturity and diversification of its investments.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
An investment in the Fund is subject to income risk, which is the possibility that the Funds yield
will decline due to falling interest rates. A Fund share is not a bank deposit and is not insured
or guaranteed by the FDIC or any government agency. In addition, although a money market fund seeks
to keep a constant price per share of $1.00, you may lose money by investing in the Fund.
The Funds concentration of investments in securities of issuers located in Virginia subjects the
Fund to economic and government policies within Virginia.
There may be economic or political changes that impact the ability of municipal issuers to repay
principal and to make interest payments on municipal securities. Changes in the financial condition
or credit rating of municipal issuers also may adversely affect the value of the Funds securities.
124
Debt securities are subject to the risk that an issuer will fail to make timely payments of
interest or principal, or go bankrupt, reducing the Funds return. The lower the rating of a debt
security, the higher its credit risk.
Restricted securities may increase the level of illiquidity in the Fund during any period that
qualified institutional buyers become uninterested in purchasing these restricted securities. The
Subadviser intends to invest only in restricted securities that it believes present minimal
liquidity risk.
For further information about these and other risks, see More Information About Risk.
(TARGET ICON)
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows changes in the performance of the Funds I Shares from year to year.*
(BAR CHART)
|
|
|
|
|
1998
|
|
|
2.93 |
% |
1999
|
|
|
2.81 |
% |
2000
|
|
|
3.71 |
% |
2001
|
|
|
2.31 |
% |
2002
|
|
|
0.97 |
% |
2003
|
|
|
0.62 |
% |
2004
|
|
|
0.81 |
% |
2005
|
|
|
2.02 |
% |
2006
|
|
|
3.01 |
% |
2007
|
|
|
[ ] |
% |
|
BEST QUARTER |
|
WORST QUARTER |
[ ]% |
|
|
[ ] |
% |
( ) |
|
|
( ) |
|
125
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was [ ]%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the iMoneyNet, Inc. Tax-Free Retail Average. These returns assume shareholders
redeem all of their shares at the end of the period indicated.
|
|
|
|
|
|
|
I SHARES |
|
1 YEAR |
5 YEARS |
10 YEARS |
|
Virginia Tax-Free Money Market Fund
|
|
[ ]%
|
|
[ ]%
|
|
[ ]% |
|
iMoneyNet, Inc. Tax-Free Retail Average
|
|
[ ]%
|
|
[ ]%
|
|
[ ]% |
To obtain
information about the Funds current yield, call 1-888-784-3863.
(LINE GRAPH ICON)
WHAT IS AN AVERAGE?
An average is a composite of mutual funds with similar investment goals. The iMoneyNet, Inc.
Tax-Free Retail Average is a widely-recognized composite of money market funds that invest in
short-term municipal securities, the income of which is exempt from federal taxation. The number of
funds in the Average varies.
(COIN ICON)
FUND FEES AND EXPENSES
126
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
A SHARES |
Investment Advisory Fees
|
|
|
0.40 |
% |
|
Other Expenses
|
|
|
[0.05 |
%] |
|
Acquired (Underlying) Fund Fees and Expenses(1)
|
|
|
[0.01 |
%] |
|
|
|
|
|
|
Total Annual Operating Expenses(2)
|
|
|
[0.46 |
%] |
|
|
|
(1) |
|
In addition to the Funds direct expenses, the Fund indirectly bears a pro-rata share of the
expenses of the underlying funds in which it invests. These Underlying Fund Fees and Expenses are
not included in the Financial Highlights section of this Prospectus, which reflects only the Total
Annual Operating Expenses (excluding Underlying Fund Fees and Expenses) of each Fund. |
|
(2) |
|
The Adviser, the Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses (excluding Underlying Fund Fees and
Expenses). These voluntary waivers may be discontinued at any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
1 YEAR |
|
3 YEARS |
|
5 YEARS |
|
10 YEARS |
|
|
|
|
|
|
|
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are
127
shown as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For
more information about these fees, see Investment Adviser.
(LIFE PRESERVER ICON)
MORE INFORMATION
ABOUT RISK
BELOW INVESTMENT GRADE RISK
High Income Fund
Intermediate Bond Fund
Investment Grade Bond Fund
Investment Grade Tax-Exempt Bond Fund
Limited Duration Fund
Seix Floating Rate High Income Fund
Seix High Yield Fund
Short-Term Bond Fund
Strategic Income Fund
Total Return Bond Fund
Ultra-Short Bond Fund
High yield securities, which are also known as junk bonds, involve greater risks of default or
downgrade and are more volatile than investment grade securities. High yield securities involve
greater risk of default or price declines than investment grade securities due to actual or
perceived changes in an issuers credit-worthiness. In addition, issuers of high yield securities
may be more susceptible than other issuers to economic downturns. High yield securities are subject
to the risk that the issuer may not be able to pay interest or dividends and ultimately to repay
principal upon maturity. Discontinuation of these payments could substantially adversely affect the
market value of the security. High yield securities may be less liquid than higher quality
investments. A security whose credit rating has been lowered may be particularly difficult to sell.
DERIVATIVES RISK
All Fixed Income Funds
Derivatives may involve risks different from, and possibly greater than, those of traditional
investments. The Fund may use derivatives (such as futures, options, inverse floaters and swaps) to
attempt to achieve its investment objective and offset certain investment risks, while at the same
time attempting to maintain liquidity. These positions may be established for hedging or
speculation purposes. Hedging involves making an investment (e.g., in a futures contract) to reduce
the risk of adverse price movements in an already existing investment position. Risks associated
with the use of derivatives include those associated with hedging and leveraging activities:
- The success of a hedging strategy may depend on an ability to predict movements in the prices of
individual securities, fluctuations in markets, and movements in interest rates.
- A Fund experiencing losses over certain ranges in the market that exceed losses experienced by a
fund that does not use derivatives.
- There may be an imperfect or no correlation between the changes in market value of the securities
held by a Fund and the prices of derivatives.
128
- There may not be a liquid secondary market for derivatives.
- Trading restrictions or limitations may be imposed by an exchange.
- Government regulations may restrict trading in derivatives.
- The other party to an agreement (e.g., options or swaps) may default; however, in certain
circumstances, such counter-party risk may be reduced by having an organization with very good
credit act as intermediary.
Because premiums or totals paid or received on derivatives are small in relation to the market
value of the underlying investments, buying and selling derivatives can be more speculative than
investing directly in securities. In addition, many types of derivatives have limited investment
lives and may expire or necessitate being sold at inopportune times.
The use of derivatives may cause a Fund to recognize higher amounts of short-term capital gains,
which are generally taxed to shareholders at ordinary income tax rates.
Credit default swaps can increase a Funds exposure to credit risk and could result in losses if
the Subadviser does not correctly evaluate the creditworthiness of the entity on which the credit
default swap is based. Total return swaps could result in losses if their reference index, security
or investments do not perform as anticipated.
To limit leveraging risk, a Fund observes asset segregation requirements to cover its obligations
under derivative instruments. By setting aside assets equal only to its net obligations under
certain derivative instruments, a Fund will have the ability to employ leverage to a greater extent
than if it were required to segregate assets equal to the full notional value of such derivative
instruments.
EMERGING MARKETS RISK
High Income Fund
Intermediate Bond Fund
Investment Grade Bond Fund
Seix Floating Rate High Income Fund
Seix High Yield Fund
Strategic Income Fund
Total Return Bond Fund
Emerging market countries are countries that the World Bank or the United Nations considers to be
emerging or developing. Most countries or regions are included in this category, except for
Australia, Canada, Hong Kong, Japan, New Zealand, Singapore, the United Kingdom, the United States
and most of the countries located in Western Europe. Emerging markets may be more likely to
experience political turmoil or rapid changes in market or economic conditions than more developed
countries. In addition, the financial stability of issuers (including governments) in emerging
market countries may be more precarious than in other countries. As a result, there will tend to be
an increased risk of price volatility associated with a Funds investments in emerging market
countries, which may be magnified by currency fluctuations relative to the U.S. dollar. Governments
of some emerging market countries have defaulted on their bonds and may do so in the future.
EXCHANGE TRADED FUND RISK
129
All Fixed Income Funds
The Funds may purchase shares of exchange-traded funds (ETFs) to gain exposure to a particular
portion of the market. ETFs are investment companies that are bought and sold on a securities
exchange. An ETF holds a portfolio of securities designed to track a particular market segment or
index. ETFs, like mutual funds, have expenses associated with their operation, including advisory
fees. When the Fund invests in an ETF, in addition to directly bearing expenses associated with its
own operations, it will bear a pro rata portion of the ETFs expense. The risks of owning shares of
an ETF generally reflect the risks of owning the underlying securities the ETF is designed to
track, although lack of liquidity in an ETF could result in being more volatile than the underlying
portfolio of securities. In addition, because of ETF expenses, compared to owning the underlying
securities directly, it may be more costly to own an ETF.
FIXED INCOME RISK
All Funds
The prices of a Funds fixed income securities respond to economic developments, particularly
interest rate changes, as well as to perceptions about the creditworthiness of individual issuers,
including governments. Generally, a Funds fixed income securities will decrease in value if
interest rates rise and vice versa.
Long-term debt securities generally are more sensitive to changes in interest rates, usually making
them more volatile than short-term debt securities and thereby increasing risk.
Debt securities are also subject to credit risk, which is the possibility than an issuer will fail
to make timely payments of interest or principal, or go bankrupt. The lower the ratings of such
debt securities, the greater their risks. In addition, lower rated securities have higher risk
characteristics, and changes in economic conditions are likely to cause issuers of these securities
to be unable to meet their obligations.
Debt securities are also subject to income risk, which is the possibility that falling interest
rates will cause a Funds income to decline. Income risk is generally higher for short-term bonds.
An additional risk of debt securities is reinvestment risk, which is the possibility that a Fund
may not be able to reinvest interest or dividends earned from an investment in such a way that they
earn the same rate of return as the invested funds that generated them. For example, falling
interest rates may prevent bond coupon payments from earning the same rate of return as the
original bond. Furthermore, pre-funded loans and issues may cause a Fund to reinvest those assets
at a rate lower than originally anticipated.
FLOATING RATE LOAN RISK
High Income Fund
Intermediate Bond Fund
Investment Grade Bond Fund
Seix Floating Rate High Income Fund
Seix High Yield Fund
Strategic Income Fund
Total Return Bond Fund
130
As fixed income securities, investments in floating rate loans are subject to interest rate risk,
but that risk is less because the interest rate of the loan adjusts periodically. As debt
securities, investments in floating rate loans are subject to credit risk. Many floating rate loans
are in unrated or lower credit rated securities. When a security is unrated, a Fund must rely more
heavily on the analytical ability of the Subadviser. Many floating rate loan investments share the
same risks as high yield securities, although these risks are reduced when the floating rate loans
are senior and secured as opposed to many high yield securities that are junior and unsecured.
Floating rate securities are often subject to restrictions on resale which can result in reduced
liquidity. A floating rate loan also may not be fully collateralized, although one lending
institution will often be required to monitor collateral. Borrowers may repay principal faster than
the scheduled due date which may result in a Fund replacing that loan with a lower-yielding
security. Investment in loan participation interests may result in increased exposure to financial
services sector risk.
A loan may not be fully collateralized which may cause the loan to decline significantly in value,
although one lending institution acting as agent for all of the lenders will generally be required
to administer and manage the loan and, with respect to collateralized loans, to service or monitor
the collateral.
Certain portfolio managers and other personnel of the Subadviser may also manage similar investment
portfolios of floating rate loans for another non-investment Subadviser contracted affiliated
business, Seix Structured Products, LLC (SSP). SSP is a subsidiary of SunTrust Bank and an
affiliate of the Adviser and Subadviser, but not a client of the Adviser or Subadviser. In that
role, this group purchases bank loans on behalf of SSP, for purposes of subsequent collateralized
loan obligation (CLO) transactions where the Adviser, Subadviser and their affiliate, SunTrust
Capital Markets, Inc., will serve as collateral manager and as structuring agent/placement agent,
respectively. The trustee and custodian of the CLO transactions are not affiliated entities of the
Adviser, Subadviser or SunTrust Capital Markets. In addition, the Adviser serves as adviser to an
account established with its affiliate, SunTrust Equity Funding, LLC for the purpose of purchasing
high yield securities for subsequent sale to these same CLO transactions. Each of these
transactions is subject to the approval of the independent trustee of the CLO transaction. In
addition to disclosure to the trustee, all such transactions are fully disclosed to potential
investors in the CLOs offering and disclosure documents.
As a result of these multiple investment-oriented and associated relationships, there exists a
potential risk that the portfolio managers may favor other adviser and non-adviser contracted
businesses over a Fund. The Subadviser has created and implemented additional policies and
procedures designed to protect shareholders against such conflicts; however, there can be no
absolute guarantee that a Fund will always participate in the same or similar investments or
receive equal or better individual investment allocations at any given time.
131
FOREIGN SECURITY RISK
High Income Fund
Intermediate Bond Fund
Investment Grade Bond Fund
Limited Duration Fund
Prime Quality Money Market Fund
Seix Floating Rate High Income Fund
Seix High Yield Fund
Short-Term Bond Fund
Strategic Income Fund
Total Return Bond Fund
Ultra-Short Bond Fund
Investments in securities of foreign companies or governments can be more volatile than investments
in U.S. companies or governments. Political and economic events unique to a country or region will
affect those markets and their issuers. These events will not necessarily affect the U.S. economy
or similar issuers located in the United States. Diplomatic, political, or economic developments,
including nationalization or appropriation, could affect investments in foreign countries. Foreign
securities markets generally have less trading volume and less liquidity than U.S. markets.
The value of securities denominated in foreign currencies, and of dividends from such securities,
can change significantly when foreign currencies strengthen or weaken relative to the U.S. dollar.
As a result, changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Funds investment. Certain foreign currencies may be
particularly volatile, and foreign governments may intervene in the currency markets, causing a
decline in value or liquidity in a Funds foreign currency holdings. These currency movements may
happen separately from and in response to events that do not otherwise affect the value of the
security in the issuers home country.
Foreign companies or governments generally are not subject to uniform accounting, auditing, and
financial reporting standards comparable to those applicable to domestic U.S. companies or
governments. Transaction costs are generally higher than those in the U.S. and expenses for
custodial arrangements of foreign securities may be somewhat greater than typical expenses for
custodial arrangements of similar U.S. securities. Some foreign governments levy withholding taxes
against dividend and interest income. Although in some countries a portion of these taxes are
recoverable, the non-recovered portion will reduce the income received from the securities
comprising the portfolio.
132
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES RISK
High Income Fund
Intermediate Bond Fund
Investment Grade Bond Fund
Limited Duration Fund
Limited-Term Federal Mortgage Securities Fund
Seix High Yield Fund
Short-Term Bond Fund
Strategic Income Fund
Total Return Bond Fund
Ultra-Short Bond Fund
U.S. Government Securities Fund
U.S. Government Securities Ultra-Short Bond Fund
Mortgage-backed and asset-backed securities are fixed income securities representing an interest in
a pool of underlying mortgages or other cash-flow producing assets such as automobile loans, credit
card receivables and other financial assets. These securities are sensitive to changes in interest
rates, but may respond to these changes differently from other fixed income securities due to the
likelihood that a change in the general level of interest rates will impact the magnitude and
timing of any prepayments of the underlying loans. As a result, it may not be possible to
accurately determine in advance the actual maturity date or average life of these securities. The
uncertainty inherent in assessing prepayment risk makes it difficult to calculate the average
maturity of a portfolio including these securities, and therefore, to assess the volatility risk of
a Fund.
MUNICIPAL ISSUER RISK
Georgia Tax-Exempt Bond Fund
High Grade Municipal Bond Fund
Investment Grade Tax-Exempt Bond Fund
Maryland Municipal Bond Fund
North Carolina Tax-Exempt Bond Fund
Tax-Exempt Money Market Fund
Virginia Intermediate Municipal Bond Fund
Virginia Tax-Free Money Market Fund
There may be economic or political changes that impact the ability of municipal issuers to repay
principal and to make interest payments on municipal securities. Changes to the financial condition
or credit rating of municipal issuers may also adversely affect the value of a Funds municipal
securities.
In addition, a Funds concentration of investments in issuers located in a single state makes the
Fund more susceptible to adverse political or economic developments affecting that state. The Fund
also may be riskier than mutual funds that buy securities of issuers in numerous states.
REGIONAL RISK
Georgia Tax-Exempt Bond Fund
High Grade Municipal Bond Fund
Maryland Municipal Bond Fund
133
North Carolina Tax-Exempt Bond Fund
Virginia Intermediate Municipal Bond Fund
Virginia Tax-Free Money Market Fund
To the extent that a Funds investments are concentrated in a specific geographic region, the Fund
may be subject to the political and other developments affecting that region. Regional economies
are often closely interrelated, and political and economic developments affecting one region,
country or state often affect other regions, countries or states, thus subjecting a Fund to
additional risks.
SECURITIES LENDING RISK
All Funds
The Fund may lend securities to broker-dealers to earn additional income. Risks include the
potential insolvency of the borrower that could result in delays in recovering securities and
capital losses. Additionally, losses could result from the reinvestment of collateral received on
loaned securities in investments that default or do not perform well. It is also possible that if a
security on loan is sold and the Fund is unable to timely recall the security, the Fund may be
required to repurchase the security in the market place, which may result in a potential loss to
shareholders. As securities on loan may not be voted by the Fund, there is a risk that the Fund may
not be able to recall the securities in sufficient time to vote on material proxy matters.
(MOUNTAIN ICON)
MORE INFORMATION ABOUT FUND INVESTMENTS
This prospectus describes the Funds primary strategies, and the Funds will normally invest in the
types of securities described in this prospectus. However, in addition to the investments and
strategies described in this prospectus, each Fund also may invest in other securities, use other
strategies and engage in other investment practices. These investments and strategies, as well as
those described in this prospectus, are described in detail in the Statement of Additional
Information.
The investments and strategies described in this prospectus are those that the Funds use under
normal conditions. During unusual economic or market conditions, or for temporary defensive or
liquidity purposes, each Fixed Income Fund may invest up to 100% of its assets in cash, money
market instruments, repurchase agreements and short-term obligations that would not ordinarily be
consistent with a Funds objectives. In addition, each Fixed Income Fund may shorten its average
weighted maturity to as little as 90 days. A Fixed Income Fund will do so only if the Subadviser
believes that the risk of loss outweighs the opportunity for higher income. Of course, a Fund
cannot guarantee that it will achieve its investment goal.
Each Fund may invest in other mutual funds for cash management purposes. When a Fund invests in
another mutual fund, in addition to directly bearing expenses associated with its own operations,
it will bear a pro rata portion of the other mutual funds expenses.
134
(RIBBON ICON)
THIRD-PARTY RATINGS
|
|
|
|
|
|
|
FUND |
|
S&P(1) |
|
MOODYS(2) |
|
NAIC(3) |
Ultra-Short Bond Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
U. S. Government
|
|
AAAm
|
|
Aaa
|
|
Approved |
Securities Money |
|
|
|
|
|
|
Market Fund
|
|
|
|
|
|
Exempt(4) |
|
|
|
|
|
|
|
U. S. Government
|
|
AAAf/S1+
|
|
Aaa/MR1
|
|
Bond Mutual Fund |
Securities Ultra-Short |
|
|
|
|
|
|
Bond Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury
|
|
AAAm
|
|
Aaa
|
|
Approved |
Securities Money |
|
|
|
|
|
|
Market Fund
|
|
|
|
|
|
Exempt(4) |
|
|
|
(1) |
|
Standard & Poors Rating Services |
|
(2) |
|
Moodys Investor Services, Inc. |
|
(3) |
|
National Association of Insurance Commissioners |
|
(4) |
|
U.S. Direct Obligations/Full Faith and Credit Exempt |
INFORMATION ABOUT PORTFOLIO HOLDINGS
A description of the Funds policies and procedures with respect to the circumstances under which
the Funds disclose their portfolio securities is available in the Statement of Additional
Information.
MANAGEMENT
The Board of Trustees is responsible for the overall supervision and management of the business and
affairs of RidgeWorth Funds. The Board of Trustees establishes policies that the Adviser and
Subadvisers must follow in their of all fund related management activities. The day-to-day
operations of RidgeWorth Funds are the responsibilities of the officers and various service
organizations retained by RidgeWorth Funds.
INVESTMENT ADVISER
135
[LOGO] RidgeWorth Capital Management, Inc. (formerly, Trusco Capital Management, Inc.), 50 Hurt
Plaza, Suite 1400, Atlanta, Georgia 30303 (RidgeWorth or the Adviser), serves as the investment
adviser to the Funds. As of June 30, 2008, the Adviser had approximately $[ ] billion in assets
under management. The Adviser is responsible for overseeing the Subadvisers to ensure compliance
with each Funds investment policies and guidelines and monitors each Subadvisers adherence to its
investment style. The Adviser also executes transactions with respect to specific securities
selected by the Subadvisers (excluding Seix Investment Advisors LLC) for purchase and sale by the
Funds. The Adviser pays the Subadvisers out of the fees it receives from the Funds.
The Adviser may use its affiliates as brokers for Fund transactions.
An investment adviser has a fiduciary obligation to its clients when the adviser has authority to
vote their proxies. Under the current contractual agreement, the Adviser is authorized to vote
proxies on behalf of each Fund. Information regarding the Advisers, and thus each Funds, Proxy
Voting Policies and Procedures is provided in the Statement of Additional Information. A copy of
the Advisers Proxy Voting Policies and Procedures may be obtained by contacting the RidgeWorth
Funds at 1-888-784-3863, or by visiting www.ridgeworthfunds.com.
For the fiscal year ended March 31, 2008, the Funds paid the Adviser advisory fees (after waivers)
based on the respective Funds average daily net assets of:
|
|
|
|
|
Georgia Tax-Exempt Bond Fund
|
|
|
0.55 |
% |
High Grade Municipal Bond Fund
|
|
|
0.55 |
% |
High Income Fund
|
|
|
0.60 |
% |
Intermediate Bond Fund
|
|
|
0.25 |
% |
Investment Grade Bond Fund
|
|
|
0.50 |
% |
Investment Grade Tax-Exempt Bond Fund
|
|
|
0.50 |
% |
Limited Duration Fund
|
|
|
0.10 |
% |
Limited-Term Federal Mortgage Securities Fund
|
|
|
0.50 |
% |
Maryland Municipal Bond Fund
|
|
|
0.55 |
% |
North Carolina Tax-Exempt Bond Fund
|
|
|
0.55 |
% |
Prime Quality Money Market Fund
|
|
|
0.49 |
% |
Seix Floating Rate High Income Fund
|
|
|
0.45 |
%* |
Seix High Yield Fund
|
|
|
0.43 |
% |
Short-Term Bond Fund
|
|
|
0.40 |
% |
Short-Term U.S. Treasury Securities Fund
|
|
|
0.40 |
% |
Strategic Income Fund
|
|
|
0.58 |
% |
Tax-Exempt Money Market Fund
|
|
|
0.44 |
% |
Total Return Bond Fund
|
|
|
0.25 |
% |
Ultra-Short Bond Fund
|
|
|
0.22 |
% |
U.S. Government Securities Fund
|
|
|
0.50 |
% |
U.S. Government Securities Money Market Fund
|
|
|
0.55 |
% |
U.S. Government Securities Ultra-Short Bond Fund
|
|
|
0.17 |
% |
U.S. Treasury Money Market Fund
|
|
|
0.54 |
% |
Virginia Intermediate Municipal Bond Fund
|
|
|
0.55 |
% |
Virginia Tax-Free Money Market Fund
|
|
|
0.40 |
% |
136
|
|
|
* |
|
The Adviser and the Subadviser have contractually agreed to waive fees and reimburse expenses of
the Seix Floating Rate High Income Fund until at least August 1, 2009 in order to keep total
operating expenses (excluding taxes, brokerage commissions, extraordinary expenses and estimated
underlying fund fees and expenses) from exceeding the expense cap. If at any point before August 1,
2011, such total annual operating expenses are less than the expense cap, the Adviser and
Subadviser may retain the difference to recapture any of the prior waivers or reimbursements. |
The following breakpoints are used in computing the advisory fee:
FIXED INCOME FUNDS
|
|
|
|
|
Average Daily Net Assets |
|
Discount From Full Fee |
First $500 million
|
|
None Full Fee
|
Next $500 million
|
|
|
5 |
% |
Over $1 billion
|
|
|
10 |
% |
MONEY MARKET FUNDS
|
|
|
|
|
Average Daily Net Assets |
|
Discount From Full Fee |
First $1 billion
|
|
None Full Fee
|
Next $1.5 billion
|
|
|
5 |
% |
Next $2.5 billion
|
|
|
10 |
% |
Over $5 billion
|
|
|
20 |
% |
Based on net assets as of March 31, 2008, the asset levels of the following Funds had reached a
breakpoint in the advisory fee.* Had the Funds asset levels been lower, the Adviser may have been
entitled to receive maximum advisory fees as follows:
|
|
|
|
|
Prime Quality Money Market Fund
|
|
|
[0.55 |
%] |
Seix High Yield Fund
|
|
|
[0.45 |
%] |
Tax-Exempt Money Market Fund
|
|
|
[0.45 |
%] |
|
|
|
* |
|
Fund expenses in the Annual Fund Operating Expenses tables shown earlier in this prospectus
reflect the advisory breakpoints. |
A discussion regarding the basis for the Board of Trustees approval of the investment advisory
contracts with the Adviser appears in the Funds annual report to shareholders for the period ended
March 31, 2008.
137
INVESTMENT SUBADVISERS
The Subadvisers are responsible for managing the portfolios of the Funds on a day-to-day basis and
selecting the specific securities to buy, sell and hold for the Funds under the supervision of the
Adviser and the Board of Trustees. A discussion regarding the basis for the Board of Trustees
approval of the investment subadvisory agreements will appear in the Funds annual report to
shareholders for the period ending March 31, 2008.
Information about the Subadvisers and the individual portfolio managers of the Funds is discussed
below. The Statement of Additional Information provides additional information regarding the
portfolio managers compensation, other accounts managed by the portfolio managers, potential
conflicts of interest and the portfolio managers ownership of securities in the Funds.
[LOGO] Seix Investment Advisors LLC (Seix)
www.seixadvisors.com
Seix, 10 Mountainview Road, Suite C-200, Upper Saddle River, NJ 07458, serves as the Subadviser to
the High Income Fund, the Intermediate Bond Fund, the Investment Grade Bond Fund, the Limited
Duration Fund, the Limited-Term Federal Mortgage Securities Fund, the Seix Floating Rate High
Income Fund, the Seix High Yield Fund, the Strategic Income Fund, the Total Return Bond Fund and
the U.S. Government Securities Fund. Seix was founded in 2007 and is a wholly-owned subsidiary of
RidgeWorth. As of June 30, 2008, Seix had approximately $[ ] in assets under management.
Seix is a fundamental, credit driven fixed-income boutique specializing in both investment grade
and high yield bond management. Seix has employed its bottom-up, research-oriented approach to
fixed income management for over 15 years. The firms success can be attributed to a deep and
talented group of veteran investment professionals, a clearly defined investment approach and a
performance oriented culture that is focused on delivering superior, risk-adjusted investment
performance for its clients.
Mr. George Goudelias is primarily responsible for the day-to-day management of the Seix Floating
Rate High Income Fund. Mr. Goudelias has served as Managing Director of Trusco since May 2004. He
has co-managed the Fund since its inception. Prior to joining Trusco, Mr. Goudelias served as
Director of High Yield Research of Seix Investment Advisors, Inc. from February 2001 to May 2004.
He has more than 22 years of investment experience.
Mr. Michael Kirkpatrick is primarily responsible for the day-to-day management of the Seix High
Yield Fund. Mr. Kirkpatrick has served as Senior High Yield Analyst of Trusco since May 2004. He
has co-managed the Fund since February 2007. Prior to joining Trusco he served as a Senior High
Yield Analyst at Seix Investment Advisors, Inc. from June 2002 to May 2004. He has 17years of
investment experience.
Mr. Michael McEachern, CFA, is primarily responsible for the day-to-day management of the High
Income Fund, the Strategic Income Fund, the Seix Floating Rate High Income Fund and the Seix High Yield
Fund. Mr. McEachern has served as Managing Director of Trusco since May 2004. He has co-managed
the High Income Fund and the Strategic Income Fund since July 2004. He has co-managed the Seix
Floating Rate High Income Fund and the Seix High Yield Fund since each Funds respective inception
after serving as the portfolio manager of the Seix High
138
Yield Funds predecessor fund. Prior to joining Trusco, Mr. McEachern served as Senior Portfolio
Manager of Seix Investment Advisors, Inc. from June 1997 to May 2004. He has more than 23 years of
investment experience.
Mr. Brian Nold is primarily responsible for the day-to-day management of the High Income Fund and
the Strategic Income Fund. Mr. Nold has served as Senior High Yield Analyst of Trusco since May
2004. He has co-managed the High Income Fund since August 2006, the Strategic Income Fund since
February 2007 and the Seix High Yield Fund since August 2007. Prior to joining Trusco, Mr. Nold
served as Senior High Yield Analyst at Seix Investment Advisors, Inc. from March 2003 to May 2004.
He has more than 8 years of investment experience.
The Intermediate Bond Fund, the Investment Grade Bond Fund, the Limited Duration Fund, the
Limited-Term Federal Mortgage Securities Fund, the Total Return Bond Fund and the U. S. Government
Securities Fund are each managed by a portfolio management team comprised of Mr. Michael Rieger,
Mr. Perry Troisi and Mr. Adrien Webb, CFA. Each member of the team is primarily responsible for the
day-to-day management of the Funds and has authority over all aspects of the Funds investment
portfolio, including selecting securities to purchase, sell or hold, developing the Funds
investment strategies, portfolio construction techniques, portfolio risk assessment, and the
management of daily cash flows.
[Mr. Rieger is primarily responsible for the day-to-day management of the U. S. Government
Securities Fund, the Limited Duration Fund, the Limited-Term Federal Mortgage Securities Fund and
the Total Return Bond Fund.] Mr. Rieger has served as Director of Securitized Assets since joining
Trusco in May 2007. He has co-managed the Funds since August 2007. Prior to joining Trusco, he was
a portfolio manager at AIG Global Investments from February 2002 to April 2007. He has more than 22
years of investment experience.
[Mr. Troisi is primarily responsible for the day-to-day management of the U. S. Government
Securities Fund, the Limited Duration Fund, the Limited-Term Federal Mortgage Securities Fund, the
Investment Grade Bond Fund, the Intermediate Bond Fund and the Total Return Bond Fund]. Mr. Troisi
has served as Managing Director of Trusco since May 2004. He has co-managed the U. S. Government
Securities Fund, the Limited Duration Fund, the Limited-Term Federal Mortgage Securities Fund since
August 2007 after managing each Fund since February 2007. He has co-managed the Investment Grade
Bond Fund since July 2004 and the Intermediate Bond Fund and the Total Return Bond Fund since each
Funds respective inception, after serving as Portfolio Manager for each Funds predecessor fund.
Prior to joining Trusco, Mr. Troisi served as Senior Portfolio Manager of Seix Investment Advisors,
Inc. from November 1999 to May 2004. He has more than 22 years of investment experience.
[Mr. Webb is primarily responsible for the day-to-day management of the Strategic Income Fund, the
Intermediate Bond Fund, the Investment Grade Bond Fund and the Total Return Bond Fund]. Mr. Webb
has served as Managing Director of Trusco since May 2004. He has co-managed the Strategic Income
Fund since October 2004 and the Intermediate Bond Fund, the Investment Grade Bond Fund and the
Total Return Bond Fund since February 2007. Prior to joining Trusco, Mr. Webb served as Senior
Portfolio Manager of Seix Investment Advisors, Inc. from May 2000 to May 2004. He has more than 13
years of investment experience.
[LOGO] StableRiver Capital Management LLC (StableRiver)
www.stableriver.com
139
StableRiver, 50 Hurt Plaza, Suite 1400, Atlanta, GA 30303, serves as the Subadviser to the Georgia
Tax-Exempt Bond Fund, the High Grade Municipal Bond Fund, the Investment Grade Tax-Exempt Bond
Fund, the Maryland Municipal Bond Fund, the North Carolina Tax-Exempt Bond Fund, the Short-Term
Bond Fund, the Short-Term U.S. Treasury Securities Fund, the U.S. Government Securities Ultra-Short
Bond Fund, the Ultra-Short Bond Fund, the Virginia Intermediate Municipal Bond Fund, the Prime
Quality Money Market Fund, the Tax-Exempt Money Market Fund, the U.S. Government Securities Money
Market Fund, the U.S. Treasury Securities Money Market Fund and the Virginia Tax-Free Money Market
Fund. StableRiver was founded in 2007 and is a wholly-owned subsidiary of RidgeWorth. As of June
30, 2008, StableRiver had approximately $[ ] in assets under management.
Mr. George E. Calvert, Jr. is primarily responsible for the day-to-day management of the Maryland
Municipal Bond Fund. Mr. Calvert has served as Vice President of Trusco since August 2000. He has
managed the Funds since August 2000. Mr. Calvert has more than 30 years of investment experience.
Mr. Ronald Schwartz, CFA, is primarily responsible for the day-to-day management of the High Grade
Municipal Bond Fund and the Investment Grade Tax-Exempt Bond Fund. Mr. Schwartz has served as
Managing Director of Trusco since July 2000. He has managed the Funds since each Funds respective
inception. He has more than 27years of investment experience.
Mr. Chris Carter, CFA, is primarily responsible for the day-to-day management of the Georgia
Tax-Exempt Bond Fund and the North Carolina Tax-Exempt Bond Fund. Mr. Carter has served as Vice
President of Trusco since July 2003. He has managed the Georgia Tax-Exempt Bond Fund since August
2003 and the North Carolina Tax-Exempt Bond Fund since March 2005. Prior to joining Trusco, Mr.
Carter served as a Portfolio Manager and Assistant Portfolio Manager of Evergreen Investment
Management Company from January 2002 to July 2003. He has more than 17 years of investment
experience.
The Ultra-Short Bond Fund, the Short-Term Bond Fund, Short-Term U.S. Treasury Fund and the U.S.
Government Securities Ultra-Short Bond Fund are each managed by a portfolio management team
comprised of Mr. Robert W. Corner, Mr. H. Rick Nelson and Mr. Chad Stephens. Each member of the
team is primarily responsible for the day-to-day management of the Funds and has authority over all
aspects of the Funds investment portfolio, including selecting securities to purchase, sell or
hold, developing the Funds investment strategies, portfolio construction techniques, portfolio
risk assessment, and the management of daily cash flows.
Mr. Corner has served as Managing Director of Trusco since September 1996. He has co-managed the
Ultra-Short Bond Fund and the U.S. Government Securities Ultra-Short Bond Fund since July 2004 and
the Short Term Bond Fund since January 2003 after managing each respective Fund since its inception
and has co-managed the Short-Term U.S. Treasury Fund since March 2008. He has more than 21 years of
investment experience.
Mr. Nelson has served as Managing Director of Trusco since March 2002. He has co-managed Short-Term
U.S. Treasury Securities Fund since January 2005, the Short-Term Bond Fund since January 2003, the
Ultra-Short Bond Fund since July 2004 and the U.S. Government Securities Ultra-Short Bond Fund
since July 2004. He has more than 26 years of investment experience.
Mr. Stephens has served as Vice President of Trusco since December 2000. He has co-managed the
Short-Term U.S. Treasury Securities Fund since January 2005, the Ultra-Short Bond Fund and the U.S.
Government Securities Ultra-Short Fund since August 2006 and the Short-Term Bond Fund since
140
March 2008. He has more
than 16 years of investment experience.
The Statement of Additional Information provides additional information regarding the portfolio
managers compensation, other accounts managed by the portfolio managers, potential conflicts of
interest and the portfolio managers ownership of securities in the Funds.
(HAND SHAKE ICON)
PURCHASING AND SELLING FUND SHARES
This section tells you how to purchase and sell (sometimes called redeem) I Shares of the Funds.
HOW TO PURCHASE FUND SHARES
The Funds offer I Shares to financial institutions and intermediaries for their own accounts or for
the accounts of customers for whom they may act as fiduciary agent, investment adviser, or
custodian. These accounts primarily consist of:
- assets of a bona fide trust,
- assets of a business entity possessing a tax identification number,
- assets of an employee benefit plan,
- assets held within select fee-based programs, or
- assets held within certain non-discretionary intermediary no-load platforms.
Employee benefit plans generally include profit sharing, 401(k) and 403(b) plans. Employee benefit
plans generally do not include IRAs; SIMPLE, SEP, SARSEP plans; plans covering self-employed
individuals and their employees or health savings accounts unless you, as a customer of a financial
institution or intermediary, meet the Funds established criteria as described above.
As a result, you, as a customer of a financial institution or intermediary, may, under certain
circumstances that meet the Funds established criteria, be able to purchase I Shares through
accounts made with select financial institutions or intermediaries. I Shares will be held of record
by (in the name of) your financial institution or intermediary. Depending upon the terms of your
account, you may have, or be given, the right to vote your I Shares. Financial institutions or
intermediaries may impose eligibility requirements for each of their clients or customers investing
in the Funds, including investment minimum requirements, which may differ from those imposed by the
Funds. Please contact your financial institution or intermediary for complete details for
purchasing I Shares.
I Shares may also be purchased directly from the Funds by officers, directors or trustees, and
employees and their immediate families (strictly limited to current spouses/domestic partners and
dependent children) of:
- RidgeWorth Funds,
- Subadvisers to the RidgeWorth Funds, or
141
- SunTrust Banks, Inc. and its subsidiaries.
Validation of current employment/service will be required upon establishment of the account. The
Funds, in their sole discretion, may determine if an applicant qualifies for this program.
WHEN CAN YOU PURCHASE SHARES?
The Funds are open for business on days when the New York Stock Exchange (the NYSE) is open for
regular trading (a Business Day). In the case of the Money Market Funds, the Federal Reserve Bank
of New York (the Fed) must also be open for settlement. The STI Classic Funds reserves the right
to open one or more Funds on days that the principal bond markets (as recommended by the Bond
Market Association) are open even if the NYSE is closed.
Each Fund calculates its net asset value per share (NAV) once each Business Day at the close of
regular trading on the NYSE (normally 4:00 p.m. Eastern Time).
If a Fixed Income Fund or its authorized agent receives your purchase or redemption request in
proper form before 4:00 p.m., Eastern Time, your transaction will be priced at that Business Days
NAV. If your request is received after 4:00 p.m., it will be priced at the next Business Days NAV.
For you to be eligible to receive dividends declared on the day you submit your purchase order, a
Money Market Fund or its authorized agent must receive your purchase order in proper form before
the time shown in the table below and must receive federal funds (readily available funds) before
6:00 p.m. Eastern Time. Otherwise, your purchase order will be effective the following Business
Day, as long as the Money Market Fund receives federal funds before calculating its NAV the
following day.
|
|
|
FUND |
|
TIME (EASTERN TIME) |
Tax-Exempt Money Market Fund
|
|
10:30 a.m. |
Virginia Tax-Free Money Market Fund
|
|
10:30 a.m. |
Prime Quality Money Market Fund
|
|
3:00 p.m. |
U.S. Government Securities Money Market Fund
|
|
3:00 p.m. |
U.S. Treasury Money Market Fund
|
|
3:00 p.m. |
The time at which transactions and shares are priced and the time until which orders are accepted
may be changed if the NYSE closes early or if the principal bond markets close early on days when
the NYSE is closed.
The Funds will not accept orders that request a particular day or price for the transaction or any
other special conditions.
YOU MAY HAVE TO TRANSMIT YOUR PURCHASE AND SALE ORDERS TO YOUR FINANCIAL INSTITUTION OR
INTERMEDIARY AT AN EARLIER TIME FOR YOUR TRANSACTION TO BECOME EFFECTIVE THAT DAY. THIS ALLOWS THE
FINANCIAL INSTITUTION OR INTERMEDIARY TIME TO PROCESS YOUR ORDER AND TRANSMIT IT TO THE TRANSFER
AGENT IN TIME TO MEET THE ABOVE STATED FUND CUT-
142
OFF TIMES. FOR MORE INFORMATION ABOUT HOW TO PURCHASE OR SELL FUND SHARES, INCLUDING A SPECIFIC
FINANCIAL INSTITUTIONS OR INTERMEDIARYS INTERNAL ORDER ENTRY CUT-OFF TIME, PLEASE CONTACT YOUR
FINANCIAL INSTITUTION OR INTERMEDIARY DIRECTLY.
A Fund may reject any purchase order.
HOW THE FUNDS CALCULATE NAV
NAV is calculated by adding the total value of a Funds investments and other assets, subtracting
its liabilities and then dividing that figure by the number of outstanding shares of the Fund.
In calculating NAV, each Fund (except the Money Market Funds) generally values its investment
portfolio at market price. In calculating NAV for each Money Market Fund, each Fund generally
values its investment portfolio using the amortized cost valuation method, which is described in
detail in the Statement of Additional Information. If market prices are not readily available or a
Fund reasonably believes that market prices or amortized cost valuation method are unreliable, such
as in the case of a security value that has been materially affected by events occurring after the
relevant market closes, the Fund is required to price those securities at fair value as determined
in good faith using methods approved by the Board of Trustees. A Funds determination of a
securitys fair value price often involves the consideration of a number of subjective factors, and
is therefore subject to the unavoidable risk that the value that a Fund assigns to a security may
be higher or lower than the securitys value would be if a reliable market quotation for the
security was readily available.
When valuing fixed income securities with remaining maturities of more than 60 days, the Funds use
the value of the security provided by pricing services. The values provided by a pricing service
may be based upon market quotations for the same security, securities expected to trade in a
similar manner, or a pricing matrix. When valuing fixed income securities with remaining maturities
of 60 days or less, the Funds use the securitys amortized cost. Amortized cost and the use of a
pricing matrix in valuing fixed income securities are forms of fair value pricing. Fair value
prices may be determined in good faith using methods approved by the Board of Trustees. Each Money
Market Fund expects its NAV to remain constant at $1.00 per share, although the Fund cannot
guarantee this.
With respect to non-U.S. securities held by a Fund, the Fund may take factors influencing specific
markets or issues into consideration in determining the fair value of a non-U.S. security.
International securities markets may be open on days when the U.S. markets are closed. In such
cases, the value of any international securities owned by a Fund may be significantly affected on
days when investors cannot buy or sell shares. In addition, due to the difference in times between
the close of the international markets and the time a Fund prices its shares, the value the Fund
assigns to securities generally will not be the same as the primary markets or exchanges. In
determining fair value prices, a Fund may consider the performance of securities on their primary
exchanges, foreign currency appreciation/depreciation, securities market movements in the U.S., or
other relevant information as related to the securities.
IN-KIND PURCHASES
Payment for shares of a Fund may, in the discretion of the Subadviser, be made in the form of
securities that are permissible investments for such Fund. In connection with an in-kind securities
payment, a Fund will require, among other things, that the securities (a) meet the investment
143
objectives and policies of the Fund; (b) are acquired for investment and not for resale; (c) are
liquid securities that are not restricted as to transfer either by law or liquidity of markets; (d)
have a value that is readily ascertainable (e.g., by a listing on a nationally recognized
securities exchange); and (e) are valued on the day of purchase in accordance with the pricing
methods used by the Fund. For further information about this form of payment, please call
1-888-784-3863
CUSTOMER IDENTIFICATION
FOREIGN INVESTORS
The Funds do not generally accept investments in I Shares by non-U.S. citizens or entities.
CUSTOMER IDENTIFICATION AND VERIFICATION
To help the government fight the funding of terrorism and money laundering activities, federal law
requires all financial institutions to obtain, verify, and record information that identifies each
person who opens an account.
When you open an account, you will be asked to provide your name, residential street address, date
of birth, Social Security number or tax identification number. You may also be asked for other
information that will allow us to identify you. Entities are also required to provide additional
information. This information will be verified to ensure the identity of all persons opening a
mutual fund account.
In certain instances, the Funds are required to collect documents to fulfill its legal obligation.
Documents provided in connection with your application will be used solely to establish and verify
a customers identity.
The Funds are required by law to reject your new account application if the required identifying
information is not provided. Attempts to collect the missing information required on the
application will be performed by either contacting you or, if applicable, your broker. If this
information is unable to be obtained within a timeframe established in the sole discretion of the
Funds your application will be rejected.
Upon receipt of your application in proper form (or upon receipt of all identifying information
required on the application), your investment will be accepted and your order will be processed at
the NAV next-determined.
However, the Funds reserve the right to close your account at the then-current days price if the
Funds are unable to verify your identity. Attempts to verify your identity will be performed within
a timeframe established in the sole discretion of the Funds. If the Funds are unable to verify your
identity, the Funds reserve the right to liquidate your account at the then-current days price and
remit proceeds to you via check. The Funds reserve the further right to hold your proceeds until
your original check clears the bank. In such an instance, you may be subject to a gain or loss on
Fund shares and will be subject to corresponding tax implications.
ANTI-MONEY LAUNDERING PROGRAM
Customer identification and verification is part of the Funds overall obligation to deter money
laundering under federal law. The Funds have adopted an anti-money laundering compliance program
designed to prevent the Funds from being used for money laundering or the financing of terrorist
activities. In this regard, the Funds reserve the right to (i) refuse, cancel or rescind any
144
purchase or exchange order, (ii) freeze any account and/or suspend account services, or (iii)
involuntarily redeem your account in cases of threatening conduct or suspected fraudulent or
illegal activity. These actions will be taken when, in the sole discretion of Fund management, they
are deemed to be in the best interest of the Funds or in cases when the Funds are requested or
compelled to do so by governmental or law enforcement authority.
HOW TO SELL YOUR FUND SHARES
You may sell your shares on any Business Day by contacting your financial institution or
intermediary. Your financial institution or intermediary will give you information about how to
sell your shares including any specific cut-off times required.
Holders of I Shares may sell shares by following the procedures established when they opened their
account or accounts with the Funds or with their financial institution or intermediary. The sale
price of each share will be the NAV next determined after the Funds receive your request in proper
form.
Redemption orders must be received by the Money Market Funds on any Business Day before 10:30 a.m.,
Eastern Time for the Tax-Exempt Money Market Fund and Virginia Tax-Free Money Market Fund or 3:00
p.m., Eastern Time for the Prime Quality Money Market Fund, U.S. Government Securities Money Market
Fund and U.S. Treasury Money Market Fund. Orders received after these times will be executed the
following Business Day.
A MEDALLION SIGNATURE GUARANTEE[DIAMOND SYMBOL] by a bank or other financial institution (a
notarized signature is not sufficient) is required to redeem shares:
- made payable to someone other than the registered shareholder;
- sent to an address or bank account other than the address or bank account of record; or
- sent to an address or bank account of record that has been changed within the last 15 calendar days.
Other documentation may be required depending on the registration of the account.
[DIAMOND SYMBOL] MEDALLION SIGNATURE GUARANTEE: A Medallion Signature Guarantee verifies the
authenticity of your signature and helps ensure that changes to your account are in fact authorized
by you. A Medallion Signature Guarantee may be obtained from a domestic bank or trust company,
broker, dealer, clearing agency, savings association or other financial institution participating
in a Medallion Program recognized by the Securities Trading Association. Signature guarantees from
financial institutions that do not reflect one of the following are not part of the program and
will not be accepted. The acceptable Medallion programs are Securities Transfer Agents Medallion
Program, (STAMP), Stock Exchange Medallion Program, (SEMP), or the New York Stock Exchange, Inc.
Medallion Program, (NYSE MSP). Contact your local financial adviser or institution for further
assistance.
RECEIVING YOUR MONEY
Normally, the Funds will send your sales proceeds within five Business Days after a Fund receives
your request, but a Fund may take up to seven days to pay the sale proceeds if making immediate
payment would adversely affect the Fund (for example, to allow the Fund to raise capital in the
case of a large redemption).
REDEMPTIONS IN KIND
145
The Funds generally pay redemption proceeds in cash. However, under unusual conditions that make
the payment of cash unwise (and for the protection of the Funds remaining shareholders), a Fund
might pay all or part of your redemption proceeds in liquid securities with a market value equal to
the redemption price (redemption in kind). It is highly unlikely that your shares would ever be
redeemed in kind, but if they were you would probably have to pay transaction costs to sell the
securities distributed to you, as well as taxes on any capital gains from the sale as with any
redemption.
SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
A Fund may suspend your right to sell your shares if the NYSE restricts trading, the SEC declares
an emergency or for other reasons approved by the SEC. More information about this is in the
Statement of Additional Information.
TELEPHONE TRANSACTIONS
Purchasing and selling Fund shares over the telephone is extremely convenient, but not without
risk. Although the Funds have certain safeguards and procedures to confirm the identity of callers
and the authenticity of instructions, the Funds are not responsible for any losses or costs
incurred by following telephone instructions the Funds reasonably believe to be genuine. If you or
your financial institution or intermediary transact with the Funds over the telephone, you will
generally bear the risk of any loss. The Funds reserve the right to modify, suspend or terminate
telephone transaction privileges at any time.
To redeem shares by telephone:
- redemption checks must be made payable to the registered shareholder; and
- redemption checks must be mailed to an address or wired to a bank account of record that has been associated with the shareholder account for at least 15 calendar days.
MARKET TIMING POLICIES AND PROCEDURES
FOR ALL FUNDS EXCEPT THE MONEY MARKET FUNDS
The Funds are intended for long-term investment purposes only and discourage shareholders from
engaging in market timing or other types of excessive short-term trading. This frequent trading
into and out of the Funds may present risks to the Funds long-term shareholders, all of which
could adversely affect shareholder returns. The risks posed by frequent trading include interfering
with the efficient implementation of the Funds investment strategies, triggering the recognition
of taxable gains and losses on the sale of Fund investments, requiring the Funds to maintain higher
cash balances to meet redemption requests, and experiencing increased transaction costs. A Fund
that invests a significant amount of its assets in overseas markets is particularly susceptible to
the risk of certain investors using a strategy known as time-zone arbitrage. Investors using this
strategy attempt to take advantage of the differences in value of foreign securities that might
result from events that occur between the close of the foreign securities market on which a foreign
security is traded and the time at which the Fund calculates its NAV.
The Funds and/or their service providers will take steps reasonably designed to detect and deter
frequent trading by shareholders pursuant to the Funds policies and procedures described in this
prospectus and approved by the Funds Board of Trustees. For purposes of applying these
146
policies, the Funds service providers may consider the trading history of accounts under common
ownership or control. The Funds policies and procedures include:
- Shareholders are restricted from making more than one (1) round trip into or out of a Fund
within 14 days or more than two (2) round trips within any continuous 90 day period. If a
shareholder exceeds either round trip restriction, he or she may be deemed a Market Timer, and
the Funds and/or their service providers may, at their discretion, reject any additional purchase
orders. The Funds define a round trip as a purchase into a Fund by a shareholder, followed by a
subsequent redemption out of the Fund. Anyone considered to be a Market Timer by the Funds, their
manager(s) or a shareholder servicing agent may be notified in writing of their designation as a
Market Timer.
- The Funds reserve the right to reject any purchase request by any investor or group of investors
for any reason without prior notice, including, in particular, if the Funds or their Adviser
reasonably believes that the trading activity would be harmful or disruptive to the Funds.
The Funds and/or their service providers seek to apply these policies to the best of their
abilities uniformly and in a manner they believe is consistent with the interests of the Funds
long-term shareholders.
Although these policies are designed to deter frequent trading, none of these measures alone nor
all of them taken together eliminate the possibility that frequent trading in the Funds will occur,
particularly with respect to trades placed by shareholders that invest in the Funds through omnibus
arrangements maintained by brokers, retirement plan accounts and other financial intermediaries.
Purchase and redemption transactions submitted to the Funds by these intermediaries reflect the
transactions of multiple beneficial owners whose individual transactions are not automatically
disclosed to the Funds. Therefore, the Funds rely in large part on the intermediaries who maintain
omnibus arrangements (which may represent a majority of Fund shares) to aid in the Funds efforts
to detect and deter short-term trading. The Funds monitor trading activity at the omnibus account
level and look for activity that indicates potential short-term trading. If they detect suspicious
trading activity, the Funds contact the intermediaries to determine whether the short-term trading
policy has been violated and may request and receive personal identifying information and
transaction histories for some or all underlying shareholders to make this determination. If a
Fund believes that a shareholder has violated the short-term trading policy, it will take further
steps to prevent any future short-term trading by such shareholder in accordance with the policy.
The Funds cannot guarantee the accuracy of the information provided by the intermediaries and may
not always be able to track short-term trading effected through these intermediaries. A Fund has
the right to terminate an intermediarys ability to invest in a Fund if excessive trading activity
persists and a Fund or its Adviser or Subadviser reasonably believes that such termination would be
in the best interests of long-term shareholders. Further, the Funds seek to discourage short-term
trading by using fair value pricing procedures to fair value certain investments under some
circumstances. In addition to the Funds market timing policies and procedures described above,
you may be subject to the market timing policies and procedures of the intermediary through which
you invest. Please consult with your intermediary for additional information regarding its frequent
trading restrictions.
FOR THE MONEY MARKET FUNDS
The Money Market Funds seek to provide a high degree of liquidity, current income and a stable net
asset value of $1.00 per share. The Money Market Funds are designed to serve as short-term cash
equivalent investments for shareholders and, therefore, expect shareholders to engage in
147
frequent purchases and redemptions. Because of the inherently liquid nature of the Money Market
Funds investments, and money market instruments in general, and the Money Market Funds intended
purpose to serve as short-term investment vehicles for shareholders, the Adviser has informed the
Board of Trustees that it believes that it would not be in shareholders best interests to place
any limitations on the frequency of shareholder purchases and redemptions into and out of the Money
Market Funds. As a result, the Board has not adopted a Money Market Fund policy or procedures with
respect to frequent purchases and redemptions.
DISTRIBUTION OF FUND SHARES
From its own assets, the Adviser, the Subadviser or their affiliates may make payments based on
gross sales and current assets to selected brokerage firms or institutions. The amount of these
payments may be substantial. The minimum aggregate sales required for eligibility for such
payments, and the factors in selecting the brokerage firms and institutions to which they will be
made, are determined from time to time by the Adviser or Subadviser. Furthermore, in addition to
the fees that may be paid by the Fund, the Adviser, the Subadviser or their affiliates may pay fees
from their own capital resources to brokers, banks, financial advisers, retirement plan service
providers and other financial intermediaries, including affiliates, for providing
distribution-related or shareholder services.
The Adviser, the Subadviser or their affiliates may pay fees from their own capital resources to
financial intermediaries to compensate them for marketing expenses they incur or to pay for the
opportunity to have them distribute the Funds. The amount of these payments is determined by the
Adviser or the Subadviser and may differ among financial intermediaries. Such payments may provide
incentives for financial intermediaries to make shares of the Funds available to their customers,
and may allow the Funds greater access to such financial intermediaries and their customers than
would be the case if no payments were made. You may wish to consider whether such arrangements
exist when evaluating any recommendation to purchase shares of the Funds.
Please refer to the Statement of Additional Information for more information regarding these
arrangements.
DIVIDENDS AND DISTRIBUTIONS
Each Fund declares dividends daily and pays these dividends monthly. Each Fund makes distributions
of its net realized capital gains, if any, at least annually. If you own Fund shares on a Funds
record date, you will be entitled to receive the distribution.
You will receive dividends and distributions in the form of additional Fund shares unless you elect
to receive payment in cash. To elect cash payment, you must notify the Funds in writing prior to
the date of the distribution. Your election will be effective for dividends and distributions paid
after the Funds receive your written notice. To cancel your election, simply send the Funds written
notice.
TAXES
PLEASE CONSULT YOUR TAX ADVISOR REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL, STATE AND LOCAL
INCOME TAXES. Below the Funds have summarized some important tax issues that affect the Funds and
their shareholders. This summary is based on current tax laws, which may change.
148
Each Fund will distribute substantially all of its net investment income and its net realized
capital gains, if any, at least annually. The dividends and distributions you receive may be
subject to federal, state and local taxation, depending upon your tax situation. Distributions you
receive from a Fund may be taxable whether or not you reinvest them. Income distributions are
generally taxable as ordinary income and will not qualify for the reduced tax rates applicable to
qualified dividend income. Capital gains distributions are generally taxable at the rates
applicable to long-term capital gains. Long-term capital gains are currently taxed at a maximum
rate of 15%. Absent further legislation, the maximum 15% tax rate on long-term capital gains will
cease to apply to taxable years beginning after December 31, 2010. EACH SALE OR EXCHANGE OF FUND
SHARES MAY BE A TAXABLE EVENT. FOR TAX PURPOSES, AN EXCHANGE OF YOUR FUND SHARES FOR SHARES OF
ANOTHER STI CLASSIC FUND IS TREATED THE SAME AS A SALE. A TRANSFER FROM ONE SHARE CLASS TO ANOTHER
SHARE CLASS IN THE SAME STI CLASSIC FUND SHOULD NOT BE A TAXABLE EVENT.
Each Fund will inform you of the amount of your ordinary income dividends and capital gain
distributions shortly after the close of each calendar year.
Shareholders of the Money Market Funds should be aware that because the Funds each expect to
maintain a stable $1.00 net asset value per share, they should not expect to realize any gain or
loss on the sale or exchange of Money Market Fund shares.
The Georgia Tax-Exempt Bond Fund, High Grade Municipal Bond Fund, Investment Grade Tax-Exempt Bond
Fund, Maryland Municipal Bond Fund, North Carolina Tax-Exempt Bond Fund, Tax-Exempt Money Market
Fund, Virginia Intermediate Municipal Bond Fund and Virginia Tax-Free Money Market Fund intend to
distribute federally tax-exempt income. Each Fund may invest a portion of its assets in securities
that generate taxable income for federal or state income taxes. Income exempt from federal tax may
be subject to state and local taxes. Any capital gains distributed by these Funds may be taxable.
While shareholders of state specific Funds may receive distributions that are exempt from that
particular states income tax, such distributions may be taxable in other states where the
shareholder files tax returns.
If you have a tax-advantaged or other retirement account you will generally not be subject to
federal taxation on income and capital gain distributions until you begin receiving your
distributions from your retirement account. You should consult your tax advisor regarding the rules
governing your own retirement plan.
Except for those certain Funds that expect to distribute federally tax-exempt income (described
above), the Funds expect to distribute primarily ordinary income dividends currently taxable at a
maximum rate of 35%.
The Short-Term U.S. Treasury Securities Fund, the U.S. Government Securities Fund, the U.S.
Government Securities Money Market Fund and the U.S. Treasury Money Market Fund each expect that a
substantial portion of Fund distributions will represent interest earned on U.S. obligations, while
the Investment Grade Bond Fund, the Short-Term Bond Fund, the Prime Quality Money Market Fund, the
Ultra-Short Bond Fund and the U.S. Government Securities Ultra-Short Bond Fund expect that some
portion of each Funds distribution will be so derived. Many states grant tax-free status to
dividends paid from interest earned on direct obligations of the U.S. Government, subject to
certain limitations.
FINANCIAL HIGHLIGHTS
149
The financial highlights table is intended to help you understand a Funds (and its predecessors)
financial performance for the past 5 years or, if shorter, the period of the Funds (and its
predecessors) operations. Certain information reflects financial results for a single Fund share.
The total returns in the table represent the rate that an investor would have earned (or lost) on
an investment in the Fund (assuming reinvestment of all dividends and distributions). This
financial information has been audited by [ ], except the information for the period ended May 31,
2004 for the North Carolina Tax-Exempt Bond Fund, the information for each of the two years (or
periods) ended October 31, 2003 for the Intermediate Bond Fund, Limited Duration Fund, Seix High
Yield Fund and Total Return Bond Fund, which has been audited by predecessor independent accounting
firms, one of which has ceased operations. The Report of the Independent Registered Public
Accounting Firm for each period shown along with the Funds financial statements and related notes,
are included in the Annual Reports to Shareholders for each such period. The 2008 Annual Report is
available upon request and without charge by calling 1-888-784-3863 or on the Funds website at
www.ridgeworthfunds.com.
150
[THIS PAGE INTENTIONALLY LEFT BLANK]
151
[THIS PAGE INTENTIONALLY LEFT BLANK]
152
INVESTMENT ADVISER:
RidgeWorth Capital Management
50 Hurt Plaza, Suite 1400
Atlanta, Georgia 30303
INVESTMENT SUBADVISER:
Seix Investment Advisors LLC
10 Mountainview Road,
Suite C-200
Upper Saddle River, NJ 07458
StableRiver Capital Management LLC
50 Hurt Plaza, Suite 1400
Atlanta, Georgia 30303
More information about the RidgeWorth Funds is available without charge through the following:
STATEMENT OF ADDITIONAL INFORMATION (SAI):
The SAI includes detailed information about the RidgeWorth Funds. The SAI is on file with the
SEC and is incorporated by reference into this prospectus. This means that the SAI, for legal
purposes, is a part of this prospectus.
ANNUAL AND SEMI-ANNUAL REPORTS:
These reports list each Funds holdings and contain information from the Funds managers about
strategies and recent market conditions and trends and their impact on Fund performance. The
reports also contain detailed financial information about the Funds.
TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT,
OR MORE INFORMATION:
TELEPHONE: 1-888-784-3863
MAIL:
RidgeWorth Funds
3435 Stelzer Road
Columbus, Ohio 43219
WEBSITE: www.ridgeworthfunds.com
SEC:
You can also obtain the SAI or the Annual and Semi-Annual reports, as well as other
information about the RidgeWorth Funds, from the EDGAR Database on the SECs website at
http://www.sec.gov. You may review and copy documents at the SEC Public Reference Room in
Washington, DC (for information on the operation of the Public Reference Room, call 202-942-8090).
You may request documents by mail from the SEC, upon payment of a duplicating fee, by writing to:
Securities and Exchange Commission, Public Reference Section, Washington, DC 20549-0102. You may
also obtain this information, upon payment of a duplicating fee, by e-mailing the SEC at
publicinfo@sec.gov.
The RidgeWorth Funds Investment Company Act registration number is 811-06557.
153
RIDGEWORTH FUNDS
Institutional Shares
PROSPECTUS
RIDGEWORTH MONEY MARKET FUNDS (formerly STI Classic Funds)
Institutional Cash Management Money Market Fund (formerly Classic Institutional Cash Management
Money Market Fund)
Institutional Municipal Cash Reserve Money Market Fund (formerly Classic Institutional Municipal
Cash Reserve Money Market Fund)
Institutional U.S. Government Securities Money Market Fund (formerly Classic Institutional U.S.
Government Securities Money Market Fund)
Institutional U.S. Treasury Securities Money Market Fund (formerly Classic Institutional U.S.
Treasury Securities Money Market Fund)
Investment Adviser: RidgeWorth Capital Management, Inc. (formerly Trusco Capital Management, Inc.)
(the Adviser)
Investment Subadviser: StableRiver Capital Management LLC (the Subadviser)
August 1, 2008
The Securities and Exchange Commission
has not approved or disapproved these
securities or passed upon the adequacy
of this prospectus. Any representation
to the contrary is a criminal offense.
PROSPECTUS
ABOUT THIS PROSPECTUS
The RidgeWorth Funds (formerly STI Classic Funds) is a mutual fund family that offers shares in
separate investment portfolios that have individual investment goals and strategies. This
prospectus gives you important information about the Institutional Shares of the Institutional
Money Market Funds (Funds) that you should know before investing. Please read this prospectus and
keep it for future reference.
This prospectus has been arranged into different sections so that you can easily review this
important information. On the next page, there is some general information you should know about
risk and return that is common to each of the Funds. For more detailed information about each Fund,
please see:
2
CUSIP/TICKER SYMBOLS
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FUND NAME |
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CLASS |
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INCEPTION* |
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TICKER |
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CUSIP |
Institutional Cash
Management Money
Market Fund |
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Institutional Shares |
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10/25/95 |
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CICXX |
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76628T264 |
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Institutional
Municipal Cash
Reserve Money
Market Fund |
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Institutional Shares |
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8/2/05 |
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CMRXX |
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76628T256 |
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Institutional U.S.
Government
Securities Money
Market Fund |
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Institutional Shares |
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8/1/94 |
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CRGXX |
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76628T249 |
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Institutional U.S.
Treasury Securities
Money Market Fund |
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Institutional Shares |
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12/12/96 |
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CIUXX |
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76628T231 |
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* |
|
The performance included under Performance Information may include the performance of other
classes of the Fund and/or predecessors of the Fund. |
RISK/RETURN
INFORMATION COMMON TO THE RIDGEWORTH FUNDS
(formerly STI Classic Funds)
Each Fund is a mutual fund. A mutual fund pools shareholders money and, using professional
investment managers, invests it in securities.
Each Fund has its own investment goal and strategies for reaching that goal. The Subadviser (under
the supervision of the Adviser) invests Fund assets in a way that it believes will help a Fund
achieve its goal. Still, investing in each Fund involves risk and there is no guarantee that a Fund
will achieve its goal. The Subadvisers judgments about the markets, the economy or companies may
not anticipate actual market movements, economic conditions or company performance, and these
judgments may affect the return on your investment. In fact, no matter how good a job the
Subadviser does, you could lose money on your investment in the Fund, just as you could with other
investments. A FUND SHARE IS NOT A BANK DEPOSIT AND IT IS NOT INSURED OR GUARANTEED BY THE FDIC OR
ANY GOVERNMENT AGENCY.
Each Funds investment goal may be changed without shareholder approval. Before investing, make
sure that the Funds goal matches your own.
4
INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND
FUND SUMMARY
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INVESTMENT GOAL
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As high a level of current income as is consistent
with preservation of capital and liquidity. |
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INVESTMENT FOCUS
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Money market instruments |
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PRINCIPAL INVESTMENT STRATEGY
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Attempts to increase income without adding undue risk |
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INVESTOR PROFILE
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Conservative investors seeking current income through a liquid investment |
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SUBADVISER:
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StableRiver Capital Management LLC |
INVESTMENT STRATEGY
The Institutional Cash Management Money Market Fund invests exclusively in high quality U.S.
dollar-denominated money market instruments. The Fund invests in obligations of (i) the U.S.
Treasury, (ii) agencies and instrumentalities of U.S. and foreign governments, (iii) domestic and
foreign banks, (iv) domestic and foreign corporate issuers, and (v) supranational entities, as well
as repurchase agreements. The Fund may invest a portion of its assets in securities that are
restricted as to resale.
In selecting investments for the Fund, the Subadviser tries to increase income without adding undue
risk by analyzing maturity, yields, market sectors and credit risk. As a money market fund, the
Fund follows strict rules about credit risk, maturity and diversification of its investments.
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
An investment in the Fund is subject to income risk, which is the possibility that the Funds yield
will decline due to falling interest rates. A Fund share is not a bank deposit and is not insured
or guaranteed by the FDIC or any government agency. In addition, although a money market fund seeks
to keep a constant price per share of $1.00, you may lose money by investing in the Fund.
U.S. government securities can exhibit price movements resulting from changes in interest rates.
Treasury inflation protected securities (TIPS) can also exhibit price movements as a result of
changing inflation expectations and seasonal inflation patterns. Certain U.S. government securities
are backed by the full faith and credit of the U.S. Government, while others are backed by the
ability of the issuing entity to borrow from the U.S. Treasury or by the issuing entitys own
resources.
5
Debt securities are subject to the risk that an issuer will fail to make timely payments of
interest or principal, or go bankrupt, reducing the Funds return. The lower the rating of a debt
security, the higher its credit risk.
Foreign securities involve special risks such as economic or financial instability, lack of timely
or reliable financial information and unfavorable political or legal developments.
Restricted securities may increase the level of illiquidity in the Fund during any period that
qualified institutional buyers become uninterested in purchasing these restricted securities. The
Subadviser intends to invest only in restricted securities that it believes present minimal
liquidity risk.
For further information about these and other risks, see More Information About Risk.
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows changes in the performance of the Funds Institutional Shares from year to
year.*
(BAR CHART)
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1998 |
|
|
5.52 |
|
1999 |
|
|
5.12 |
|
2000 |
|
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6.33 |
|
2001 |
|
|
4.13 |
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2002 |
|
|
1.80 |
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2003 |
|
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0.97 |
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2004 |
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1.22 |
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2005 |
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3.11 |
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2006 |
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4.94 |
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2007 |
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[ ] |
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BEST QUARTER |
|
WORST QUARTER |
[ ]% |
|
|
[ ] |
% |
[ ]/[ ]/[ ]
|
|
[ ]/[ ]/[ ] |
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was [ ]%. |
6
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the iMoneyNet, Inc. First Tier Institutions-Only Average. These returns assume
shareholders redeem all of their shares at the end of the period indicated.
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INSTITUTIONAL SHARES |
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1 YEAR |
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5 YEARS |
|
10 YEARS |
Institutional Cash
Management Money Market
Fund |
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[ ] |
% |
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[ ] |
% |
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[ ] |
% |
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iMoneyNet, Inc. First Tier
Institutional Average |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
To obtain information about the Funds current yield, call 1-888-784-3863.
WHAT IS AN AVERAGE?
An average is a composite of mutual funds with similar investment goals. The iMoneyNet, Inc. First
Tier Institutions-Only Average is a widely-recognized composite of money market funds that invest
in commercial paper, bank obligations and short-term investments in the highest rating category.
The number of funds in the Average varies.
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
7
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
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INSTITUTIONAL SHARES |
Investment Advisory Fees |
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[0.12] |
% |
Other Expenses(1) |
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[ ] |
% |
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Total Annual Operating Expenses |
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0.[ ] |
% |
Fee Waivers and Expense Reimbursements(2) |
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[(0. )] |
% |
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Net Operating Expenses |
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[0.[ ]] |
% |
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(1) |
|
Adjusted to reflect expected changes in Other Expenses for the current fiscal year. |
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(2) |
|
The Adviser and Subadviser have contractually agreed to agree to waive their fees and the
Adviser and Subadviser agree to reimburse expenses to the extent necessary to limit total operating
expenses (excluding taxes, brokerage commissions, extraordinary expenses and estimated indirect
expenses attributable to investments in other funds, such as ETFs) until at least August 1, 2009 in
order to keep Total Annual Operating Expenses from exceeding 0.17%. If at any point before August
1, 2011, Total Annual Operating Expenses are less than the applicable expense cap, the Adviser and
Subadviser may retain the difference to recapture any of the prior waivers or reimbursements. In
addition, the Adviser, Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. These voluntary waivers may be
discontinued at any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
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1 YEAR* |
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3 YEARS |
|
5 YEARS |
|
10 YEARS |
$[ ]
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$[ ]
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$[ ]
|
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$[ ] |
|
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|
* |
|
Without waivers and reimbursements, Year 1 costs would be $[ ]. |
8
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
9
INSTITUTIONAL MUNICIPAL CASH RESERVE MONEY MARKET FUND
FUND SUMMARY
|
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INVESTMENT GOAL
|
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High current interest income exempt from federal income
taxes, while preserving capital and liquidity |
|
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INVESTMENT FOCUS
|
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Municipal money market instruments |
|
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|
PRINCIPAL INVESTMENT
STRATEGY
|
|
Attempts to increase income without adding risk by
analyzing credit quality |
|
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|
INVESTOR PROFILE
|
|
Conservative investors who want to receive current tax-exempt income from their investment |
|
|
|
INVESTMENT SUBADVISER:
|
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StableRiver Capital Management LLC |
INVESTMENT STRATEGY
The Institutional Municipal Cash Reserve Money Market Fund invests substantially all of its net
assets in money market instruments issued by municipalities and issuers that pay income exempt from
regular federal income tax. The Fund may invest up to 100% of its net assets in securities subject
to the alternative minimum tax. The Fund may invest a portion of its assets in securities that are
restricted as to resale.
In selecting investments for the Fund, the Subadviser analyzes the credit quality and structure of
each security to minimize risk. The Subadviser actively manages the Funds average maturity based
on current interest rates and the Subadvisers outlook of the market. As a money market fund, the
Fund follows strict rules about credit risk, maturity and diversification of its investments.
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
An investment in the Fund is subject to income risk, which is the possibility that the Funds yield
will decline due to falling interest rates. A Fund share is not a bank deposit and is not insured
or guaranteed by the FDIC or any government agency. In addition, although a money market fund seeks
to keep a constant price per share of $1.00, you may lose money by investing in the Fund.
There may be economic or political changes that impact the ability of municipal issuers to repay
principal and to make interest payments on municipal securities. Changes in the financial condition
or credit rating of municipal issuers also may adversely affect the value of the Funds securities.
Restricted securities may increase the level of fund illiquidity to the extent that qualified
institutional buyers become, for a time, uninterested in purchasing these restricted securities.
The
10
Subadviser intends to invest only in restricted securities that it believes present minimal
liquidity risk.
For further information about these and other risks, see More Information About Risk.
PERFORMANCE INFORMATION
The bar chart and performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows performance for the Funds Institutional Shares from last year.*
(BAR CHART)
|
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2006 |
|
|
3.28 |
|
2007 |
|
|
[ ] |
|
|
|
|
|
|
|
BEST QUARTER |
|
WORST QUARTER |
0.[ ]% |
|
|
0.[ ] |
% |
[ ]/[ ]/[ ]
|
|
[ ]/[ ]/[ ] |
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was [ ]%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2007, to those of the iMoneyNet, Inc. Tax-Free Institutional Average. These returns assume
shareholders redeem all of their shares at the end of the period indicated.
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SINCE |
INSTITUTIONAL SHARES |
|
1 YEAR |
|
INCEPTION* |
Institutional Municipal
Cash Reserve Money Market Fund |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
iMoneyNet, Inc. Tax-Free
Institutional Average |
|
|
[ ] |
% |
|
|
[ ] |
% |
11
|
|
|
* |
|
Since inception of the Institutional Shares on August 2, 2005. Benchmark returns since July 31,
2005 (benchmark returns available only on a month end basis). |
To obtain information about the Funds current yield, call 1-888-784-3863.
WHAT IS AN AVERAGE?
An average is a composite of mutual funds with similar investment goals. The iMoneyNet, Inc.
Tax-Free Institutional Average is a widely recognized composite of money market funds that invest
in short-term municipal securities, the income of which is exempt from federal taxation. The number
of funds in the Average varies.
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
INSTITUTIONAL SHARES |
Investment Advisory Fees |
|
|
0.[15] |
% |
Other Expenses(1) |
|
|
0.[ ] |
% |
|
|
|
|
|
|
Total Annual Operating Expenses |
|
|
0.[ ] |
% |
Fee Waivers and Expense Reimbursements(2) |
|
|
(0.[ ] |
)% |
|
|
|
|
|
|
|
|
|
|
Net Operating Expenses |
|
|
[0.20 |
% ] |
|
|
|
(1) |
|
Adjusted to reflect expected changes in Other Expenses for the current fiscal year. |
12
|
|
|
(2) |
|
The Adviser and Subadviser have contractually agreed to agree to waive their fees and the
Adviser and Subadviser agree to reimburse expenses to the extent necessary to limit total operating
expenses (excluding taxes, brokerage commissions, extraordinary expenses and estimated indirect
expenses attributable to investments in other funds, such as ETFs) until at least August 1, 2009
in order to keep Total Annual Operating Expenses from exceeding 0.20%. If at any point before
August 1, 2011, Total Annual Operating Expenses are less than the expense cap, the Adviser and
Subadviser may retain the difference to recapture any of the prior waivers or reimbursements. In
addition, the Adviser, Subadviser and/or other service providers may voluntarily waive a portion of
their fees in order to limit Total Annual Operating Expenses. Such waivers may be discontinued at
any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
1 YEAR* |
|
3 YEARS |
|
5 YEARS |
|
10 YEARS |
$[ ]
|
|
$[ ]
|
|
$[ ]
|
|
$[ ] |
|
|
|
* |
|
Without waivers and reimbursements, Year 1 costs would be $[ ]. |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
13
INSTITUTIONAL U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
High current income to the extent consistent with the
preservation of capital and the maintenance of liquidity |
|
|
|
INVESTMENT FOCUS
|
|
U.S. Treasury and government agency securities, and repurchase agreements |
|
|
|
PRINCIPAL
INVESTMENT STRATEGY
|
|
Attempts to increase income without adding undue risk by
analyzing yields |
|
|
|
INVESTOR PROFILE
|
|
Conservative investors seeking current income through a
liquid investment |
|
|
|
SUBADVISER:
|
|
StableRiver Capital Management LLC |
INVESTMENT STRATEGY
The Institutional U.S. Government Securities Money Market Fund invests exclusively in U.S. Treasury
obligations, obligations issued or guaranteed as to principal and interest by agencies or
instrumentalities of the U.S. Government, repurchase agreements involving these securities, and
shares of registered money market funds that invest in the foregoing.
In selecting investments for the Fund, the Subadviser tries to increase income without adding undue
risk by analyzing yields. The Subadviser actively manages the maturity of the Fund and its
portfolio to maximize the Funds yield based on current market interest rates and the Subadvisers
outlook on the market. As a money market fund, the Fund follows strict rules about credit risk,
maturity and diversification of its investments.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
An investment in the Fund is subject to income risk, which is the possibility that the Funds yield
will decline due to falling interest rates. A Fund share is not a bank deposit and is not insured
or guaranteed by the FDIC or any government agency. In addition, although a money market fund seeks
to keep a constant price per share of $1.00, you may lose money by investing in the Fund.
Mortgage-backed investments involve risk of loss due to prepayments and, like any bond, due to
default. Because of the sensitivity of mortgage-related securities to changes in interest rates,
the Funds performance may be more volatile than if it did not hold these securities.
U.S. government securities can exhibit price movements resulting from changes in interest rates.
Treasury inflation protected securities (TIPS) can also exhibit price movements as a result of
14
changing inflation expectations and seasonal inflation patterns. Certain U.S. government securities
are backed by the full faith and credit of the U.S. government, while others are backed by the
ability of the issuing entity to borrow from the U.S. Treasury or by the issuing entitys own
resources.
For further information about these and other risks, see More Information About Risk.
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows changes in the performance of the Funds Institutional Shares from year to
year.*
(BAR CHART)
|
|
|
|
|
1998 |
|
|
5.36 |
|
1999 |
|
|
4.99 |
|
2000 |
|
|
6.18 |
|
2001 |
|
|
4.02 |
|
2002 |
|
|
1.72 |
|
2003 |
|
|
0.94 |
|
2004 |
|
|
1.16 |
|
2005 |
|
|
3.00 |
|
2006 |
|
|
4.81 |
|
2007 |
|
|
[ ] |
|
|
BEST QUARTER |
|
WORST QUARTER |
[ ]% |
|
|
[ ] |
% |
([ ]/[ ]/[ ]) |
|
|
([ ]/[ ]/[ ]) |
% |
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was [ ]%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2006, to those of the iMoneyNet, Inc. Government Institutional Average. These returns assume
shareholders redeem all of their shares at the end of the period indicated.
15
|
|
|
|
|
|
|
|
|
|
|
|
|
INSTITUTIONAL SHARES |
|
1 YEAR |
|
5 YEARS |
|
10 YEARS |
Institutional U.S.
Government Securities Money
Market Fund |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
iMoneyNet, Inc. Government
Institutional Average |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
To obtain information about the Funds current yield, call 1-888-784-3863.
WHAT IS AN AVERAGE?
An average is a composite of mutual funds with similar investment goals. The iMoneyNet, Inc.
Government Institutional Average is a widely-recognized composite of money market funds that invest
in U.S. Treasury bills, repurchase agreements, or agencies of the U.S. Government. The number of
funds in the Average varies.
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
INSTITUTIONAL SHARES |
Investment Advisory Fees |
|
|
0.15 |
% |
Other Expenses |
|
|
0.0[ ] |
% |
|
|
|
|
|
|
|
|
|
|
Total Annual Operating Expenses(1) |
|
|
0.[ ] |
% |
|
|
|
(1) |
|
The Adviser and Subadviser have contractually agreed to agree to waive their fees and the
Adviser and Subadviser agree to reimburse expenses to the extent necessary to limit total operating
expenses (excluding taxes, brokerage commissions, extraordinary expenses and estimated indirect
expenses attributable to investments in other funds, such as ETFs) until at least August 1, 2009
in order to keep Total Annual Operating Expenses from exceeding 0.20%. If at any point before
August 1, 2011, Total Annual Operating Expenses are less than the |
16
applicable expense cap, the Adviser and Subadviser may retain the difference to recapture any of
the prior waivers or reimbursements. In addition, the Adviser, Subadviser and/or other service
providers may voluntarily waive a portion of their fees in order to limit Total Annual Operating
Expenses. These voluntary waivers may be discontinued at any time.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
1 YEAR |
|
3 YEARS |
|
5 YEARS |
|
10 YEARS |
$[ ]
|
|
$[ ]
|
|
$[ ]
|
|
$[ ] |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
17
INSTITUTIONAL U.S. TREASURY SECURITIES MONEY MARKET FUND
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
As high a level of current income as is consistent with
preservation of capital and liquidity |
|
|
|
INVESTMENT FOCUS
|
|
Money market instruments issued and guaranteed by the U.S. Treasury |
|
|
|
PRINCIPAL
INVESTMENT STRATEGY
|
|
Attempts to increase income without adding undue risk by
analyzing yields |
|
|
|
INVESTOR PROFILE
|
|
Conservative investors seeking current income through a liquid investment |
|
|
|
SUBADVISER:
|
|
StableRiver Capital Management LLC |
(TELESCOPE ICON)
INVESTMENT STRATEGY
The Institutional U.S. Treasury Securities Money Market Fund invests exclusively in U.S. Treasury
obligations, repurchase agreements collateralized by these securities, and shares of registered
money market funds that invest in the foregoing. The Fund limits its investments so as to obtain
the highest investment quality rating by a nationally recognized statistical rating organization
(AAAm by Standard & Poors).
In selecting investments for the Fund, the Subadviser tries to increase income without adding undue
risk by analyzing yields for various maturities. The Subadviser actively manages the maturity of
the Fund to maximize the Funds yield based on current market interest rates and the Subadvisers
outlook on the market. As a money market fund, the Fund follows strict rules about credit risk,
maturity and diversification of its investments.
(LIFE PRESERVER ICON)
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
An investment in the Fund is subject to income risk, which is the possibility that the Funds yield
will decline due to falling interest rates. A Fund share is not a bank deposit and is not insured
or guaranteed by the FDIC or any government agency. In addition, although a money market fund seeks
to keep a constant price per share of $1.00, you may lose money by investing in the Fund.
18
Although the Funds U.S. Treasury securities are considered to be among the safest investments,
they are not guaranteed against price movements due to changing interest rates.
For further information about these and other risks, see More Information About Risk.
(TARGET ICON)
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows changes in the performance of the Funds Institutional Shares from year to
year.*
(BAR CHART)
|
|
|
|
|
1998 |
|
|
5.36 |
% |
|
|
|
|
|
1999 |
|
|
4.83 |
% |
2000 |
|
|
6.06 |
% |
2001 |
|
|
3.66 |
% |
2002 |
|
|
1.55 |
% |
2003 |
|
|
0.90 |
% |
2004 |
|
|
1.08 |
% |
2005 |
|
|
2.89 |
% |
2006 |
|
|
4.80 |
% |
2007 |
|
|
|
|
|
BEST QUARTER |
|
WORST QUARTER |
[ ]% |
|
|
[ ] |
% |
([ ]/[ ]/[ ]) |
|
|
([ ]/[ ]/[ ]) |
% |
|
|
|
* |
|
The performance information shown above is based on a calendar year. The Funds total return from
1/1/08 to 6/30/08 was [ ]%. |
19
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31,
2006, to those of the iMoneyNet, Inc. Treasury & Repo Retail Average. These returns assume
shareholders redeem all of their shares at the end of the period indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
INSTITUTIONAL SHARES |
|
1 YEAR |
|
5 YEARS |
|
10 YEARS |
Institutional U.S.
Treasury Securities Money
Market Fund |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
iMoneyNet, Inc. Treasury &
Repo Institutional Average** |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
iMoneyNet, Inc. Treasury &
Repo Retail Average |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
[ ] |
% |
|
|
|
* |
|
Effective [ ], 2008 the Fund transitioned its benchmark from iMoneyNet, Inc. Treasury & Repo
Retail Average to iMoneyNet Treasury Institutional Average Index to better reflect the Funds
investment strategy. |
To obtain information about the Funds current yield, call 1-888-784-3869.
WHAT IS AN AVERAGE?
An average is a composite of mutual funds with similar investment goals. The iMoneyNet, Inc.
Treasury & Repo Retail Average is a widely- recognized composite of money market funds that invest
in U.S. Treasury bills and repurchase agreements backed by these securities. The number of funds in
the Average varies.
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
20
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
|
|
|
|
|
|
INSTITUTIONAL SHARES |
Investment Advisory Fees |
|
|
0.14 |
% |
Other Expenses(1) |
|
|
0.[ ] |
% |
|
|
|
|
|
|
|
|
|
|
Total Annual Operating Expenses(2) |
|
|
0.[ ] |
% |
|
|
|
(1) |
|
Adjusted to reflect expected changes in Other Expenses for the current fiscal year. |
|
(2) |
|
The Adviser and Subadviser have contractually agreed to agree to waive their fees and the
Adviser and Subadviser agree to reimburse expenses to the extent necessary to limit total operating
expenses (excluding taxes, brokerage commissions, extraordinary expenses and estimated indirect
expenses attributable to investments in other funds, such as ETFs) until at least August 1, 2009
in order to keep Total Annual Operating Expenses from exceeding 0.[20]%. If at any point before
August 1, 2011, Total Annual Operating Expenses are less than the applicable expense cap, the
Adviser and Subadviser may retain the difference to recapture any of the prior waivers or
reimbursements. In addition, the Adviser, Subadviser and/or other service providers may voluntarily
waive a portion of their fees in order to limit Total Annual Operating Expenses. These voluntary
waivers may be discontinued at any time. |
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
|
|
|
|
|
|
|
1 YEAR |
|
3 YEARS |
|
5 YEARS |
|
10 YEARS |
$[ ]
|
|
$[ ]
|
|
$[ ]
|
|
$[ ] |
21
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
22
MORE INFORMATION ABOUT RISK
CREDIT RISK
Institutional Cash Management Money Market Fund
The possibility that an issuer will be unable to make timely payments of either principal or
interest.
FIXED INCOME RISK
All Funds
The prices of a Funds fixed income securities respond to economic developments, particularly
interest rate changes, as well as to perceptions about the creditworthiness of individual issuers,
including governments. Generally, a Funds fixed income securities will decrease in value if
interest rates rise and vice versa.
Long-term debt securities generally are more sensitive to changes in interest rates, usually making
them more volatile than short-term debt securities and thereby increasing risk.
Debt securities are also subject to income risk, which is the possibility that falling interest
rates will cause a Funds income to decline. Income risk is generally higher for short-term bonds.
An additional risk of debt securities is reinvestment risk, which is the possibility that a Fund
may not be able to reinvest interest or dividends earned from an investment in such a way that they
earn the same rate of return as the invested funds that generated them. For example, falling
interest rates may prevent bond coupon payments from earning the same rate of return as the
original bond. Furthermore, pre-funded loans and issues may cause a Fund to reinvest those assets
at a rate lower than originally anticipated.
FOREIGN SECURITY RISK
Institutional Cash Management Money Market Fund
Investments in securities of foreign companies or governments can be more volatile than investments
in U.S. companies or governments. Diplomatic, political, or economic developments, including
nationalization or appropriation, could affect investments in foreign countries. Foreign securities
markets generally have less trading volume and less liquidity than U.S. markets. Foreign companies
or governments generally are not subject to uniform accounting, auditing, and financial reporting
standards comparable to those applicable to domestic U.S. companies or governments. Transaction
costs are generally higher than those in the U.S. and expenses for custodial arrangements of
foreign securities may be somewhat greater than typical expenses for custodial arrangements of
similar U.S. securities. Some foreign governments levy withholding taxes against dividend and
interest income. Although in some
23
countries a portion of these taxes are recoverable, the non-recovered portion will reduce the
income received from the securities comprising the portfolio.
MORTGAGE-BACKED SECURITY RISK
Institutional U.S. Government Securities Money Market Fund
Mortgage-backed securities are fixed income securities representing an interest in a pool of
underlying mortgage loans. Mortgage-backed securities are sensitive to changes in interest rates,
but may respond to these changes differently from other fixed income securities due to the
likelihood that a change in the general level of interest rates will impact the magnitude and
timing of any prepayments of the underlying mortgage loans. As a result, it may not be possible to
accurately determine in advance the actual maturity date or average life of a mortgage-backed
security. The uncertainty inherent in assessing prepayment risk makes it difficult to calculate the
average maturity of a portfolio including mortgage-backed securities, and therefore, to assess the
volatility risk of the Fund.
MUNICIPAL ISSUER RISK
Institutional Municipal Cash Reserve Money Market Fund
There may be economic or political changes that impact the ability of municipal issuers to repay
principal and to make interest payments on municipal securities. Changes to the financial condition
or credit rating of municipal issuers may also adversely affect the value of the Funds municipal
securities. Constitutional or legislative limits on borrowing by municipal issuers may result in
reduced supplies of municipal securities. Moreover, certain municipal securities are backed only by
a municipal issuers ability to levy and collect taxes.
SECURITIES LENDING RISK
All Funds
A Fund may lend securities to broker-dealers to earn additional income. Risks include the potential
insolvency of the borrower that could result in delays in recovering securities and capital losses.
Additionally, losses could result from the reinvestment of collateral received on loaned securities
in investments that default or do not perform well. It is also possible that if a security on loan
is sold and a Fund is unable to timely recall the security, the Fund may be required to repurchase
the security in the market place, which may result in a potential loss to shareholders. As
securities on loan may not be voted by the Fund, there is a risk that the Fund may not be able to
recall the securities in sufficient time to vote on material proxy matters.
24
MORE INFORMATION ABOUT FUND INVESTMENTS
This prospectus describes the Funds primary strategies, and the Funds will normally invest in the
types of securities described in this prospectus. However, in addition to the investments and
strategies described in this prospectus, each Fund also may invest in other securities, use other
strategies and engage in other investment practices. These investments and strategies, as well as
those described in this prospectus, are described in detail in the Statement of Additional
Information. Of course, a Fund cannot guarantee that it will achieve its investment goal.
Each Fund may invest in other mutual funds for cash management purposes. When a Fund invests in
another mutual fund, in addition to directly bearing expenses associated with its own operations,
it will bear a pro rata portion of the others mutual funds expenses.
THIRD-PARTY RATINGS
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Name |
|
Moodys Rating1 |
|
S&P Rating2 |
|
NAIC List3 |
Institutional Cash
Management Money
Market Fund |
|
Aaa |
|
AAAm |
|
Class 1 Approved |
Institutional
Municipal Cash
Reserve Money
Market Fund |
|
Aaa |
|
AAAm |
|
Class 1 Approved |
Institutional U.S.
Government
Securities Money
Market Fund |
|
Aaa |
|
AAAm |
|
Approved; Exempt(4) |
Institutional U.S.
Treasury Securities
Money Market Fund |
|
Aaa |
|
AAAm |
|
Approved; Exempt(4) |
|
|
|
(1) |
|
Moodys Investor Services, Inc. |
|
(2) |
|
Standard & Poors Rating Services |
|
(3) |
|
National Association of Insurance Commissioners |
|
(4) |
|
U.S. Direct Obligations/Full Faith and Credit Exempt |
INFORMATION ABOUT PORTFOLIO HOLDINGS
A description of the Funds policies and procedures with respect to the circumstances under which
the Funds disclose their portfolio securities is available in the Statement of Additional
Information.
MANAGEMENT
25
The Board of Trustees is responsible for the overall supervision and management of the business and
affairs of RidgeWorth Funds. The Board of Trustees establishes policies that the Adviser and
Subadviser must follow in their of all fund related management activities. The day-to-day
operations of RidgeWorth Funds are the responsibilities of the officers and various service
organizations retained by RidgeWorth Funds.
INVESTMENT ADVISER
[LOGO] RidgeWorth Capital Management, Inc. (formerly, Trusco Capital Management, Inc.), 50 Hurt
Plaza, Suite 1400, Atlanta, Georgia 30303 (RidgeWorth or the Adviser), serves as the investment
adviser to the Funds. As of June 30, 2008, the Adviser had approximately $[] billion in assets
under management. The Adviser is responsible for overseeing the Subadviser to ensure compliance
with each Funds investment policies and guidelines and monitors the Subadvisers adherence to its
investment style. The Adviser also executes transactions with respect to specific securities
selected by the Subadviser for purchase and sale by the Funds. The Adviser pays the Subadviser out
of the fees it receives from the Funds.
The Adviser may use its affiliates as brokers for Fund transactions.
An investment adviser has a fiduciary obligation to its clients when the adviser has authority to
vote their proxies. Under the current contractual agreement, the Adviser is authorized to vote
proxies on behalf of each Fund. Information regarding the Advisers, and thus each Funds, Proxy
Voting Policies and Procedures is provided in the Statement of Additional Information. A copy of
the Advisers Proxy Voting Policies and Procedures may be obtained by contacting the RidgeWorth
Funds at 1-888-784-3863, or by visiting www.ridgeworthfunds.com.
For the fiscal year ended March 31, 2008, the Funds paid the Adviser advisory fees (after waivers)
based on the respective Funds average daily net assets of:
|
|
|
|
|
Institutional Cash Management |
|
|
|
|
Money Market Fund |
|
|
0.12 |
% |
Institutional Municipal Cash |
|
|
|
|
Reserve Money Market Fund |
|
|
0.13 |
% |
Institutional U.S. Government |
|
|
|
|
Securities Money Market Fund |
|
|
0.15 |
% |
Institutional U.S. Treasury |
|
|
|
|
Securities Money Market Fund |
|
|
0.14 |
% |
The Adviser has contractually agreed to waive fees and reimburse expenses until at least August 1,
2009 in order to keep total operating expenses of each Fund from exceeding the applicable expense
cap. If at any point before August 1, 2011, total annual operating expenses are less than the
applicable expense cap, the Adviser may retain the difference to recapture any of the prior waivers
or reimbursements.
The following breakpoints are been used in computing the advisory fee for all Funds:
26
|
|
|
|
|
AVERAGE DAILY NET ASSETS |
|
DISCOUNT FROM FULL FEE |
First $1 billion |
|
None - Full Fee |
Next $1.5 billion |
|
|
5 |
% |
Next $2.5 billion |
|
|
10 |
% |
Over $5 billion |
|
|
20 |
% |
Based on net assets as of March 31, 2008, the asset levels of the following Funds had reached a
breakpoint in the advisory fee.* Had the Funds asset levels been lower, the Adviser may have been
entitled to receive maximum advisory fees as follows:
|
|
|
|
|
Institutional Cash Management |
|
|
|
|
Money Market Fund |
|
|
0.13 |
% |
Institutional U.S. Treasury |
|
|
|
|
Money Market Fund |
|
|
0.15 |
% |
|
|
|
* |
|
Fund expenses in the Annual Fund Operating Expenses tables shown earlier in this Prospectus
reflect the advisory breakpoints. |
A discussion regarding the basis for the Board of Trustees approval of the investment advisory
contracts with the Adviser appears in the Funds annual report to shareholders for the period ended
March 31, 2008.
INVESTMENT SUBADVISER
The Subadviser is responsible for managing the portfolios of the Funds on a day-to-day basis and
selecting the specific securities to buy, sell and hold for the Funds under the supervision of the
Adviser and the Board of Trustees. A discussion regarding the basis for the Board of Trustees
approval of the investment subadvisory agreement will appear in the Funds annual report to
shareholders for the period ending March 31, 2008. Information about the Subadviser is
discussed below.
[LOGO] StableRiver Capital Management LLC (StableRiver)
www.stableriver.com
StableRiver, 50 Hurt Plaza, Suite 1400, Atlanta, GA 30303, serves as the Subadviser to the
Institutional Cash Management Money Market Fund, the Institutional Municipal Cash Reserve Fund, the
Institutional U.S. Government Securities Money Market Fund and the Institutional U.S. Treasury
Securities Fund. StableRiver was founded in 2007 and is a wholly-owned subsidiary of RidgeWorth.
As of June 30, 2008, StableRiver had approximately $[ ] in assets under management.
StableRiver focuses on delivering high-quality fixed income strategies to institutional investors.
As the name suggests, StableRiver has a firmly established, steadfast investment process that
follows a predictable course of action even in unpredictable market cycles. The firms
multi-faceted strategy employs top-down management with bottom-up security selection incorporating
comprehensive risk management and compliance systems. StableRivers process has led to consistent,
competitive investment performance for its clients.
27
PURCHASING AND SELLING FUND SHARES
This section tells you how to purchase and sell (sometimes called redeem) Institutional Shares of
the Funds.
HOW TO PURCHASE FUND SHARES
The Funds offer Institutional Shares exclusively to financial institutions and intermediaries for
their own accounts or for the accounts of customers for which they act as fiduciary agent,
investment adviser, or custodian and which consist of:
- assets of a bona fide trust, or
- assets of a business entity possessing a tax identification number.
Shares are sold without a sales charge, although institutions may charge their customers for
services provided in connection with the purchase of shares. Institutional shares will be held of
record by (in the name of) your institution. Depending upon the terms of your account, however, you
may have, or be given, the right to vote your Institutional Shares.
WHEN CAN YOU PURCHASE SHARES?
The Funds are open for business on days when the New York Stock Exchange (the NYSE) is open for
regular trading and the Federal Reserve Bank of New York (the Fed) is open for settlement (a
Business Day). The RidgeWorth Funds reserves the right to open one or more Funds on days that the
principal bond markets (as recommended by the Bond Market Association) are open and the Fed is open
for settlement even if the NYSE is closed.
The Institutional Municipal Cash Reserve Money Market Fund calculates its net asset value per share
(NAV) once each Business Day at the close of regular trading on the NYSE (normally 4:00 p.m.
Eastern Time). The Institutional Cash Management Money Market Fund, Institutional U.S. Government
Securities Money Market Fund and Institutional U.S. Treasury Securities Money Market Fund each
calculates its NAV at 5:00 p.m. Eastern Time.
For you to be eligible to receive dividends declared on the day you submit your purchase order, a
Fund or its authorized agent must receive your purchase order in proper form before the time shown
in the table below and must receive federal funds (readily available funds) before 6:00
p.m. Eastern Time. Otherwise, your purchase order will be effective the following Business Day, as
long as the Fund receives federal funds before calculating its NAV the following day.
|
|
|
FUND |
|
TIME (EASTERN TIME) |
Institutional Municipal Cash |
|
|
Reserve Money Market Fund |
|
10:30 a.m. |
28
|
|
|
FUND |
|
TIME (EASTERN TIME) |
Institutional U.S. |
|
|
Government Securities Money Market
Fund |
|
[3]:00 p.m. |
Institutional U.S. Treasury |
|
|
Securities Money Market Fund |
|
[3]:00 p.m. |
Institutional Cash |
|
|
Management Money Market Fund |
|
5:00 p.m |
The time at which transactions and shares are priced and the time until which orders are accepted
may be changed if the NYSE closes early or if the principal bond markets close early on days when
the NYSE is closed.
The Funds will not accept orders that request a particular day or price for the transaction or any
other special conditions.
YOU MAY HAVE TO TRANSMIT YOUR PURCHASE AND SALE ORDERS TO YOUR INSTITUTION OR INTERMEDIARY AT AN
EARLIER TIME FOR YOUR TRANSACTION TO BECOME EFFECTIVE THAT DAY. THIS ALLOWS YOUR INSTITUTION OR
INTERMEDIARY TIME TO PROCESS YOUR ORDER AND TRANSMIT IT TO THE TRANSFER AGENT IN TIME TO MEET THE
ABOVE STATED FUND CUT-OFF TIMES. FOR MORE INFORMATION ABOUT HOW TO PURCHASE OR SELL FUND SHARES,
INCLUDING SPECIFIC ORDER ENTRY CUT-OFF TIMES,
PURCHASING AND SELLING FUND SHARES
PLEASE CONTACT YOUR INSTITUTION OR INTERMEDIARY DIRECTLY.
A Fund may reject any purchase order.
HOW THE FUNDS CALCULATE NAV
NAV is calculated by adding the total value of a Funds investments and other assets, subtracting
its liabilities and then dividing that figure by the number of outstanding shares of the Fund.
In calculating NAV, each Fund generally values its investment portfolio using the amortized cost
valuation method, which is described in detail in the Statement of Additional Information. If the
Subadviser determines in good faith that this method is unreliable during certain market conditions
or for other reasons, a Fund may value its portfolio at market price or at fair value as
determined in good faith using methods approved by the Board of Trustees. Each Fund expects its NAV
to remain constant at $1.00 per share, although the Fund cannot guarantee this.
MINIMUM PURCHASES
29
To purchase Institutional Shares for the first time, you must invest at least $5,000,000 for the
Institutional Municipal Cash Reserve Money Market Fund and $10,000,000 for the other Funds.
Institutions that have multiple qualifying accounts (e.g., a pension plan and a foundation) may
aggregate those accounts to meet minimum purchase requirements. A Fund may accept investments of
smaller amounts for other categories of investors at its discretion.
IN-KIND PURCHASES
Payment for shares of a Fund may, in the discretion of the Subadviser, be made in the form of
securities that are permissible investments for such Fund. In connection with an in-kind securities
payment, a Fund will require, among other things, that the securities (a) meet the investment
objectives and policies of the Fund; (b) are acquired for investment and not for resale; (c) are
liquid securities that are not restricted as to transfer either by law or liquidity of markets; (d)
have a value that is readily ascertainable (e.g., by a listing on a nationally recognized
securities exchange); and (e) are valued on the day of purchase in accordance with the pricing
methods used by the Fund. For further information about this form of payment, please call
1-888-784-3869.
CUSTOMER IDENTIFICATION
FOREIGN INVESTORS
The Funds do not generally accept investments in Institutional Shares by non-U.S. citizens or
entities.
CUSTOMER IDENTIFICATION AND VERIFICATION
To help the government fight the funding of terrorism and money laundering activities, federal law
requires all financial institutions to obtain, verify, and record information that identifies each
person who opens an account.
When you open an account, you will be asked to provide your name, residential street address, date
of birth, Social Security number or tax identification number. You may also be asked for other
information that will allow the Funds to identify you. Entities are also required to provide
additional documentation. This information will be verified to ensure the identity of all persons
opening a mutual fund account.
In certain instances, the Funds are required to collect documents to fulfill their legal
obligation. Documents provided in connection with your application will be used solely to establish
and verify a customers identity.
The Funds are required by law to reject your new account application if the required identifying
information is not provided. Attempts to collect the missing information required on the
application will be performed by either contacting you or, if applicable, your broker. If this
30
information is unable to be obtained within a timeframe established in the sole discretion of the
Funds your application will be rejected.
Upon receipt of your application in proper form (or upon receipt of all identifying information
required on the application), your investment will be accepted and your order will be processed at
the NAV next-determined.
However, the Funds reserve the right to close your account at the then-current days price if the
Funds are unable to verify your identity. Attempts to verify your identity will be performed within
a timeframe established in the sole discretion of the Funds. If the Funds are unable to verify your
identity, the Funds reserve the right to liquidate your account at the then-current days price and
remit proceeds to you via check. The Funds reserve the further right to hold your proceeds until
your original check clears the bank. In such an instance, you may be subject to a gain or loss on
Fund shares and will be subject to corresponding tax implications.
ANTI-MONEY LAUNDERING PROGRAM
Customer identification and verification is part of the Funds overall obligation to deter money
laundering under federal law. The Funds have adopted an anti-money laundering compliance program
designed to prevent the Funds from being used for money laundering or the financing of terrorist
activities. In this regard, the Funds reserve the right to (i) refuse, cancel or rescind any
purchase or exchange order, (ii) freeze any account and/or suspend account services, or (iii)
involuntarily redeem your account in cases of threatening conduct or suspected fraudulent or
illegal activity. These actions will be taken when, in the sole discretion of Fund management, they
are deemed to be in the best interest of the Funds or in cases when the Funds are requested or
compelled to do so by governmental or law enforcement authority.
HOW TO SELL YOUR FUND SHARES
You may sell your shares on any Business Day by contacting the Funds. If you are a customer of a
financial institution or intermediary, you must contact that institution or intermediary directly
for information about how to sell your shares including any specific cut-off times required.
Holders of Institutional Shares may sell shares by following the procedures established when they
opened their account or accounts with the Funds or with their financial institution or
intermediary. The sale price of each share will be the NAV next determined after the Funds receive
your request in proper form.
Redemption orders must be received by the Funds on a Business Day before 10:30
a.m., Eastern Time for the Institutional Municipal Cash Reserve Money Market Fund, before 3:00
p.m., Eastern Time for the Institutional U.S. Government Securities Money Market Fund and the
Institutional U.S. Treasury Securities Money Market Fund and before 5:00 p.m. Eastern Time for the
Institutional Cash Management Money Market Fund. Orders received after these times will be executed
the following Business Day.
31
A MEDALLION SIGNATURE GUARANTEE by a bank or other financial institution (a notarized signature is
not sufficient) is required to redeem shares:
- made payable to someone other than the registered shareholder;
- sent to an address or bank account other than the address or bank account of record; or
- sent to an address or bank account of record that has been changed within the last 15 calendar
days.
Other documentation may be required depending on the registration of the account.
MEDALLION SIGNATURE GUARANTEE: A Medallion Signature Guarantee verifies the authenticity of your
signature and helps ensure that changes to your account are in fact authorized by you. A Medallion
Signature Guarantee may be obtained from a domestic bank or trust company, broker, dealer, clearing
agency, savings association or other financial institution participating in a Medallion Program
recognized by the Securities Trading Association. Signature guarantees from financial institutions
that do not reflect one of the following are not part of the program and will not be accepted. The
acceptable Medallion programs are Securities Transfer Agents Medallion Program, (STAMP), Stock
Exchange Medallion Program, (SEMP), or the New York Stock Exchange, Inc. Medallion Program, (NYSE
MSP). Contact your local financial adviser or institution for further assistance.
RECEIVING YOUR MONEY
Normally, the Funds will send your sale proceeds within five Business Days after a Fund receives
your request, but a Fund may take up to seven days to pay the sale proceeds if making immediate
payment would adversely affect the Fund (for example, to allow the Fund to raise capital in the
case of a large redemption).
REDEMPTIONS IN KIND
The Funds generally pay redemption proceeds in cash. However, under unusual conditions that make
the payment of cash unwise (and for the protection of the Funds remaining shareholders), a Fund
might pay all or part of your redemption proceeds in liquid securities with a market value equal
to the redemption price (redemption in kind). It is highly unlikely that your shares would ever be
redeemed in kind, but if they were you would probably have to pay transaction costs to sell the
securities distributed to you, as well as taxes on any capital gains from the sale as with any
redemption.
SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
A Fund may suspend your right to sell your shares if the NYSE restricts trading, the SEC declares
an emergency or for other reasons approved by the SEC. More information about this is in the
Statement of Additional Information.
32
TELEPHONE TRANSACTIONS
Purchasing and selling Fund shares over the telephone is extremely convenient, but not without
risk. Although the Funds have certain safeguards and procedures to confirm the identity of callers
and the authenticity of instructions, the Funds are not responsible for any losses or costs
incurred by following telephone instructions the Funds reasonably believe to be genuine. If you or
your financial institution or intermediary transact with the Funds over the telephone, you will
generally bear the risk of any loss. The Funds reserve the right to modify, suspend or terminate
telephone transaction privileges at any time.
To redeem shares by telephone:
- redemption checks must be made payable to the registered shareholder; and
- redemption checks must be mailed to an address or wired to a bank account of record that has been
associated with the shareholder account for at least 15 calendar days.
MARKET TIMING POLICIES AND PROCEDURES
The Funds are money market funds and seek to provide a high degree of liquidity, current income and
a stable net asset value of $1.00 per share. The Funds are designed to serve as short-term cash
equivalent investments for shareholders and, therefore, expect shareholders to engage in frequent
purchases and redemptions. Because of the inherently liquid nature of the Funds investments, and
money market instruments in general, and the Funds intended purpose to serve as short-term
investment vehicles for shareholders, the Adviser has informed the Board of Trustees that it
believes that it would not be in shareholders best interests to place any limitations on the
frequency of shareholder purchases and redemptions into and out of the Funds. As a result, the
Board has not adopted a Fund policy or procedures with respect to frequent purchases and
redemptions.
DISTRIBUTION OF FUND SHARES
From its own assets, the Adviser, the Subadviser or their affiliates may make payments
based on gross sales and current assets to selected brokerage firms or institutions. The
amount of these payments may be substantial. The minimum aggregate sales required for
eligibility for such payments, and the factors in selecting the brokerage firms and
institutions to which they will be made, are determined from time to time by the Adviser or
Subadviser. Furthermore, in addition to the fees that may be paid by the Fund, the Adviser,
the Subadviser or their affiliates may pay fees from their own capital resources
to brokers, banks, financial advisers, retirement plan service providers and other
financial intermediaries, including affiliates, for providing distribution-related or
shareholder services.
The Adviser, the Subadviser or their affiliates may pay fees from their own capital
resources to financial intermediaries to compensate them for marketing expenses they incur
or to pay for the opportunity to have them distribute the Funds. The amount of these
payments is determined by the Adviser or the Subadviser and may differ among financial
intermediaries. Such payments may provide incentives for financial
33
intermediaries to make
shares of the Funds available to their customers, and may allow the Funds greater access
to such financial intermediaries and their customers than would be the case if no payments
were made. You may wish to consider whether such arrangements exist when evaluating any
recommendation to purchase shares of the Funds.
Please refer to the Statement of Additional Information for more information regarding
these arrangements.
DIVIDENDS AND DISTRIBUTIONS
Each Fund declares dividends daily and pays these dividends monthly. Each Fund makes distributions
of its net realized capital gains, if any, at least annually. If you own Fund shares on a Funds
record date, you will be entitled to receive the distribution.
You will receive dividends and distributions in the form of additional Fund shares unless you elect
to receive payment in cash. To elect cash payment, you must notify the Fund in writing prior to the
date of the distribution. Your election will be effective for dividends and distributions paid
after the Funds receive your written notice. To cancel your election, simply send the Funds written
notice.
TAXES
PLEASE CONSULT YOUR TAX ADVISOR REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL, STATE AND LOCAL
INCOME TAXES. Below the Funds have summarized some important tax issues that affect the Funds and
their shareholders. This summary is based on current tax laws, which may change.
Each Fund will distribute substantially all of its net investment income and its net realized
capital gains, if any, at least annually. The dividends and distributions you receive may be
subject to federal, state and local taxation, depending upon your tax situation. Distributions you
receive from a Fund may be taxable whether or not you reinvest them. Income distributions are
generally taxable at ordinary income tax rates and will not qualify for the reduced tax rates
applicable to qualified dividend income. EACH SALE OR EXCHANGE OF FUND SHARES MAY BE A TAXABLE
EVENT. FOR TAX PURPOSES, AN EXCHANGE OF YOUR FUND SHARES FOR SHARES OF ANOTHER RIDGEWORTH FUND IS
TREATED THE SAME AS A SALE. A transfer from one share class to another share class in the same
RidgeWorth Fund should not be a taxable event.
Shareholders of the Funds, however, should be aware that because the Funds each expect to maintain
a stable $1.00 net asset value per share, they should not expect to realize any gain or loss on the
sale or exchange of Fund shares.
The Institutional Municipal Cash Reserve Money Market Fund intends to distribute federally
tax-exempt income. This Fund may invest a portion of its assets in securities that generate taxable
income for federal or state income taxes. Income exempt from federal tax may be subject
34
to state
and local taxes. Any capital gains distributed by this Fund may be taxable. This Fund expects to
pay exempt interest dividends that are generally excludable from an investors gross income for
regular federal income tax purposes. However, the receipt of exempt-interest dividends may cause
recipients of Social Security or Railroad Retirement benefits to be taxed on a portion of such
benefits. In addition, the receipt of exempt-interest dividends may result in liability for federal
alternative minimum tax and for state (including state alternative minimum tax) and local taxes,
both for individual and corporate shareholders. Corporate shareholders will be required to take the
interest on municipal securities into account in determining their alternative minimum taxable
income.
If you have a tax-advantaged or other retirement account you will generally not be subject to
federal taxation on income and capital gain distributions until you begin receiving your
distributions from your retirement account. You should consult your tax advisor regarding the rules
governing your own retirement plan.
Except for the Institutional Municipal Cash Reserve Money Market Fund, the Funds expect to
distribute primarily ordinary income dividends taxable at the maximum rate of 35%.
Many states grant tax-free status to dividends paid from interest earned on direct obligations of
the U.S. Government, subject to certain limitations.
MORE INFORMATION ABOUT TAXES IS IN THE STATEMENT OF ADDITIONAL INFORMATION.
35
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand a Funds financial performance
for the past 5 years or, if shorter, the period of the Funds operations. Certain information
reflects financial results for a single Fund share. The total returns in the table represent the
rate that an investor would have earned (or lost) on an investment in the Fund (assuming
reinvestment of all dividends and distributions). This financial information has been audited by [
]. The Report of Independent Registered Public Accounting Firm for each period shown, along with
the Funds financial statements and related notes, are included in the Annual Reports to
Shareholders for such periods. The 2008 Annual Report is available upon request and without charge
by calling 1-888-784-9269 or on the Funds website at www.ridgeworthfunds.com.
[Insert Financial Highlights here]
[THIS PAGE INTENTIONALLY LEFT BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
36
INVESTMENT ADVISER:
RidgeWorth Capital Management, Inc.
50 Hurt Plaza, Suite 1400
Atlanta, Georgia 30303
INVESTMENT SUBADVISER:
StableRiver Capital Management LLC
50 Hurt Plaza, Suite 1400
Atlanta, Georgia 30303
More information about the RidgeWorth Funds is available without charge through the following:
STATEMENT OF ADDITIONAL INFORMATION (SAI):
The SAI includes detailed information about the RidgeWorth Funds. The SAI is on file with the SEC
and is incorporated by reference into this prospectus. This means that the SAI, for legal purposes,
is a part of this prospectus.
ANNUAL AND SEMI-ANNUAL REPORTS:
These reports list each Funds holdings and contain information from the Funds managers about
strategies and recent market conditions and trends and their impact on Fund performance. The
reports also contain detailed financial information about the Funds.
TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT,
OR MORE INFORMATION:
TELEPHONE: 1-888-STI-FUND
MAIL:
RidgeWorth Funds
3435 Stelzer Road
Columbus, Ohio 43219
WEBSITE: www.ridgeworthfunds.com
SEC:
You can also obtain the SAI or the Annual and Semi-Annual reports, as well as other information
about the RidgeWorth Funds, from the EDGAR Database on the SECs website at http://www.sec.gov. You
may review and copy documents at the SEC Public Reference Room in Washington, DC (for information
on the operation of the Public Reference Room, call 202-942-8090). You may request documents by
mail from the SEC, upon payment of a duplicating fee, by writing to: Securities and Exchange
Commission, Public Reference Section, Washington, DC 20549-0102. You may also obtain this
information, upon payment of a duplicating fee, by e-mailing the SEC at publicinfo@sec.gov.
The RidgeWorth Funds Investment Company Act registration number is 811-06557.
RIDGEWORTH FUNDS
37
Corporate Trust Shares
PROSPECTUS
RIDGEWORTH MONEY MARKET FUNDS (formerly STI Classic Funds)
Institutional U.S. Treasury Securities Money Market Fund (formerly, Classic Institutional U.S.
Treasury Securities Money Market Fund)
Investment Adviser: RidgeWorth Capital Management, Inc. (formerly Trusco Capital Management, Inc.)
(the Adviser)
Investment Subadviser: StableRiver Capital Management, Inc. (the Subadviser)
August 1, 2008
The Securities and Exchange Commission has not approved or disapproved these securities or passed
upon the adequacy of this prospectus.
Any representation
to the contrary is a criminal offense.
ABOUT THIS PROSPECTUS
The RidgeWorth Funds is a mutual fund family that offers shares in separate investment portfolios
that have individual investment goals and strategies. This prospectus gives you important
information about the Corporate Trust Shares of the Institutional U.S. Treasury Securities Money
Market Fund (Fund) that you should know before investing. Please read this prospectus and keep it
for future reference.
This prospectus has been arranged into different sections so that you can easily review this
important information. On the next page, there is some general information you should know about
risk and return. For more detailed information about the Fund, please see:
2
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10 |
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10 |
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12 |
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INSIDE PRIVACY POLICY |
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BACK COVER |
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HOW TO OBTAIN MORE INFORMATION ABOUT BACK COVER |
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THE RIDGEWORTH FUNDS |
AUGUST 1, 2008
3
CUSIP/TICKER SYMBOL
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FUND NAME |
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CLASS |
|
INCEPTION |
|
TICKER |
|
CUSIP |
Institutional U.S.
Treasury
Securities Money
Market Fund
|
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Corporate Trust
Shares
|
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6/2/99
|
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76628T223 |
RISK/RETURN INFORMATION COMMON TO THE RIDGEWORTH FUNDS (formerly STI Classic Funds)
The Fund is a mutual fund. A mutual fund pools shareholders money and, using professional
investment managers, invests it in securities.
The Fund has an investment goal and strategies for reaching that goal. The Subadviser (under the
supervision of the Adviser) invests Fund assets in a way that it believes will help the Fund
achieve its goal. Still, investing in the Fund involves risk and there is no guarantee that the
Fund will achieve its goal. The Subadvisers judgments about the markets, the economy or companies
may not anticipate actual market movements, economic conditions or company performance, and these
judgments may affect the return on your investment. In fact, no matter how good a job the
Subadviser does, you could lose money on your investment in the Fund, just as you could with other
investments. A FUND SHARE IS NOT A BANK DEPOSIT AND IT IS NOT INSURED OR GUARANTEED BY THE FDIC OR
ANY GOVERNMENT AGENCY.
The Funds investment goal may be changed without shareholder approval. Before investing, make sure
that the Funds goal matches your own.
4
INSTITUTIONAL U.S. TREASURY SECURITIES MONEY MARKET FUND
(SUITCASE ICON)
FUND SUMMARY
|
|
|
INVESTMENT GOAL
|
|
As high a level of current income as is
consistent with
preservation of capital and liquidity |
|
|
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INVESTMENT FOCUS
|
|
Money market instruments issued and
guaranteed by the U.S. Treasury |
|
|
|
PRINCIPAL INVESTMENT STRATEGY
|
|
Attempts to increase income without adding
undue risk by
analyzing yields |
|
|
|
INVESTOR PROFILE
|
|
Conservative investors seeking current
income through a
liquid investment |
|
|
|
SUBADVISER
|
|
StableRiver Capital Management, Inc. |
INVESTMENT STRATEGY
The Institutional U.S. Treasury Securities Money Market Fund invests exclusively in U.S. Treasury
bills, notes, bonds and components of these securities, repurchase agreements collateralized by
these securities, and shares of registered money market funds that invest in the foregoing. The
Fund limits its investments so as to obtain the highest investment quality rating by a nationally
recognized statistical rating organization (AAAm by Standard & Poors).
In selecting investments for the Fund, the Subadviser tries to increase income without adding undue
risk by analyzing yields for various maturities. The Subadviser actively manages the maturity of
the Fund and its portfolio to maximize the Funds yield based on current market interest rates and
the Subadvisers outlook on the market. As a money market fund, the Fund follows strict rules about
credit risk, maturity and diversification of its investments.
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THIS FUND?
An investment in the Fund is subject to income risk, which is the possibility that the Funds yield
will decline due to falling interest rates. A Fund share is not a bank deposit and is not insured
or guaranteed by the FDIC or any government agency. In addition, although a money market fund seeks
to keep a constant price per share of $1.00, you may lose money by investing in the Fund.
Although the Funds U.S. Treasury securities are considered to be among the safest investments,
they are not guaranteed against price movements due to changing interest rates.
For further information about these and other risks, see More Information About Risk.
5
PERFORMANCE INFORMATION
The bar chart and the performance table that follow illustrate the risks and volatility of an
investment in the Fund. The Funds past performance does not indicate how the Fund will perform in
the future.
This bar chart shows changes in the performance of the Funds Corporate Trust Shares from year to
year.*
(BAR CHART)
|
|
|
|
|
2000 |
|
|
5.85 |
% |
2001 |
|
|
3.45 |
% |
2002 |
|
|
1.35 |
% |
2003 |
|
|
0.70 |
% |
2004 |
|
|
0.88 |
% |
2005 |
|
|
2.66 |
% |
2006 |
|
|
4.54 |
% |
2007 |
|
|
[ ] |
% |
|
BEST QUARTER |
|
WORST QUARTER |
[ ]% |
|
|
[ ] |
% |
([ ]/[ ]/[ ]) |
|
|
([ ]/[ ]/[ ]) |
% |
|
|
The performance information shown above is based on a calendar year. The Funds total return
from 1/1/08 to 6/30/08 was [ ]%. |
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Funds average annual total returns for the periods ended December 31, 2006
to those of the iMoneyNet, Inc. Treasury & Repo Retail Average. These returns assume shareholders
redeem all of their shares at the end of the period indicated.
|
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|
SINCE |
CORPORATE TRUST SHARES |
|
1 YEAR |
|
5 YEARS |
|
INCEPTION* |
Institutional U.S.
Treasury Securities Money
Market Fund
|
|
[ ]%
|
|
[ ]%
|
|
[ ]% |
iMoneyNet, Inc. Treasury & Repo Institutional Average**
|
|
[ ]%
|
|
[ ]%
|
|
[ ]% |
iMoneyNet, Inc. Treasury &
Repo Retail Average Index
|
|
[ ]%
|
|
[ ]%
|
|
[ ]% |
Since inception of the Corporate Trust Shares on June 2, 1999. Benchmark returns since May 31,
1999 (benchmark returns available only on a month end basis).
6
|
|
|
** |
|
Effective [ ], 2008 the Fund transitioned its benchmark from iMoneyNet, Inc. Treasury &
Repo Retail Average to iMoneyNet, Inc. Treasury & Repo Institutional Average to better reflect
the Funds investment strategy. |
To obtain information about the Funds current yield, call 1-888-784-3863.
WHAT IS AN AVERAGE?
An average is a composite of mutual funds with similar investment goals. The iMoneyNet, Inc.
Treasury & Repo Retail Average is a widely- recognized composite of money market funds that invest
in U.S. Treasury bills and repurchase agreements backed by these securities. The number of funds in
the Average varies. The iMoneyNet, Inc. Treasury & Repo Institutional Average [ ].
FUND FEES AND EXPENSES
This table describes the Funds fees and expenses that you may pay if you buy and hold Fund shares.
The annual fund operating expenses shown in the table below are based on amounts incurred during
the Funds most recent fiscal year, unless otherwise indicated.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
|
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CORPORATE TRUST SHARES |
Investment Advisory Fees |
|
|
0.14 |
% |
Other Expenses(1)(2) |
|
|
0.[ ] |
% |
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|
|
Total Annual Operating Expenses(3) |
|
|
0.[ ] |
% |
|
|
|
(1) |
|
Adjusted to reflect expected changes in Other Expenses for the current fiscal year. |
|
(2) |
|
Other Expenses includes a 0.25% Shareholder Servicing Fee. |
(2) The Adviser and Subadviser have contractually agreed to agree to waive their fees and the
Adviser and Subadviser agree to reimburse expenses to the extent necessary to limit total operating
expenses (excluding taxes, brokerage commissions, extraordinary expenses and estimated indirect
expenses attributable to investments in other funds, such as ETFs) until at least August 1, 2009 in
order to keep Total Annual Operating Expenses from exceeding 0.[45]%. If at any point before August
1, 2011, Total Annual Operating Expenses are less than the applicable expense cap, the Adviser and
Subadviser may retain the difference to recapture any of the prior waivers or reimbursements. In
addition, the Adviser and Subadviser and/or other service providers may voluntarily waive a portion
of their fees in order to limit Total Annual Operating Expenses. These voluntary waivers may be
discontinued at any time.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and that you sell your shares at the end of the period.
7
The Example also assumes that each year your investment has a 5% return, Fund operating expenses
remain the same and you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the Fund would be:
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1 YEAR |
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3 YEARS |
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5 YEARS |
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10 YEARS |
$[ ]
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$[ ]
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$[ ]
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$[ ] |
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory, shareholder,
distribution, administration and custody services. The Funds expenses in the table above are shown
as a percentage of the Funds net assets. These expenses are deducted from Fund assets. For more
information about these fees, see Investment Adviser.
8
MORE INFORMATION ABOUT RISK
FIXED INCOME RISK
The prices of the Funds fixed income securities respond to economic developments, particularly
interest rate changes, as well as to perceptions about the creditworthiness of individual issuers,
including governments. Generally, the Funds fixed income securities will decrease in value if
interest rates rise and vice versa.
Long-term debt securities generally are more sensitive to changes in interest rates, usually making
them more volatile than short-term debt securities and thereby increasing risk.
Debt securities are also subject to income risk, which is the possibility that falling interest
rates will cause the Funds income to decline. Income risk is generally higher for short-term
bonds.
An additional risk of debt securities is reinvestment risk, which is the possibility that the Fund
may not be able to reinvest interest or dividends earned from an investment in such a way that they
earn the same rate of return as the invested funds that generated them. For example, falling
interest rates may prevent bond coupon payments from earning the same rate of return as the
original bond. Furthermore, pre-funded loans and issues may cause the Fund to reinvest those assets
at a rate lower than originally anticipated.
SECURITIES LENDING RISK
The Fund may lend securities to broker-dealers to earn additional income. Risks include the
potential insolvency of the borrower that could result in delays in recovering securities and
capital losses. Additionally, losses could result from the reinvestment of collateral received on
loaned securities in investments that default or do not perform well. It is also possible that if a
security on loan is sold and the Fund is unable to timely recall the security, the Fund may be
required to repurchase the security in the market place, which may result in a potential loss to
shareholders. As securities on loan may not be voted by the Fund, there is a risk that the Fund may
not be able to recall the securities in sufficient time to vote on material proxy matters.
MORE INFORMATION ABOUT FUND INVESTMENTS
This prospectus describes the Funds primary strategies, and the Fund will normally invest in the
types of securities described in this prospectus. However, in addition to the investments and
strategies described in this prospectus, the Fund also may invest in other securities, use other
strategies and engage in other investment practices. These investments and strategies, as well as
those described in this prospectus, are described in detail in the Statement of Additional
Information. Of course, the Fund cannot guarantee that it will achieve its investment goal.
The Fund may invest in other mutual funds for cash management purposes. When the Fund invests in
another mutual fund, in addition to directly bearing expenses associated with its own operations,
it will bear a pro rata portion of the other mutual funds expenses.
9
THIRD-PARTY RATINGS
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Fund Name |
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Moodys Rating1 |
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S&P Rating2 |
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NAIC List3 |
Institutional U.S.
Treasury Securities
Money Market Fund
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Aaa
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AAAm
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Approved; Exempt(4) |
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(1) |
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Moodys Investor Services, Inc. |
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(2) |
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Standard & Poors Rating Services |
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(3) |
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National Association of Insurance Commissioners |
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(4) |
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U.S. Direct Obligations/Full Faith and Credit Exempt |
INFORMATION ABOUT PORTFOLIO HOLDINGS
A description of the Funds policies and procedures with respect to the circumstances under which
the Fund discloses its portfolio securities is available in the Statement of Additional
Information.
MANAGEMENT
The Board of Trustees is responsible for the overall supervision and management of the business and
affairs of RidgeWorth Funds. The Board of Trustees establishes policies that the Adviser and
Subadviser must follow in their of all fund related management activities. The day-to-day
operations of RidgeWorth Funds are the responsibilities of the officers and various service
organizations retained by RidgeWorth Funds.
INVESTMENT ADVISER
[LOGO] RidgeWorth Capital Management, Inc. (formerly, Trusco Capital Management, Inc.), 50 Hurt
Plaza, Suite 1400, Atlanta, Georgia 30303 (RidgeWorth or the Adviser), serves as the investment
adviser to the Funds. As of June 30, 2008, the Adviser had approximately $[73.3] billion in assets
under management. The Adviser is responsible for overseeing the Subadviser to ensure compliance
with the Funds investment policies and guidelines and monitors the Subadvisers adherence to its
investment style. The Adviser also executes transactions with respect to specific securities
selected by the Subadviser for purchase and sale by the Fund. The Adviser pays the Subadviser out
of the fees it receives from the Fund.
The Adviser may use its affiliates as brokers for Fund transactions.
An investment adviser has a fiduciary obligation to its clients when the adviser has authority to
vote their proxies. Under the current contractual agreement, the Adviser is authorized to vote
proxies on behalf of each Fund. Information regarding the Advisers, and thus each Funds, Proxy
Voting Policies and Procedures is provided in the Statement of Additional Information. A copy of
the Advisers Proxy Voting Policies and Procedures may be obtained by contacting the RidgeWorth
Funds at 1-888-784-3863, or by visiting www.ridgeworthfunds.com.
For the fiscal year ended March 31, 2008, the Fund paid the Adviser advisory fees (after waivers)
of [0.___%] of the Funds average daily net assets.
10
The following breakpoints are used in computing the advisory fee:
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AVERAGE DAILY NET ASSETS |
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DISCOUNT FROM FULL FEE |
First $1 billion |
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None Full Fee |
Next $1.5 billion |
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5 |
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Next $2.5 billion |
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% |
Over $5 billion |
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20 |
% |
Based on net assets as of March 31, 2008, the Funds asset level had reached a breakpoint in the
advisory fee. Fund expenses in the Annual Fund Operating Expenses table shown earlier in this
Prospectus reflect the advisory breakpoints. Had the Funds asset levels been lower, the Adviser
may have been entitled to receive maximum advisory fees of 0.15%.
A discussion regarding the basis for the Board of Trustees approval of the investment advisory
contract with the Adviser appears in the Funds annual report to shareholders for the period ended
March 31, 2008.
INVESTMENT SUBADVISER
The Subadviser is responsible for managing the portfolios of the Fund on a day-to-day basis and
selecting the specific securities to buy, sell and hold for the Fund under the supervision of the
Adviser and the Board of Trustees. A discussion regarding the basis for the Board of Trustees
approval of the investment subadvisory agreement will appear in the Funds annual report to
shareholders for the period ending March 31, 2008. Information about the Subadviser is
discussed below.
[LOGO] StableRiver Capital Management LLC (StableRiver)
www.stableriver.com
StableRiver, 50 Hurt Plaza, Suite 1400, Atlanta, GA 30303, serves as the Subadviser to the Fund.
StableRiver was founded in 2007 and is a wholly-owned subsidiary of RidgeWorth. As of June 30,
2008, StableRiver had approximately $[ ] in assets under management.
StableRiver focuses on delivering high-quality fixed income strategies to institutional investors.
As the name suggests, StableRiver has a firmly established, steadfast investment process that
follows a predictable course of action even in unpredictable market cycles. The firms
multi-faceted strategy employs top-down management with bottom-up security selection incorporating
comprehensive risk management and compliance systems. StableRivers process has led to consistent,
competitive investment performance for its clients.
PURCHASING AND SELLING FUND SHARES
This section tells you how to purchase and sell (sometimes called redeem) Corporate Trust Shares
of the Fund.
11
HOW TO PURCHASE FUND SHARES
The Fund offers Corporate Trust Shares only to accounts of various financial intermediaries with
whom the Fund has certain agreements (Intermediaries). Shares are sold without a sales charge.
Corporate
Trust Shares will be held of record by (in the name of) the Intermediary. Depending upon the terms
of your account, however, you may have, or be given, the right to vote your Corporate Trust Shares.
WHEN CAN YOU PURCHASE SHARES?
The Fund is open for business on days when the New York Stock Exchange (the NYSE) is open for
regular trading and the Federal Reserve Bank of New York (the Fed) is open for settlement (a
Business Day). RidgeWorth Funds reserves the right to open the Fund on days that the principal
bond markets (as recommended by the Bond Market Association) are open and the Fed is open for
settlement even if the NYSE is closed.
The Fund calculates its NAV at [5:00] p.m. Eastern Time.
For you to be eligible to receive dividends declared on the day you submit your purchase order, the
Fund or its authorized agent must receive your purchase order in proper form before [3]:00 p.m.
Eastern Time and must receive federal funds (readily available funds) before 6:00 p.m. Eastern
Time. Otherwise, your purchase order will be effective the following Business Day, as long as the
Fund receives federal funds before calculating its NAV the following day.
The time at which transactions and shares are priced and the time until which orders are accepted
may be changed if the NYSE closes early or if the principal bond markets close early on days when
the NYSE is closed.
The Fund will not accept orders that request a particular day or price for the transaction or any
other special conditions.
YOU MAY HAVE TO TRANSMIT YOUR PURCHASE AND SALE ORDERS TO SUNTRUST AT AN EARLIER TIME THAN THOSE
LISTED ABOVE FOR YOUR TRANSACTION TO BECOME EFFECTIVE THAT DAY. THIS ALLOWS SUNTRUST TIME TO
PROCESS YOUR ORDER AND TRANSMIT IT TO THE ADMINISTRATOR OR THE TRANSFER AGENT IN TIME TO MEET THE
ABOVE STATED FUND CUT-OFF TIMES. FOR MORE INFORMATION ABOUT HOW TO PURCHASE OR SELL FUND SHARES
THROUGH YOUR ACCOUNT, INCLUDING SPECIFIC INTERNAL ORDER ENTRY CUT-OFF TIMES, PLEASE CONTACT
SUNTRUST DIRECTLY.
The Fund may reject any purchase order.
HOW THE FUND CALCULATES NAV
NAV is calculated by adding the total value of the Funds investments and other assets, subtracting
its liabilities and then dividing that figure by the number of outstanding shares of the Fund.
In calculating NAV, the Fund generally values its investment portfolio using the amortized cost
valuation method, which is described in detail in the Statement of Additional Information. If the
Subadviser determines in good faith that this method is unreliable during certain market conditions
or for other reasons, the Fund may value its portfolio at market price or at fair value as
determined in good faith using methods approved by the Board of Trustees. The Fund expects its NAV
to remain constant at $1.00 per share, although the Fund cannot guarantee this.
IN-KIND PURCHASES
12
Payment for shares of the Fund may, in the discretion of the Subadviser, be made in the form of
securities that are permissible investments for the Fund. In connection with an in-kind securities
payment, the Fund
will require, among other things, that the securities (a) meet the investment objectives and
policies of the Fund; (b) are acquired for investment and not for resale; (c) are liquid securities
that are not restricted as to transfer either by law or liquidity of markets; (d) have a value that
is readily ascertainable (e.g., by a listing on a nationally recognized securities exchange); and
(e) are valued on the day of purchase in accordance with the pricing methods used by the Fund. For
further information about this form of payment, please call 1-888-784-3863.
CUSTOMER IDENTIFICATION
FOREIGN INVESTORS
The Fund does not generally accept investments in Corporate Trust Shares by non-U.S. citizens or
entities.
CUSTOMER IDENTIFICATION AND VERIFICATION
To help the government fight the funding of terrorism and money laundering activities, federal law
requires all financial institutions to obtain, verify, and record information that identifies each
person who opens an account.
When you open an account, you will be asked to provide your name, residential street address, date
of birth, Social Security number or tax identification number. You may also be asked for other
information that will allow us to identify you. Entities are also required to provide additional
documentation. This information will be verified to ensure the identity of all persons opening a
mutual fund account.
In certain instances, the Fund is required to collect documents to fulfill its legal obligation.
Documents provided in connection with your application will be used solely to establish and verify
a customers identity. The Fund is required by law to reject your new account application if the
required identifying information is not provided. Attempts to collect the missing information
required on the application will be performed by either contacting you or, if applicable, your
broker. If this information is unable to be obtained within a timeframe established in the sole
discretion of the Fund, your application will be rejected.
Upon receipt of your application in proper form (or upon receipt of all identifying information
required on the application), your investment will be accepted and your order will be processed at
the NAV next-determined.
However, the Fund reserves the right to close your account at the then-current days price if the
Fund is unable to verify your identity. Attempts to verify your identity will be performed within a
timeframe established in the sole discretion of the Fund. If the Fund is unable to verify your
identity, the Fund reserves the right to liquidate your account at the then-current days price and
remit proceeds to you via check. The Fund reserves the further right to hold your proceeds until
your original check clears the bank. In such an instance, you may be subject to a gain or loss on
Fund shares and will be subject to corresponding tax implications.
ANTI-MONEY LAUNDERING PROGRAM
Customer identification and verification is part of the Funds overall obligation to deter money
laundering under federal law. The Fund has adopted an anti-money laundering compliance program
designed to prevent the Fund from being used for money laundering or the financing of terrorist
activities. In this
13
regard, the Fund reserves the right to (i) refuse, cancel or rescind any
purchase or exchange order, (ii) freeze any account and/or suspend account services, or (iii)
involuntarily redeem your account in cases of
threatening conduct or suspected fraudulent or illegal activity. These actions will be taken when,
in the sole discretion of Fund management, they are deemed to be in the best interest of the Fund
or in cases when the Fund is requested or compelled to do so by governmental or law enforcement
authority
HOW TO SELL YOUR FUND SHARES
You may sell your shares on any Business Day by contacting your Intermediary. Your Intermediary
will provide information about how to sell your shares including any specific cut-off times
required.
Redemption orders must be sent to the Fund by the Intermediary as the record owner of shares and
you may sell shares by following the procedures established when you opened your account or
accounts.
Redemption orders must be received by the Fund on a Business Day before [3]:00 p.m., Eastern Time.
Orders received after [3]:00 p.m., Eastern Time will be executed the following Business Day.
A MEDALLION SIGNATURE GUARANTEE by a bank or other financial institution (a notarized signature is
not sufficient) is required to redeem shares:
- made payable to someone other than the registered shareholder;
- sent to an address or bank account other than the address or bank account of record; or
- sent to an address or bank account of record that has been changed within the last 15 calendar
days.
Other documentation may be required depending on the registration of the account.
MEDALLION SIGNATURE GUARANTEE: A Medallion Signature Guarantee verifies the authenticity of your
signature and helps ensure that changes to your account are in fact authorized by you. A Medallion
Signature Guarantee may be obtained from a domestic bank or trust company, broker, dealer, clearing
agency, savings association or other financial institution participating in a Medallion Program
recognized by the Securities Trading Association. Signature guarantees from financial institutions
that do not reflect one of the following are not part of the program and will not be accepted. The
acceptable Medallion programs are Securities Transfer Agents Medallion Program, (STAMP), Stock
Exchange Medallion Program, (SEMP), or the New York Stock Exchange, Inc. Medallion Program, (NYSE
MSP). Contact your local financial adviser or institution for further assistance.
RECEIVING YOUR MONEY
Normally, the Fund will send your sale proceeds within five Business Days after the Fund receives
your request, but the Fund may take up to seven days to pay the sale proceeds if making immediate
payment would adversely affect the Fund (for example, to allow the Fund to raise capital in the
case of a large redemption).
REDEMPTIONS IN KIND
The Fund generally pays redemption proceeds in cash. However, under unusual conditions that make
the payment of cash unwise (and for the protection of the Funds remaining shareholders), the Fund
might pay all or part of your redemption proceeds in liquid securities with a market value equal to
the redemption price (redemption in kind). It is highly unlikely that your shares would ever be
redeemed in kind, but if
14
they were you would probably have to pay transaction costs to sell the
securities distributed to you, as well as taxes on any capital gains from the sale as with any
redemption.
SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
The Fund may suspend your right to sell your shares if the NYSE restricts trading, the SEC declares
an emergency or for other reasons approved by the SEC. More information about this is in the
Statement of Additional Information.
TELEPHONE TRANSACTIONS
Purchasing and selling Fund shares over the telephone is extremely convenient, but not without
risk. Although the Fund has certain safeguards and procedures to confirm the identity of callers
and the authenticity of instructions, the Fund is not responsible for any losses or costs incurred
by following telephone instructions the Fund reasonably believes to be genuine. If you or your
financial institution or intermediary transact with the Fund over the telephone, you will generally
bear the risk of any loss. The Fund reserves the right to modify, suspend or terminate telephone
transaction privileges at any time.
To redeem shares by telephone:
- redemption checks must be made payable to the registered shareholder; and
- redemption checks must be mailed to an address or wired to a bank account of record that has been
associated with the shareholder account for at least 15 calendar days.
MARKET TIMING POLICIES AND PROCEDURES
The Fund is a money market fund and seeks to provide a high degree of liquidity, current income and
a stable net asset value of $1.00 per share. The Fund is designed to serve as a short-term cash
equivalent investment for shareholders and, therefore, expects shareholders to engage in frequent
purchases and redemptions. Because of the inherently liquid nature of the Funds investments, and
money market instruments in general, and the Funds intended purpose to serve as a short-term
investment vehicle for shareholders, the Adviser has informed the Board of Trustees that it
believes that it would not be in shareholders best interests to place any limitations on the
frequency of shareholder purchases and redemptions into and out of the Fund. As a result, the Board
has not adopted a Fund policy or procedures with respect to frequent purchases and redemptions.
DISTRIBUTION OF FUND SHARES
From its own assets, the Adviser, the Subadviser or their affiliates may make payments
based on gross sales and current assets to selected brokerage firms or institutions. The
amount of these payments may be substantial. The minimum aggregate sales required for
eligibility for such payments, and the factors in selecting the brokerage firms and
institutions to which they will be made, are determined from time to time by the Adviser or
Subadviser. Furthermore, in addition to the fees that may be paid by the Fund, the Adviser,
the Subadviser or their affiliates may pay fees from their own capital resources to
brokers, banks, financial advisers, retirement plan service providers and other financial
intermediaries, including affiliates, for providing distribution-related or shareholder
services.
The Adviser, the Subadviser or their affiliates may pay fees from their own capital
resources to financial intermediaries to compensate them for marketing expenses they incur
or to pay for the
15
opportunity to have them distribute the Funds. The amount of these
payments is determined by the Adviser or the Subadviser and may differ among financial
intermediaries. Such payments may provide incentives for financial intermediaries to make
shares of the Funds available to their
customers, and may allow the Funds greater access to such financial intermediaries and
their customers than would be the case if no payments were made. You may wish to consider
whether such arrangements exist when evaluating any recommendation to purchase shares of
the Funds.
Please refer to the Statement of Additional Information for more information regarding
these arrangements.
SHAREHOLDER SERVICING PLAN
The Funds Shareholder Servicing Plan permits the Corporate Trust Shares to pay banks,
broker-dealers or other financial institutions for shareholder support services they provide, at a
rate of up to 0.25% of the average daily net assets of the Corporate Trust Shares. These services
may include, among other services, providing general shareholder liaison services (including
responding to shareholder inquiries), providing information on shareholder investments, and
establishing and maintaining shareholder accounts and records.
DIVIDENDS AND DISTRIBUTIONS
The Fund declares dividends daily and pays these dividends monthly. The Fund makes distributions of
its net realized capital gains, if any, at least annually. If you own Fund shares on a Funds
record date, you will be entitled to receive the distribution.
You will receive dividends and distributions in the form of additional Fund shares unless you elect
to receive payment in cash. To elect cash payment, you must notify the Fund in writing prior to the
date of the distribution. Your election will be effective for dividends and distributions paid
after the Fund receives your written notice. To cancel your election, simply send the Fund written
notice.
TAXES
PLEASE CONSULT YOUR TAX ADVISOR REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL, STATE AND LOCAL
INCOME TAXES. Below the Fund has summarized some important tax issues that affect the Fund and its
shareholders. This summary is based on current tax laws, which may change.
The Fund will distribute substantially all of its net investment income and its net realized
capital gains, if any, at least annually. The dividends and distributions you receive may be
subject to federal, state and local taxation, depending upon your tax situation. Distributions you
receive from the Fund may be taxable whether or not you reinvest them. Income distributions are
generally taxable at ordinary income tax rates and will not qualify for the reduced rates
applicable to qualified dividend income. EACH SALE OF FUND SHARES MAY BE A TAXABLE EVENT; HOWEVER,
BECAUSE THE FUND EXPECTS TO MAINTAIN A STABLE $1.00 NET ASSET VALUE PER SHARE, YOU SHOULD NOT
EXPECT TO REALIZE ANY GAIN OR LOSS ON THE SALE OR EXCHANGE OF YOUR FUND SHARES. A transfer from one
share class to another share class in the same RidgeWorth Fund should not be a taxable event.
A significant portion of the Funds distributions may represent interest earned on U.S.
obligations. Many states grant tax-free status to dividends paid from interest earned on direct
obligations of the U.S. Government, subject to certain limitations.
16
MORE INFORMATION ABOUT TAXES IS IN THE STATEMENT OF ADDITIONAL INFORMATION.
17
[THIS PAGE INTENTIONALLY LEFT BLANK]
18
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Funds financial performance
for the past 5 years. Certain information reflects financial results for a single Fund share. The
total returns in the table represent the rate that an investor would have earned (or lost) on an
investment in the Fund (assuming reinvestment of all dividends and distributions). This financial
information has been audited by [ ]. The Report of Independent Registered Public Accounting
Firm for each period shown, along with the Funds financial statements and related notes, are
included in the Annual Reports to Shareholders for such periods. The 2008 Annual Report is
available upon request and without charge by calling 1-888-784-3863 or on the Funds website at
www.ridgeworthfunds.com.
[insert financial highlights here]
19
[THIS PAGE INTENTIONALLY LEFT BLANK]
20
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21
[THIS PAGE INTENTIONALLY LEFT BLANK]
22
INVESTMENT ADVISER:
RidgeWorth Capital Management, Inc.
50 Hurt Plaza, Suite 1400
Atlanta, Georgia 30303
INVESTMENT SUBADVISER:
StableRiver Capital Management LLC
50 Hurt Plaza, Suite 1400
Atlanta, Georgia 30303
More information about the RidgeWorth Funds is available without charge through the following:
STATEMENT OF ADDITIONAL INFORMATION (SAI):
The SAI includes detailed information about the RidgeWorth Funds. The SAI is on file with the
SEC and is incorporated by reference into this prospectus. This means that the SAI, for legal
purposes, is a part of this prospectus.
ANNUAL AND SEMI-ANNUAL REPORTS:
These reports list each Funds holdings and contain information from the Funds managers about
strategies and recent market conditions and trends and their impact on Fund performance. The
reports also contain detailed financial information about the Funds.
TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT, OR MORE INFORMATION:
TELEPHONE: Shareholder Services
Telephone: 1-888-784-3863
MAIL:
RidgeWorth Funds
3435 Stelzer Road
Columbus, Ohio 43219
WEBSITE: www.ridgeworthfunds.com
SEC:
You can also obtain the SAI or the Annual and Semi-Annual reports, as well as other
information about the RidgeWorth Funds, from the EDGAR Database on the SECs website at
http://www.sec.gov. You may review and copy documents at the SEC Public Reference Room in
Washington, DC (for information on the operation of the Public Reference Room, call 202-942-8090).
You may request documents by mail from the SEC, upon payment of a duplicating fee, by writing to:
Securities and Exchange Commission, Public Reference Section, Washington, DC 20549-0102. You may
also obtain this information, upon payment of a duplicating fee, by e-mailing the SEC at
publicinfo@sec.gov.
The RidgeWorth Funds Investment Company Act registration number is 811-06557.
RIDGEWORTH FUNDS
23
STATEMENT OF ADDITIONAL INFORMATION
RIDGEWORTH FUNDS
(formerly, STI Classic Funds)
August 1, 2008
Investment Adviser:
RIDGEWORTH CAPITAL MANAGEMENT, INC.
(formerly, Trusco Capital Management, Inc.)
(the Adviser)
This Statement of Additional Information (SAI) is not a prospectus. It is intended to provide
additional information regarding the activities and operations of RidgeWorth Funds (the Trust)
and should be read in conjunction with the Trusts prospectuses dated August 1, 2008, as may be
supplemented from time to time. This SAI relates to each class of the following series of the
Trust (each a Fund and collectively, the Funds):
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Corporate |
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Institutional |
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I Shares |
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Equity Funds |
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Aggressive Growth Stock Fund |
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Emerging Growth Stock Fund |
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International Equity 130/30 Fund |
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International Equity Fund |
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International Equity Index Fund |
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Large Cap Core Equity Fund |
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Large Cap Growth Stock Fund |
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Large Cap Quantitative Equity Fund |
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Large Cap Value Equity Fund |
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Mid-Cap Core Equity Fund |
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ü |
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ü |
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ü |
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Mid-Cap Value Equity Fund |
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ü |
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ü |
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ü |
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Real Estate 130/30 Fund |
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ü |
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ü |
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ü |
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Select Large Cap Growth Stock Fund |
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ü |
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ü |
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ü |
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Small Cap Growth Stock Fund |
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ü |
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ü |
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ü |
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Small Cap Value Equity Fund |
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ü |
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ü |
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ü |
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U.S. Equity 130/30 Fund |
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ü |
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ü |
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ü |
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Taxable Fixed Income Funds |
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High Income Fund |
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ü |
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ü |
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ü |
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Intermediate Bond Fund |
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ü |
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ü |
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ü |
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Investment Grade Bond Fund |
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ü |
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ü |
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ü |
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Limited Duration Fund |
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ü |
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Limited-Term Federal Mortgage
Securities Fund |
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ü |
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ü |
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ü |
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Seix Floating Rate High Income Fund |
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ü |
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ü |
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ü |
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Seix High Yield Fund |
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ü |
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ü |
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ü |
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Short-Term Bond Fund |
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ü |
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ü |
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ü |
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Short-Term U.S. Treasury Securities Fund |
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ü |
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ü |
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ü |
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Strategic Income Fund |
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ü |
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ü |
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ü |
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Total Return Bond Fund |
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ü |
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ü |
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ü |
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Corporate |
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Institutional |
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Trust |
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A Shares |
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B Shares |
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C Shares |
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I Shares |
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Shares |
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Shares |
U.S. Government Securities Fund |
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ü |
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ü |
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ü |
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U.S. Government Securities Ultra-Short
Bond Fund |
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ü |
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Ultra-Short Bond Fund |
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ü |
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Tax-Exempt Fixed Income Funds |
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Georgia Tax-Exempt Bond Fund |
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ü |
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ü |
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ü |
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High Grade Municipal Bond Fund |
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ü |
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ü |
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ü |
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Investment Grade Tax-Exempt Bond Fund |
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ü |
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ü |
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ü |
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Maryland Municipal Bond Fund |
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ü |
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ü |
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ü |
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North Carolina Tax-Exempt Bond Fund |
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ü |
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ü |
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ü |
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Virginia Intermediate Municipal Bond
Fund |
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ü |
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ü |
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ü |
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Money Market Funds |
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Institutional Cash Management Money
Market Fund |
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ü |
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Institutional Municipal Reserve Cash
Management Money Market Fund |
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ü |
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Institutional U.S. Government
Securities Money Market Fund |
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ü |
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Institutional U.S. Treasury Securities
Money Market Fund |
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ü |
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ü |
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Prime Quality Money Market Fund |
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ü |
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ü |
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ü |
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Tax-Exempt Money Market Fund |
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ü |
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ü |
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U.S. Government Securities
Money Market Fund |
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ü |
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ü |
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U.S. Treasury Money Market Fund |
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ü |
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ü |
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Virginia Tax-Free Money Market Fund |
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ü |
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ü |
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Asset Allocation Funds |
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Life Vision Aggressive Growth Fund |
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ü |
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ü |
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ü |
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ü |
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Life Vision Conservative Fund |
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ü |
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ü |
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ü |
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ü |
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Life Vision Growth and Income Fund |
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ü |
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ü |
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ü |
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ü |
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Life Vision Moderate Growth Fund |
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ü |
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ü |
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ü |
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ü |
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Life Vision Target Date 2015 Fund |
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ü |
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ü |
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ü |
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Life Vision Target Date 2025 Fund |
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ü |
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ü |
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ü |
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Life Vision Target Date 2035 Fund |
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ü |
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ü |
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ü |
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The Equity Funds and Asset Allocation Funds are collectively referred to herein as Equity Funds
and the Taxable Fixed Income Funds and the Tax-Exempt Fixed Income Funds are collectively referred
to herein as the Fixed Income Funds.
B Shares are no longer offered to new investors.
This SAI is incorporated by reference into the Trusts prospectuses dated August 1, 2008.
Capitalized terms not defined herein are defined in the prospectuses. A prospectus may be obtained
by writing to the Trust or calling toll-free 1-888-784-3863.
TABLE OF CONTENTS
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1 |
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1 |
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35 |
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37 |
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41 |
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44 |
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51 |
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53 |
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68 |
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68 |
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68 |
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69 |
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69 |
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75 |
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78 |
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80 |
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87 |
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96 |
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97 |
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99 |
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99 |
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99 |
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100 |
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100 |
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100 |
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101 |
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102 |
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A-1 |
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PROXY VOTING POLICY |
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B-1 |
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THE TRUST
Each Fund is a separate series of the Trust, an open-end management investment company established
under Massachusetts law as a Massachusetts business trust under a Declaration of Trust dated
January 15, 1992. The Declaration of Trust permits the Trust to offer separate series (each a
Fund and collectively, the Funds) of units of beneficial interest (shares) and different
classes of shares of each Fund. The Trust reserves the right to create and issue shares of
additional funds and/or classes. Each Fund, except the Real Estate 130/30 Fund, Maryland Municipal
Bond Fund, North Carolina Tax-Exempt Bond Fund and the Virginia Intermediate Municipal Bond Fund is
diversified, as that term is defined in the Investment Company Act of 1940, as amended (the 1940
Act). Prior to March 31, 2008 the name of the Trust was STI Classic Funds.
DESCRIPTION OF PERMITTED INVESTMENTS
The Funds respective investment objectives and principal investment strategies are described in
the prospectuses. The following information supplements, and should be read in conjunction with,
the prospectuses. Following are descriptions of the permitted investments and investment practices
discussed in the Funds prospectuses under the Investment Strategy section and the associated
risk factors. A Subadviser will only invest in any of the following instruments or engage in any of
the following investment practices if such investment or activity is consistent with and permitted
by the Funds stated investment policies.
American Depositary Receipts (ADRs), European Depositary Receipts (EDRs) and Global Depositary
Receipts (GDRs). ADRs, EDRs, and GDRs are securities, typically issued by a U.S. financial
institution or a non-U.S. financial institution in the case of an EDR or GDR (a depositary). The
institution has ownership interests in a security, or a pool of securities, issued by a foreign
issuer and deposited with the depositary. ADRs, EDRs and GDRs may be available through sponsored
or unsponsored facilities. A sponsored facility is established jointly by the issuer of the
security underlying the receipt and a depositary. An unsponsored facility may be established by a
depositary without participation by the issuer of the underlying security. Holders of unsponsored
depositary receipts generally bear all the costs of the unsponsored facility. The depositary of an
unsponsored facility frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through, to the holders of the
receipts, voting rights with respect to the deposited securities.
ADRs may be listed or unlisted. A listed ADR is traded on a U.S. exchange. An unlisted ADR is not
listed on a U.S. exchange. The prices of these securities are not found in a daily newspaper.
Instead, an indication of their value appears in the pink sheets, a directory that includes
unlisted companies traded only among brokers, or over-the-counter. The pink sheets are published
daily for brokers by the National Quotations Bureau, which collects prices from market-makers.
Acquisitional/equipment lines (delayed-draw term loans). Acquisitional/equipment lines
(delayed-draw term loans) are credits that may be drawn down for a given period to purchase
specified assets or equipment of to make acquisitions. The issuer pays a fee during the commitment
period (a ticking fee). The lines are then repaid over a specified period (the term-out period).
Repaid amounts may not be re-borrowed. To avoid any leveraging concerns, the Fund will segregate or
earmark liquid assets with the Funds custodian in an amount sufficient to cover its repurchase
obligations.
Asset-Backed Securities. Asset-backed securities are securities backed by non-mortgage assets such
as company receivables, truck and auto loans, leases, and credit card receivables and mortgage-like
assets such as home equity
1
loans on manufactured housing. These securities may be traded over-the-counter and typically have a
short-intermediate maturity structure depending on the pay down characteristics of the underlying
financial assets which are passed through to the security holder. These securities are generally
issued as pass-through certificates, which represent undivided fractional ownership interests in
the underlying pool of assets. Asset-backed securities may also be debt obligations, which are
known as collateralized obligations and are generally issued as the debt of a special purpose
entity, such as a trust, organized solely for the purpose of owning these assets and issuing debt
obligations. Asset-backed securities that are backed by a single type of asset are pooled together
by asset type for purposes of calculating a Funds industry concentration levels.
Asset-backed securities are not issued or guaranteed by the U.S. Government, its agencies or
instrumentalities; however, the payment of principal and interest on such obligations may be
guaranteed up to certain amounts and, for a certain period, by a letter of credit issued by a
financial institution (such as a bank or insurance company) unaffiliated with the issuers of such
securities. The purchase of asset-backed securities raises risk considerations peculiar to the
financing of the instruments underlying such securities. There also is the possibility that
recoveries on repossessed collateral may not, in some cases, be available to support payments on
those securities.
Asset-backed securities entail prepayment risk, which may vary depending on the type of asset, but
is generally less than the prepayment risk associated with mortgage-backed securities. In addition,
credit card receivables are unsecured obligations of the card holder.
Bank Obligations. A Fund may invest in obligations issued by banks and other savings institutions.
Investments in bank obligations include obligations of domestic branches of foreign banks and
foreign branches of domestic banks. Such investments in domestic branches of foreign banks and
foreign branches of domestic banks may involve risks that are different from investments in
securities of domestic branches of U.S. banks. These risks may include future unfavorable political
and economic developments, possible withholding taxes on interest income, seizure or
nationalization of foreign deposits, currency controls, interest limitations, or other governmental
restrictions which might affect the payment of principal or interest on the securities held by a
Fund. Additionally, these institutions may be subject to less stringent reserve requirements and to
different accounting, auditing, reporting and recordkeeping requirements than those applicable to
domestic branches of U.S. banks. The Funds may invest in U.S. dollar-denominated obligations of
domestic branches of foreign banks and foreign branches of domestic banks only when the Subadvisers
believe that the risks associated with such investment are minimal and that all applicable quality
standards have been satisfied. Bank obligations include the following:
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Bankers Acceptances. Bankers acceptances are bills of exchange or time drafts
drawn on and accepted by a commercial bank. Corporations use bankers acceptances
to finance the shipment and storage of goods and to furnish dollar exchange.
Maturities are generally six months or less. |
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Certificates of Deposit. Certificates of deposit are interest-bearing instruments
with a specific maturity. They are issued by banks and savings and loan
institutions in exchange for the deposit of funds and normally can be traded in the
secondary market prior to maturity. Certificates of deposit with penalties for
early withdrawal will be considered illiquid. |
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Time Deposits. Time deposits are non-negotiable receipts issued by a bank in
exchange for the deposit of funds. Like a certificate of deposit, it earns a
specified rate of interest over a definite period of time; however, it cannot be
traded in the secondary market. Time deposits with a withdrawal penalty or that
mature in more than seven days are considered to be illiquid securities. |
The Funds will not purchase obligations issued by the Adviser, Subadvisers or their affiliates.
2
Borrowing. As required by the 1940 Act, a Fund must maintain continuous asset coverage (total
assets, including assets acquired with borrowed funds, less liabilities exclusive of borrowings) of
300% of all amounts borrowed. If, at any time, the value of the Funds assets should fail to meet
this 300% coverage test, the Fund, within three days (not including Sundays and holidays), will
reduce the amount of the Funds borrowings to the extent necessary to meet this 300% coverage.
Maintenance of this percentage limitation may result in the sale of portfolio securities at a time
when investment considerations otherwise indicate that it would be disadvantageous to do so.
In addition to the foregoing, the Funds are authorized to borrow money as a temporary measure for
extraordinary or emergency purposes in amounts not in excess of 5% of the value of a Funds total
assets. This borrowing is not subject to the foregoing 300% asset coverage requirement. The Funds
are authorized to pledge portfolio securities as the Subadvisers deem appropriate in connection
with any borrowings.
Borrowing may subject the Funds to interest costs, which may exceed the interest received on the
securities purchased with the borrowed funds. The Funds may borrow at times to meet redemption
requests rather than sell portfolio securities to raise the necessary cash. Borrowing can involve
leveraging when securities are purchased with the borrowed money.
Brady Bonds. A Brady Bond is a U.S. dollar denominated bond issued by an emerging market,
particularly those in Latin America, and collateralized by U.S. Treasury zero-coupon bonds. In the
event of a default on collateralized Brady Bonds for which obligations are accelerated, the
collateral for the payment of principal will not be distributed to investors, nor will such
obligations be sold and the proceeds distributed. The collateral will be held by the collateral
agent to the scheduled maturity of the defaulted Brady Bonds, which will continue to be
outstanding, at which time the face amount of the collateral will equal the principal payments
which would have then been due on the Brady Bonds in the normal course.
Certificates of Deposit. Certificates of deposit are interest bearing instruments with a specific
maturity. They are issued by banks and savings and loan institutions in exchange for the deposit of
funds and normally can be traded in the secondary market prior to maturity. Certificates of deposit
with penalties for early withdrawal will be considered illiquid.
Collateralized Debt Obligations. Collateralized Debt Obligations (CDOs) are securitized
interests in pools of assets. Assets called collateral usually comprise loans or debt instruments.
A CDO may be called a collateralized loan obligation (CLO) or collateralized bond obligation
(CBO) if it holds only loans or bonds, respectively. Investors bear the credit risk of the
collateral. Multiple tranches of securities are issued by the CDO, offering investors various
maturity and credit risk characteristics. Tranches are categorized as senior, mezzanine, and
subordinated/equity, according to their degree of credit risk. If there are defaults or the CDOs
collateral otherwise underperforms, scheduled payments to senior tranches take precedence over
those of mezzanine tranches, and scheduled payments to mezzanine tranches take precedence over
those to subordinated/equity tranches. Senior and mezzanine tranches are typically rated, with the
former receiving ratings of A to AAA/Aaa and the latter receiving ratings of B to BBB/Baa. The
ratings reflect both the credit quality of underlying collateral as well as how much protection a
given tranche is afforded by tranches that are subordinate to it.
Commercial Paper. Commercial paper is the term used to designate unsecured short-term promissory
notes issued by corporations and other entities. Maturities on these issues vary from a few to 270
days.
Convertible Bonds. Convertible bonds are bonds which may be converted, at the option of either the
issuer or the holder, into a specified amount of common stock of the issuer, or in the case of
exchangeable bonds, into the common stock of another corporation. Convertible bonds are generally
subordinate to other publicly held debt of the issuer, and therefore typically have a lower credit
rating than nonconvertible debt of the issuer. Convertible bonds generally carry a lower coupon
rate than the issuer would otherwise pay at issuance in exchange for the
3
conversion feature. In addition to the interest rate risk factors generally associated with fixed
income investments, the market risk of a convertible bond is determined by changes in the credit
quality of the issuer and price changes and volatility of the stock into which the bond may be
converted. The conversion feature may cause a convertible bond to be significantly more volatile
than other types of fixed income investments. Convertible bonds for which the value of the
conversion feature is deemed worthless are generally referred to as busted convertibles, and risk
associated more closely approximates that of similar debt without the conversion feature.
Corporate Issues. Corporate issues refer to debt instruments issued by private corporations or
other business entities. Bondholders, as creditors, have a prior legal claim over common and
preferred stockholders of the corporation as to both income and assets for the principal and
interest due to the bondholder. A Fund will buy corporate issues subject to any quality
constraints. Corporate issues may also be issued by master limited partnerships and real estate
investment trusts, or REITS.
Credit-Linked Notes. A credit linked note (CLN) is a type of hybrid instrument in which a special
purpose entity issues a structured note (the Note Issuer) that is intended to replicate a single
bond, a portfolio of bonds, or with respect to the unsecured credit of an issuer, in general (the
Reference Instrument). The purchaser of the CLN (the Note Purchaser) invest a par amount and
receives a payment during the term of the CLN that equals a fixed or floating rate of interest
equivalent to a high rated funded asset (such as a bank certificate of deposit) plus an additional
premium that relates to taking on the credit risk of the Reference Instrument. Upon maturity of
the CLN, the Note Purchaser will receive a payment equal to (i) the original par amount paid to the
Note Issuer, if there is neither a designated event of default (an Event of Default) with respect
to the Reference Instrument nor a restructuring of the issuer of the Reference Instrument (a
Restructuring Event) or (ii) the value of the Reference Instrument, if an Event of Default or
Restructuring Event has occurred. Depending upon the terms of the CLN, it is also possible that
the Note Purchaser may be required to take physical delivery of the Reference Instrument in the
event of an Event of Default or a Restructuring Event. Most CLNs use a corporate bond (or a
portfolio of corporate bonds) as the Reference Instrument(s). However, almost any type of fixed
income security (including foreign government securities) or derivative contract (such as a credit
default swap) can be used as the Reference Instrument.
When a Fund purchases a CLN, the Fund is required to cover its position in order to limit
leveraging and related risks. To cover its long position, a Fund will segregate or earmark liquid
assets with the Funds custodian that, when added to any amounts deposited as margin, are equal to
the value of the CLN or otherwise cover its position in a manner consistent with the 1940 Act or
the rules and Securities and Exchange Commission (SEC) interpretations thereunder. The
segregated account functions as a practical limit on the amount of leverage which the Fund may
undertake and on the potential increase in the speculative character of the Funds outstanding
portfolio securities. Additionally, such segregated accounts will generally assure the availability
of adequate funds to meet the obligations of the fund arising from such investment activities.
Custodial Receipts. A custodial receipt represents an indirect interest in a tax-exempt bond that
is deposited with a custodian. For example, custodial receipts may be used to permit the sale of
the deposited bond in smaller denominations than would otherwise be permitted. Frequently,
custodial receipts are issued to attach bond insurance or other forms of credit enhancement to the
deposited tax-exempt bond. Note, because a separate security is not created by the issuance of a
receipt, many of the tax advantages bestowed upon holders of the deposited tax-exempt bond are also
conferred upon the custodial receipt holder.
Debt Securities. Debt securities (e.g., bonds, notes, debentures) represent money borrowed that
obligates the issuer (e.g., a corporation, municipality, government, government agency) to repay
the borrowed amount at maturity (when the obligation is due and payable) and usually to pay the
holder interest at specific times.
Dollar Rolls. Dollar rolls are transactions in which securities are sold for delivery in the
current month and the seller contracts to repurchase substantially similar securities on a
specified future date. Any difference between
4
the sale price and the purchase price (plus interest earned on the cash proceeds of the sale) is
applied against the past interest income on the securities sold to arrive at an implied borrowing
rate.
Dollar rolls may be renewed prior to cash settlement and initially may involve only a firm
commitment agreement by the Fund to buy a security.
If the broker-dealer to whom a Fund sells the security becomes insolvent, the Funds right to
repurchase the security may be restricted. Other risks involved in entering into dollar rolls
include the risk that the value of the security may change adversely over the term of the dollar
roll and that the security the Fund is required to repurchase may be worth less than the security
that the Fund originally held. To avoid any leveraging concerns, the Fund will segregate or earmark
liquid assets with the Funds custodian in an amount sufficient to cover its repurchase
obligations.
Equipment Trust Certificates (ETCs). ETCs are issued by a trust formed to finance large purchases
of equipment, such as airplanes, at favorable interest rates. Legal title on such equipment is held
by a trustee. The trustee leases the equipment and sells ETCs at a small discount to the purchase
price of the equipment. The lease payments are then used to pay principal and interest to the ETC
holders.
Equity Securities. Equity securities represent ownership interests in a company and consist of
common stocks, preferred stocks, warrants to acquire common stock, and securities convertible into
common stock. Investments in equity securities in general are subject to market risks that may
cause their prices to fluctuate over time. Fluctuations in the value of equity securities in which
a fund invests will cause the net asset value of a fund to fluctuate. The Funds purchase equity
securities traded in the U.S. or foreign countries on securities exchanges or the over-the-counter
market. Equity securities are described in more detail below:
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Common Stock. Common stock represents an equity or ownership interest in an issuer. In
the event an issuer is liquidated or declares bankruptcy, the claims of owners of bonds and
preferred stock take precedence over the claims of those who own common stock. |
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Preferred Stock. Preferred stock represents an equity or ownership interest in an issuer
that pays dividends at a specified rate and that has precedence over common stock in the
payment of dividends. In the event an issuer is liquidated or declares bankruptcy, the
claims of owners of bonds take precedence over the claims of those who own preferred and
common stock. |
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Warrants. Warrants are instruments that entitle the holder to buy an equity security at
a specific price for a specific period of time. Changes in the value of a warrant do not
necessarily correspond to changes in the value of its underlying security. The price of a
warrant may be more volatile than the price of its underlying security, and a warrant may
offer greater potential for capital appreciation as well as capital loss. Warrants do not
entitle a holder to dividends or voting rights with respect to the underlying security and
do not represent any rights in the assets of the issuing company. A warrant ceases to have
value if it is not exercised prior to its expiration date. These factors can make warrants
more speculative than other types of investments. |
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Convertible Securities. Convertible securities are bonds, debentures, notes, preferred
stocks or other securities that may be converted or exchanged (by the holder or by the
issuer) into shares of the underlying common stock (or cash or securities of equivalent
value) at a stated exchange ratio. A convertible security may also be called for redemption
or conversion by the issuer after a particular date and under certain circumstances
(including a specified price) established upon issue. If a convertible security held by a
fund is called for redemption or conversion, the fund could be required to tender it for
redemption, convert it into the underlying common stock, or sell it to a third-party. |
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Convertible securities generally have less potential for gain or loss than common stocks.
Convertible securities generally provide yields higher than the underlying common stocks,
but generally lower than comparable non-convertible securities. Because of this higher
yield, convertible securities generally sell at a price above their conversion value,
which is the current market value of the stock to be received upon conversion. The
difference between this conversion value and the price of convertible securities will vary
over time depending on changes in the value of the underlying common stocks and interest
rates. When the underlying common stocks decline in value, convertible securities will tend
not to decline to the same extent because of the interest or dividend payments and the
repayment of principal at maturity for certain types of convertible securities. However,
securities that are convertible other than at the option of the holder generally do not
limit the potential for loss to the same extent as securities convertible at the option of
the holder. When the underlying common stocks rise in value, the value of convertible
securities may also be expected to increase. At the same time, however, the difference
between the market value of convertible securities and their conversion value will narrow,
which means that the value of convertible securities will generally not increase to the same
extent as the value of the underlying common stocks. Because convertible securities may also
be interest-rate sensitive, their value may increase as interest rates fall and decrease as
interest rates rise. Convertible securities are also subject to credit risk, and are often
lower-quality securities. |
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Small and Medium Capitalization Issuers. Generally, capitalization or market
capitalization is a measure of a companys size. Investing in equity securities of small
and medium capitalization companies often involves greater risk than is customarily
associated with investments in larger capitalization companies. This increased risk may be
due to the greater business risks of smaller size, limited markets and financial resources,
narrow product lines and frequent lack of depth of management. The securities of smaller
companies are often traded in the over-the-counter market and even if listed on a national
securities exchange may not be traded in volumes typical for that exchange. Consequently,
the securities of smaller companies are less likely to be liquid, may have limited market
stability, and may be subject to more abrupt or erratic market movements than securities of
larger, more established growth companies or the market averages in general. |
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Equity-Linked Securities. A Fund may invest in equity-linked securities, including,
among others, PERCS, ELKS or LYONs, which are securities that are convertible into, or the
value of which is based upon the value of, equity securities upon certain terms and
conditions. The amount received by an investor at maturity of such securities is not fixed
but is based on the price of the underlying common stock. It is impossible to predict
whether the price of the underlying common stock will rise or fall. Trading prices of the
underlying common stock will be influenced by the issuers operational results, by complex,
interrelated political, economic, financial or other factors affecting the capital markets,
the stock exchanges on which the underlying common stock is traded and the market segment
of which the issuer is a part. In addition, it is not possible to predict how equity-linked
securities will trade in the secondary market. The market for such securities may be
shallow, and high volume trades may be possible only with discounting. In addition to the
foregoing risks, the return on such securities depends on the creditworthiness of the
issuer of the securities, which may be the issuer of the underlying securities or a
third-party investment banker or other lender. The creditworthiness of such third-party
issuer equity-linked securities may, and often does, exceed the creditworthiness of the
issuer of the underlying securities. The advantage of using equity-linked securities over
traditional equity and debt securities is that the former are income producing vehicles
that may provide a higher income than the dividend income on the underlying equity
securities while allowing some participation in the capital appreciation of the underlying
equity securities. Another advantage of using equity-linked securities is that they may be
used for hedging to reduce the risk of investing in the generally more volatile underlying
equity securities. |
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The following are three examples of equity-linked securities. A Fund may invest in the
securities described below or other similar equity-linked securities.
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PERCS. Preferred Equity Redemption Cumulative Stock (PERCS) technically is
preferred stock with some characteristics of common stock. PERCS are mandatorily
convertible into common stock after a period of time, usually three years, during
which the investors capital gains are capped, usually at 30%. Commonly, PERCS may
be redeemed by the issuer at any time or if the issuers common stock is trading at
a specified price level or better. The redemption price starts at the beginning of
the PERCS duration period at a price that is above the cap by the amount of the
extra dividends the PERCS holder is entitled to receive relative to the common stock
over the duration of the PERCS and declines to the cap price shortly before maturity
of the PERCS. In exchange for having the cap on capital gains and giving the issuer
the option to redeem the PERCS at any time or at the specified common stock price
level, the Fund may be compensated with a substantially higher dividend yield than
that on the underlying common stock. |
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ELKS. Equity-Linked Securities (ELKS) differ from ordinary debt securities, in
that the principal amount received at maturity is not fixed but is based on the
price of the issuers common stock. ELKS are debt securities commonly issued in
fully registered form for a term of three years under an indenture trust. At
maturity, the holder of ELKS will be entitled to receive a principal amount equal to
the lesser of a cap amount, commonly in the range of 30% to 55% greater than the
current price of the issuers common stock, or the average closing price per share
of the issuers common stock, subject to adjustment as a result of certain dilution
events, for the 10 trading days immediately prior to maturity. Unlike PERCS, ELKS
are commonly not subject to redemption prior to maturity. ELKS usually bear interest
six times during the three-year term at a substantially higher rate than the
dividend yield on the underlying common stock. In exchange for having the cap on the
return that might have been received as capital gains on the underlying common
stock, the Fund may be compensated with the higher yield, contingent on how well the
underlying common stock does. |
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LYONS. Liquid Yield Option Notes (LYONS) differ from ordinary debt securities,
in that the amount received prior to maturity is not fixed but is based on the price
of the issuers common stock. LYONs are zero-coupon notes that sell at a large
discount from face value. For an investment in LYONs, a Fund will not receive any
interest payments until the notes mature, typically in 15 to 20 years, when the
notes are redeemed at face, or par value. The yield on LYONs, typically, is
lower-than-market rate for debt securities of the same maturity, due in part to the
fact that the LYONs are convertible into common stock of the issuer at any time at
the option of the holder of the LYONs. Commonly, the LYONs are redeemable by the
issuer at any time after an initial period or if the issuers common stock is
trading at a specified price level or better, or, at the option of the holder, upon
certain fixed dates. The redemption price typically is the purchase price of the
LYONs plus accrued original issue discount to the date of redemption, which amounts
to the lower-than-market yield. A Fund will receive only the lower-than-market yield
unless the underlying common stock increases in value at a substantial rate. LYONs
are attractive to investors, like a Fund, when it appears that they will increase in
value due to the rise in value of the underlying common stock. |
Eurodollar and Yankee Dollar Obligations. Eurodollar obligations are U.S. dollar denominated
obligations issued outside the United States by non-U.S. corporations or other entities. Yankee
dollar obligations are U.S. dollar denominated obligations issued in the United States by non-U.S.
corporations or other entities. Yankee obligations are subject to the same risks that pertain to
the domestic issues, notably credit risk, market risk and liquidity risk. Additionally, Yankee
obligations are subject to certain sovereign risks. One such risk is the
7
possibility that a sovereign country might prevent capital from flowing across their borders. Other
risks include: adverse political and economic developments; the extent and quality of government
regulation of financial markets and institutions; the imposition of foreign withholding taxes; and
the expropriation or nationalization or foreign issuers.
Exchange Traded Funds (ETFs). ETFs are investment companies whose shares are bought and sold on
a securities exchange. An ETF holds a portfolio of securities designed to track a particular
market segment or index. Some examples of ETFs are SPDRsâ, streetTRACKS,
DIAMONDSSM, NASDAQ 100 Index Tracking StockSM (QQQs SM),
iSharesâ and VIPERsâ A Fund could purchase an ETF to
temporarily gain exposure to a portion of the U.S. or foreign market. The risks of owning an ETF
generally reflect the risks of owning the underlying securities they are designed to track,
although lack of liquidity in an ETF could result in it being more volatile than the underlying
portfolio of securities and ETFs have management fees that increase their costs versus the costs of
owning the underlying securities directly. (See also Investment Company Shares below).
Fixed Income Securities. Fixed income securities are debt obligations issued by corporations,
municipalities and other borrowers. Coupons may be fixed or adjustable, based on a pre-set formula.
The market value of fixed income investments may change in response to interest rate changes and
other factors. During periods of falling interest rates, the values of outstanding fixed income
securities generally rise. Conversely, during periods of rising interest rates, the values of such
securities generally decline. Moreover, while securities with longer maturities tend to produce
higher yields, the prices of longer maturity securities are also subject to greater market
fluctuations as a result of changes in interest rates. Changes by recognized agencies in the rating
of any fixed income security and in the ability of an issuer to make payments of interest and
principal will also affect the value of these investments. Changes in the value of portfolio
securities will not affect cash income derived from these securities but will affect a Funds net
asset value.
Floating Rate Instruments. Floating rate instruments have a rate of interest that is set as a
specific percentage of a designated base rate (such as LIBOR). Such obligations are frequently
secured by letters of credit or other credit support arrangements provided by banks. The quality of
the underlying credit or of the bank, as the case may be, must, in the Subadvisers opinion be
equivalent to the long-term bond or commercial paper ratings stated in the prospectus. The
Subadviser will monitor the earning power, cash flow and liquidity ratios of the issuers of such
instruments and the ability of an issuer of a demand instrument to pay principal and interest on
demand.
Foreign Securities. Foreign securities may include U.S. dollar denominated obligations or
securities of foreign issuers denominated in other currencies. Possible investments include
obligations of foreign corporations and other entities, obligations of foreign branches of U.S.
banks and of foreign banks, including, without limitation, European Certificates of Deposit,
European Time Deposits, European Bankers Acceptances, Canadian Time Deposits, Europaper and Yankee
Certificates of Deposit, and investments in Canadian Commercial Paper and foreign securities. These
instruments have investment risks that differ in some respects from those related to investments in
obligations of U.S. domestic issuers. These risks include future adverse political and economic
developments, the possible imposition of withholding taxes on interest or other income, possible
seizure, nationalization, or expropriation of foreign deposits, the possible establishment of
exchange controls or taxation at the source, greater fluctuations in value due to changes in
exchange rates, or the adoption of other foreign governmental restrictions which might adversely
affect the payment of principal and interest on such obligations. These investments may also entail
higher custodial fees and sales commissions than domestic investments. Foreign issuers of
securities or obligations are often subject to accounting treatment and engage in business
practices different from those respecting domestic issuers of similar securities or obligations.
Foreign branches of U.S. banks and foreign banks may be subject to less stringent reserve
requirements than those applicable to domestic branches of U.S. banks.
In making investment decisions for the Funds, the Subadvisers evaluate the risks associated with
investing Fund assets in a particular country, including risks stemming from a countrys financial
infrastructure and settlement
8
practices; the likelihood of expropriation, nationalization or confiscation of invested assets;
prevailing or developing custodial practices in the country; the countrys laws and regulations
regarding the safekeeping, maintenance and recovery of invested assets, the likelihood of
government-imposed exchange control restrictions which could impair the liquidity of Fund assets
maintained with custodians in that country, as well as risks from political acts of foreign
governments (country risks). Of course, the Subadviser cannot assure that the Fund will not
suffer losses resulting from investing in foreign countries.
Holding Fund assets in foreign countries through specific foreign custodians presents additional
risks, including but not limited to the risks that a particular foreign custodian or depository
will not exercise proper care with respect to Fund assets or will not have the financial strength
or adequate practices and procedures to properly safeguard Fund assets.
By investing in foreign securities, the Funds attempt to take advantage of differences between both
economic trends and the performance of securities markets in the various countries, regions and
geographic areas as prescribed by each Funds investment objective and policies. During certain
periods the investment return on securities in some or all countries may exceed the return on
similar investments in the United States, while at other times the investment return may be less
than that on similar U.S. securities. The international investments of a Fund may reduce the effect
that events in any one country or geographic area will have on its investment holdings. Of course,
negative movement by a Funds investments in one foreign market represented in its portfolio may
offset potential gains from the Funds investments in another countrys markets.
Emerging countries are all countries that are considered to be developing or emerging countries by
the World Bank or the International Finance Corporation, as well as countries classified by the
United Nations or otherwise regarded by the international financial community as developing.
Forward Foreign Currency Contracts. Forward foreign currency contracts (Forward Contracts)
involve obligations to purchase or sell a specific currency amount at a future date, agreed upon by
the parties, at a price set at the time of the contract. A Fund may also enter into a Forward
Contract to sell, for a fixed amount of U.S. dollars or other appropriate currency, the amount of
foreign currency approximating the value of some or all of the Funds securities denominated in the
foreign currency. A Fund may realize a gain or loss from currency transactions.
When a Fund purchases or sells a Forward Contract, the Fund is required to cover its position in
order to limit leveraging and related risks. To cover its long position, a Fund will segregate or
earmark liquid assets with the Funds custodian that, when added to any amounts deposited as
margin, are equal to the value of the Forward Contract or otherwise cover its position in a
manner consistent with the 1940 Act or the rules and Securities and Exchange Commission (SEC)
interpretations thereunder. To cover its short position, a Fund will segregate or earmark liquid
assets with the Funds custodian that, when added to any amounts deposited as margin, are equal to
the value of the currencies underlying the Forward Contract (but are not less than the market price
at which the short position was established). The segregated account functions as a practical
limit on the amount of leverage which the Fund may undertake and on the potential increase in the
speculative character of the Funds outstanding portfolio securities. Additionally, such segregated
accounts will generally assure the availability of adequate funds to meet the obligations of the
fund arising from such investment activities.
Futures and Options on Futures. Futures contracts provide for the future sale by one party and
purchase by another party of a specified amount of a specific security at a specified future time
and at a specified price. An option on a futures contract gives the purchaser the right, in
exchange for a premium, to assume a position in a futures contract at a specified exercise price
during the term of the option. A Fund will reduce the risk that it will be unable to close out a
futures contract by only entering into futures contracts that are traded on a national futures
exchange regulated by the Commodities Futures Trading Commission (CFTC). A Fund may use futures
contracts and related options for bona fide hedging; attempting to offset changes in the value of
securities held or
9
expected to be acquired or be disposed of; attempting to minimize fluctuations in foreign
currencies; attempting to gain exposure to a particular market, index or instrument; or other risk
management purposes. To the extent a Fund uses futures and/or options on futures, it will do so in
accordance with Rule 4.5 of the Commodity Exchange Act (CEA). The Trust, on behalf of each Fund,
has filed a notice of eligibility for exclusion from the definition of the term commodity pool
operator in accordance with Rule 4.5 and therefore, no Fund is subject to registration or
regulation as a commodity pool operator under the CEA.
An index futures contract is a bilateral agreement pursuant to which two parties agree to take or
make delivery of an amount of cash equal to a specified dollar amount times the difference between
the index value at the close of trading of the contract and the price at which the futures contract
is originally struck. No physical delivery of the securities comprising the index is made;
generally contracts are closed out prior to the expiration date of the contract.
When a Fund purchases or sells a futures contract, under applicable federal securities laws, rules,
and interpretations thereof and applicable exchange rules, a Fund must set aside (referred to
sometimes as asset segregation) liquid assets, or engage in other measures to cover open
positions with respect to such transactions. For example, with respect to futures contracts that
are not contractually required to cash-settle, a Fund must cover its open positions by setting
aside liquid assets equal to the contracts full, notional value. With respect to futures contracts
that are contractually required to cash-settle, a Fund may set aside or deliver liquid assets,
including cash, in an amount equal to a Funds daily marked-to-market (net) obligation rather than
the notional value. By setting aside or delivering assets equal to only its net obligation under
cash-settled futures contracts a Fund will have the ability to employ leverage to a greater
extent than if a Fund were required to segregate assets equal to the full notional value of such
contracts. The Funds reserve the right to modify their asset segregation policies in the future.
A Fund may also cover its long position in a futures contract by purchasing a put option on the
same futures contract with a strike price (i.e., an exercise price) as high as or higher than the
price of the futures contract. A long position is established when the Subadviser purchases a
stock outright. In the alternative, if the strike price of the put is less than the price of the
futures contract, the Fund will maintain in a segregated account cash or liquid securities equal in
value to the difference between the strike price of the put and the price of the futures contract.
A Fund may also cover its long position in a futures contract by taking a short position in the
instruments underlying the futures contract, or by taking positions in instruments with prices,
which are expected to move relatively consistently with the futures contract. A Fund may cover its
short position in a futures contract by taking a long position in the instruments underlying the
futures contracts, or by taking positions in instruments with prices, which are expected to move
relatively consistently with the futures contract. A short position is established when the
Subadviser sells a security that it has borrowed.
A Fund may cover its sale of a call option on a futures contract by taking a long position in the
underlying futures contract at a price less than or equal to the strike price of the call option.
In the alternative, if the long position in the underlying futures contract is established at a
price greater than the strike price of the written (sold) call, the Fund will maintain in a
segregated account cash or liquid securities equal in value to the difference between the strike
price of the call and the price of the futures contract. A Fund may also cover its sale of a call
option by taking positions in instruments with prices which are expected to move relatively
consistently with the call option. A Fund may cover its sale of a put option on a futures contract
by taking a short position in the underlying futures contract at a price greater than or equal to
the strike price of the put option, or, if the short position in the underlying futures contract is
established at a price less than the strike price of the written put, the Fund will maintain in a
segregated account cash or liquid securities equal in value to the difference between the strike
price of the put and the price of the futures contract. A Fund may also cover its sale of a put
option by taking positions in instruments with prices, which are expected to move relatively
consistently with the put option.
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There are significant risks associated with a Funds use of futures contracts and related options,
including the following: (1) the success of a hedging strategy may depend on a Subadvisers ability
to predict movements in the prices of individual securities, fluctuations in markets and movements
in interest rates, (2) there may be an imperfect or no correlation between the changes in market
value of the securities held by the Fund and the prices of futures and options on futures, (3)
there may not be a liquid secondary market for a futures contract or option, (4) trading
restrictions or limitations may be imposed by an exchange, and (5) government regulations may
restrict trading in futures contracts and options on futures. In addition, some strategies reduce a
Funds exposure to price fluctuations, while others tend to increase its market exposure.
Guaranteed Investment Contracts (GICs). A GIC is a general obligation of the issuing insurance
company and not a separate account. The purchase price paid for a GIC becomes part of the general
assets of the issuer, and the contract is paid at maturity from the general assets of the issuer.
Generally, GICs are not assignable or transferable without the permission of the issuing insurance
company. For this reason, an active secondary market in GICs does not currently exist and GICs are
considered to be illiquid investments.
Hedging Techniques. Hedging is an investment strategy designed to offset investment risks. Hedging
activities include, among other things, the use of options and futures. There are risks associated
with hedging activities, including: (i) the success of a hedging strategy may depend on an ability
to predict movements in the prices of individual securities, fluctuations in markets, and movements
in interest rates; (ii) there may be an imperfect or no correlation between the changes in market
value of the securities held by a Fund and the prices of futures and option on futures; (iii) there
may not be a liquid secondary market for a futures contract or option; and (iv) trading
restrictions or limitations may be imposed by an exchange, and government regulations may restrict
trading in futures contracts and options.
High Yield Securities. High yield securities, commonly referred to as junk bonds, are debt
obligations rated below investment grade, i.e., below BBB by Standard & Poors Ratings Group
(S&P) or Baa by Moodys Investors Service, Inc. (Moodys), or their unrated equivalents. The
risks associated with investing in high yield securities include:
1. High yield, lower rated bonds involve greater risk of default or price declines
than investments in investment grade securities (e.g., securities rated BBB or
higher by S&P or Baa or higher by Moodys) due to changes in the issuers
creditworthiness.
2. The market for high risk, high yield securities may be thinner and less active,
causing market price volatility and limited liquidity in the secondary market. This
may limit the ability of a Fund to sell these securities at their fair market
values either to meet redemption requests, or in response to changes in the economy
or the financial markets.
3. Market prices for high risk, high yield securities may also be affected by
investors perception of the issuers credit quality and the outlook for economic
growth. Thus, prices for high risk, high yield securities may move independently of
interest rates and the overall bond market.
4. The market for high risk, high yield securities may be adversely affected by
legislative and regulatory developments.
High Yield Foreign Sovereign Debt Securities. Investing in fixed and floating rate high yield
foreign sovereign debt securities will expose a Fund to the direct or indirect consequences of
political, social or economic changes in countries that issue the securities. The ability of a
foreign sovereign obligor to make timely payments on its external debt obligations will also be
strongly influenced by the obligors balance of payments, including export performance, its access
to international credits and investments, fluctuations in interest rates and the extent of its
11
foreign reserves. A country whose exports are concentrated in a few commodities or whose economy
depends on certain strategic imports could be vulnerable to fluctuations in international prices of
these commodities or imports. To the extent that a country receives payment for its exports in
currencies other than dollars, its ability to make debt payments denominated in dollars could be
adversely affected. If a foreign sovereign obligor cannot generate sufficient earnings from foreign
trade to service its external debt, it may need to depend on continuing loans and aid from foreign
governments, commercial banks and multilateral organizations, and inflows of foreign investment.
The commitment on the part of these foreign governments, multilateral organizations and others to
make such disbursements may be conditioned on the governments implementation of economic reforms
and/or economic performance and the timely service of its obligations. Failure to implement such
reforms, achieve such levels of economic performance or repay principal or interest when due may
result in the cancellation of such third parties commitments to lend funds, which may further
impair the obligors ability or willingness to timely service its debts.
Illiquid Securities. Illiquid securities are securities that cannot be sold or disposed of in the
ordinary course of business (within seven days) at approximately the prices at which they are
valued. Because of their illiquid nature, illiquid securities must be priced at fair value as
determined in good faith pursuant to procedures approved by the Trusts Board of Trustees. Despite
such good faith efforts to determine fair value prices, a Funds illiquid securities are subject to
the risk that the securitys fair value price may differ from the actual price, which the Fund may
ultimately realize upon its sale or disposition. Difficulty in selling illiquid securities may
result in a loss or may be costly to a Fund. Under the supervision of the Trusts Board of
Trustees, the Subadviser determines the liquidity of a Funds investments. In determining the
liquidity of a Funds investments, the Subadviser may consider various factors, including (1) the
frequency and volume of trades and quotations, (2) the number of dealers and prospective purchasers
in the marketplace, (3) dealer undertakings to make a market, and (4) the nature of the security
and the market in which it trades (including any demand, put or tender features, the mechanics and
other requirements for transfer, any letters of credit or other credit enhancement features, any
ratings, the number of holders, the method of soliciting offers, the time required to dispose of
the security, and the ability to assign or offset the rights and obligations of the security). A
Fund will not invest more than 15% of its net assets (10% with respect to the Money Market Funds)
in illiquid securities.
Inverse Floaters. A Fund may invest in municipal securities whose interest rated bear an inverse
relationship to the interest rate on another security or the value of an index (Inverse
Floaters). An investment in Inverse Floaters may involve greater risk than an investment in a
fixed rate bond. Because changes in the interest rate on the other security or index inversely
affect the residual interest paid on the Inverse Floater, the value and income of an inverse
floater is generally more volatile than that of a fixed rate bond. Inverse Floaters have varying
degrees of liquidity, and the market for these securities is relatively volatile. These securities
tend to underperform the market for fixed rate bonds in a rising interest rate environment, but
tend to outperform the market for fixed rate bonds when interest rates decline.
Investment Company Shares. Each Fund may invest in the securities of other investment companies to
the extent that such an investment would be consistent with the requirements of the 1940 Act and
the Funds investment objectives. Investments in the securities of other investment companies may
involve duplication of advisory fees and certain other expenses. By investing in another
investment company, a Fund becomes a shareholder of that investment company. As a result, the
investing Funds shareholders indirectly will bear the Funds proportionate share of the fees and
expenses paid by shareholders of the other investment company, in addition to the fees and expenses
the Funds shareholders directly bear in connection with the Funds own operations.
Under Section 12(d)(1) of the 1940 Act, a Fund may invest only up to 5% of its total assets in the
securities of any one investment company (ETF or other mutual funds), but may not own more than 3%
of the outstanding voting stock of any one investment company (the 3% Limitation) or invest more
than 10% of its total assets in the
12
securities of other investment companies. Because other investment companies employ an investment
advisor, such investments by the Fund may cause shareholders to bear duplicate fees.
A Fund may exceed the limits established by Section 12(d)(1) if (i) the ETF or the Fund has
received an order for exemptive relief from the 3% limitation from the SEC that is applicable to
the Fund; and (ii) the ETF and the Fund take appropriate steps to comply with any conditions in
such order. In the alternative, a Fund may rely on Rule 12d1-3, which allows unaffiliated mutual
funds to exceed the 5% Limitation and the 10% Limitation, provided the aggregate sales loads any
investor pays (i.e., the combined distribution expenses of both the acquiring fund and the acquired
funds) does not exceed the limits on sales loads established by Financial Industry Regulatory
Authority (FINRA), for funds of funds.
For hedging or other purposes, each Fund may invest in investment companies that seek to track the
composition and/or performance of specific indexes or portions of specific indexes. Certain of
these investment companies, known as ETFs, are traded on a securities exchange. (See Exchange
Traded Funds above.) The market prices of index-based investments will fluctuate in accordance
with changes in the underlying portfolio securities of the investment company and also due to
supply and demand of the investment companys shares on the exchange upon which the shares are
traded. Index-based investments may not replicate or otherwise match the composition or performance
of their specified index due to transaction costs, among other things. Pursuant to orders issued by
the SEC to iShares® Funds Vanguard Trust and procedures approved by the Board, each Fund
may invest in iShares® Funds and Vanguard Trust in excess of the 5% and 10% limits described above,
provided that the Fund has described ETF investments in its prospectus and otherwise complies with
the conditions of the SEC, as it may be amended, and any other applicable investment limitations.
iShares® is a registered trademark of Barclays Global Investors, N.A. (BGI). Neither
BGI nor the iShares® Funds makes any representations regarding the advisability of investing in the
Funds.
Investment Grade Obligations. Investment grade obligations are fixed income obligations rated by
one or more of the rating agencies in one of the four highest rating categories at the time of
purchase (e.g., AAA, AA, A or BBB by S&P or Fitch, Inc. (Fitch), or Aaa, Aa, A or Baa by Moodys
or determined to be of equivalent quality by the Subadviser). Securities rated BBB or Baa represent
the lowest of four levels of investment grade obligations and are regarded as borderline between
sound obligations and those in which the speculative element begins to predominate. Ratings
assigned to fixed income securities represent only the opinion of the rating agency assigning the
rating and are not dispositive of the credit risk associated with the purchase of a particular
fixed income obligation. A Fund may hold unrated securities if the Subadviser considers the risks
involved in owning that security to be equivalent to the risks involved in holding an instrument
grade security. Moreover, market risk also will affect the prices of even the highest rated fixed
income obligation so that their prices may rise or fall even if the issuers capacity to repay its
obligation remains unchanged.
Leveraged Buyouts. The Funds may invest in leveraged buyout limited partnerships and funds that, in
turn, invest in leveraged buyout transactions (LBOs). An LBO, generally, is an acquisition of an
existing business by a newly formed corporation financed largely with debt assumed by such newly
formed corporation to be later repaid with funds generated from the acquired company. Since most
LBOs are by nature highly leveraged (typically with debt to equity ratios of approximately 9 to 1),
equity investments in LBOs may appreciate substantially in value given only modest growth in the
earnings or cash flow of the acquired business. Investments in LBO partnerships and funds, however,
present a number of risks. Investments in LBO limited partnerships and funds will normally lack
liquidity and may be subject to intense competition from other LBO limited partnerships and funds.
Additionally, if the cash flow of the acquired company is insufficient to service the debt assumed
in the LBO, the LBO limited partnership or fund could lose all or part of its investment in such
acquired company.
Loan Participations. Loan participations are interests in loans to U.S. corporations, which are
administered by the lending bank or agent for a syndicate of lending banks. In a loan
participation, the borrower corporation is the issuer of the participation interest except to the
extent the Fund derives its rights from the intermediary bank.
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Because the intermediary bank does not guarantee a loan participation, a loan participation is
subject to the credit risks associated with the underlying corporate borrower.
In the event of bankruptcy or insolvency of the corporate borrower, a loan participation may be
subject to certain defenses that can be asserted by the borrower as a result of improper conduct by
the intermediary bank. In addition, in the event the underlying corporate borrower fails to pay
principal and interest when due, the Fund may be subject to delays, expenses, and risks that are
greater than those that would have been involved if the Fund had purchased a direct obligation of
the borrower. Under the terms of a Loan Participation, the Fund may be regarded as a creditor of
the intermediary bank (rather than of the underlying corporate borrower), so that the Fund may also
be subject to the risk that the intermediary bank may become insolvent.
The secondary market for loan participations is limited and any such participation purchased by the
Fund may be regarded as illiquid.
Medium-Term Notes. Medium-term notes are periodically or continuously offered corporate or agency
debt that differs from traditionally underwritten corporate bonds only in the process by which they
are issued.
Money Market Securities. Money market securities include short-term U.S. government securities;
custodial receipts evidencing separately traded interest and principal components of securities
issued by the U.S. Treasury; commercial paper rated in the highest short-term rating category by a
nationally recognized statistical ratings organization (NRSRO), such as S&P or Moodys, or
determined by the Subadviser to be of comparable quality at the time of purchase; short-term bank
obligations (certificates of deposit, time deposits and bankers acceptances) of U.S. commercial
banks with assets of at least $1 billion as of the end of their most recent fiscal year; and
repurchase agreements involving such securities. Each of these money market securities are
described herein. For a description of ratings, see Appendix A to this SAI.
Mortgage-Backed Securities. Each Fund may invest in mortgage-backed and asset-backed securities.
Mortgage-backed securities (MBS) are securities which represent ownership interests in, or are
debt obligations secured entirely or primarily by, pools of residential or commercial mortgage
loans or other asset-backed securities (the Underlying Assets). Such securities may be issued by
U.S. government agencies and government-sponsored entities, such as Government National Mortgage
Association (GNMA), Federal National Mortgage Association (FNMA), Federal Home Loan Mortgage
Corporation (FHLMC), commercial banks, savings and loan associations, mortgage banks, or by
issuers that are affiliates of or sponsored by such entities. The payment of interest and principal
on mortgage-backed obligations issued by these entities may be guaranteed by the full faith and
credit of the U.S. Government (in the case of GNMA), or may be guaranteed by the issuer (in the
case of FNMA and MHLMC). However, these guarantees do not apply to the market prices and yields of
these securities, which vary with changes in interest rates.
Obligations of GNMA are backed by the full faith and credit of the U.S. Government. Obligations of
Fannie Mae and FHLMC are not backed by the full faith and credit of the U.S. Government, but are
considered to be of high quality since they are considered to be instrumentalities of the United
States. Each Fund will not purchase mortgage-backed securities that do not meet the above minimum
credit standards. In the case of mortgage-backed securities representing ownership interests in the
Underlying Assets, the principal and interest payments on the underlying mortgage loans are
distributed monthly to the holders of the mortgage-backed securities. In the case of
mortgage-backed securities representing debt obligations secured by the Underlying Assets, the
principal and interest payments on the underlying mortgage loans, and any reinvestment income
thereon, provide the funds to pay debt service on such mortgage-backed securities.
Certain mortgage-backed securities represent an undivided fractional interest in the entirety of
the Underlying Assets (or in a substantial portion of the Underlying Assets, with additional
interests junior to that of the
14
mortgage-backed security), and thus have payment terms that closely resemble the payment terms of
the Underlying Assets.
In addition, many mortgage-backed securities are issued in multiple classes. Each class of such
multi-class mortgage-backed securities, often referred to as a tranche, is issued at a specific
fixed or floating coupon rate and has a stated maturity or final distribution date. Principal
prepayment on the Underlying Assets may cause the MBS to be retired substantially earlier than
their stated maturities or final distribution dates. Interest is paid or accrues on all or most
classes of the MBS on a periodic basis, typically monthly or quarterly. The principal of and
interest on the Underlying Assets may be allocated among the several classes of a series of MBS in
many different ways. In a relatively common structure, payments of principal (including any
principal prepayments) on the Underlying Assets are applied to the classes of a series of MBS in
the order of their respective stated maturities so that no payment of principal will be made on any
class of MBS until all other classes having an earlier stated maturity have been paid in full. An
important feature of MBS is that the principal amount is generally subject to partial or total
prepayment at any time because the Underlying Assets (i.e., loans) generally may be prepaid at any
time.
Private pass-through securities are mortgage-backed securities issued by a non-governmental agency,
such as a trust. While they are generally structured with one or more types of credit enhancement,
private pass-through securities generally lack a guarantee by an entity having the credit status of
a governmental agency or instrumentality. The two principal types of private mortgage-backed
securities are collateralized mortgage obligations (CMOs) and real estate mortgage investment
conduits (REMICs).
CMOs are collateralized mortgage obligations, which are collateralized by mortgage pass-through
securities. Cash flows from the mortgage pass-through securities are allocated to various tranches
(a tranche is essentially a separate security) in a predetermined, specified order. Each tranche
has a stated maturity the latest date by which the tranche can be completely repaid, assuming no
prepayments and has an average life the average of the time to receipt of a principal payment
weighted by the size of the principal payment. The average life is typically used as a proxy for
maturity because the debt is amortized (repaid a portion at a time), rather than being paid off
entirely at maturity, as would be the case in a straight debt instrument.
Although some of the mortgages underlying CMOs may be supported by various types of insurance, and
some CMOs may be backed by GNMA certificates or other mortgage pass-throughs issued or guaranteed
by U.S. government agencies or instrumentalities, the CMOs themselves are not generally guaranteed.
REMICs are private entities formed for the purpose of holding a fixed pool of mortgages secured by
an interest in real property. REMICs are similar to CMOs in that they issue multiple classes of
securities and are rated in one of the two highest categories by S&P or Moodys.
Investors may purchase beneficial interests in REMICs, which are known as regular interests, or
residual interests. Guaranteed REMIC pass-through certificates (REMIC Certificates) issued by
Fannie Mae or FHLMC represent beneficial ownership interests in a REMIC trust consisting
principally of mortgage loans or Fannie Mae, FHLMC or GNMA-guaranteed mortgage pass-through
certificates.
For FHLMC REMIC Certificates, FHLMC guarantees the timely payment of interest. GNMA REMIC
Certificates are backed by the full faith and credit of the U.S. Government.
Stripped mortgage-backed securities are securities that are created when a U.S. government agency
or a financial institution separates the interest and principal components of a mortgage-backed
security and sells them as individual securities. The holder of the principal only security
(PO) receives the principal payments made by the underlying mortgage-backed security, while the
holder of the interest only security (IO) receives interest payments from the same underlying
security.
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The prices of stripped mortgage-backed securities may be particularly affected by changes in
interest rates. As interest rates fall, prepayment rates tend to increase, which tends to reduce
prices of IOs and increase prices of POs. Rising interest rates can have the opposite effect.
Money Market Fund Investments. Investments by a money market fund are subject to limitations
imposed under regulations adopted by the SEC. Under these regulations, money market funds may
acquire only obligations that present minimal credit risk and that are eligible securities, which
means they are (i) rated, at the time of investment, by at least two NRSROs (one if it is the only
organization rating such obligation) in the highest rating category or, if unrated, determined to
be of comparable quality (a first tier security), or (ii) rated according to the foregoing
criteria in the second highest rating category or, if unrated, determined to be of comparable
quality (second tier security). In the case of taxable money market funds, investments in second
tier securities are subject to further constraints in that (i) no more than 5% of a money market
funds assets may be invested in second tier securities and (ii) any investment in securities of
any one such issuer is limited to the greater of 1% of the money market funds total assets or $1
million. A taxable money market fund may not purchase securities of any issuer (except securities
issued or guaranteed by the U.S. Government, its agencies or instrumentalities) if, as a result,
more than 5% of the total assets of the Fund would be invested the securities of one issuer. A
taxable money market fund may also hold more than 5% of its assets in first tier securities of a
single issuer for three business days (that is, any day other than a Saturday, Sunday or
customary business holiday).
Municipal Forwards. Municipal forwards are forward commitments for the purchase of tax-exempt bonds
with a specified coupon to be delivered by an issuer at a future date, typically exceeding 45 days
but normally less than one year after the commitment date. Municipal forwards are normally used as
a refunding mechanism for bonds that may only be redeemed on a designated future date. See
When-Issued Securities and Forward Commitment Securities for more information.
Municipal Lease Obligations. Municipal lease obligations are securities issued by state and local
governments and authorities to finance the acquisition of equipment and facilities. They may take
the form of a lease, an installment purchase contract, a conditional sales contract, or a
participation interest in any of the above.
Municipal Securities. Municipal bonds include general obligation bonds, revenue or special
obligation bonds, private activity and industrial development bonds and participation interests in
municipal bonds. General obligation bonds are backed by the taxing power of the issuing
municipality. Revenue bonds are backed by the revenues of a project or facility (for example, tolls
from a bridge). Certificates of participation represent an interest in an underlying obligation or
commitment, such as an obligation issued in connection with a leasing arrangement. The payment of
principal and interest on private activity and industrial development bonds generally is totally
dependent on the ability of a facilitys user to meet its financial obligations and the pledge, if
any, of real and personal property as security for the payment.
Municipal notes consist of general obligation notes, tax anticipation notes (notes sold to finance
working capital needs of the issuer in anticipation of receiving taxes on a future date), revenue
anticipation notes (notes sold to provide needed cash prior to receipt of expected non-tax revenues
from a specific source), bond anticipation notes, certificates of indebtedness, demand notes and
construction loan notes. A Funds investments in any of the notes described above will be limited
to those obligations (i) where both principal and interest are backed by the full faith and credit
of the United States, (ii) which are rated MIG-2 or V-MIG-2 at the time of investment by Moodys,
(iii) which are rated SP-2 at the time of investment by S&P, or (iv) which, if not rated by S&P or
Moodys, are in the Subadvisers judgment, of at least comparable quality to MIG-2, VMIG-2 or SP-2.
From time to time, a municipality may refund a bond that it has already issued prior to the
original bonds call date by issuing a second bond, the proceeds of which are used to purchase
securities. The securities are placed in
16
an escrow account pursuant to an agreement between the municipality and an independent escrow
agent. The principal and interest payments on the securities are then used to pay off the original
bondholders. For purposes of diversification and industry concentration, pre-refunded bonds will be
treated as governmental issues.
Municipal bonds generally must be rated investment grade by at least one national securities rating
agency or, if not rated, must be deemed by the Subadviser to essentially have characteristics
similar to those of bonds having the above rating. Bonds downgraded to below investment grade may
continue to be held at the discretion of the Funds Subadviser. A Fund may purchase industrial
development and pollution control bonds if the interest paid is exempt from federal income tax.
These bonds are issued by or on behalf of public authorities to raise money to finance various
privately-operated facilities for business and manufacturing, housing, sports and pollution
control. These bonds are also used to finance public facilities such as airports, mass transit
systems, ports and parking. The payment of the principal and interest on such bonds is dependent
solely on the ability of the facilitys user to meet its financial obligations and the pledge, if
any, of real and personal property so financed as security for such payment.
Private activity bonds are issued by or on behalf of states, or political subdivisions thereof, to
finance privately owned or operated facilities for business and manufacturing, housing, sports, and
pollution control, and to finance activities of and facilities for charitable institutions. Private
activity bonds are also used to finance public facilities such as airports, mass transit systems,
ports parking and low-income housing. The payment of the principal and interest on private activity
bonds is dependent solely on the ability of the facilitys user to meet its financial obligations
and may be secured by a pledge of real and personal property so financed.
Investments in floating rate instruments will normally involve industrial development or revenue
bonds which provide that the rate of interest is set as a specific percentage of a designated base
rate (such as the prime rate) at a major commercial bank, and that the Funds can demand payment of
the obligation at all times or at stipulated dates on short notice (not to exceed 30 days) at par
plus accrued interest. Such obligations are frequently secured by letters of credit or other credit
support arrangements provided by banks. The quality of the underlying credit or of the bank, as the
case may be, must, in the Subadvisers opinion, be equivalent to the long-term bond or commercial
paper ratings stated above. The Subadviser will monitor the earning power, cash flow and liquidity
ratios of the issuers of such instruments and the ability of an issuer of a demand instrument to
pay principal and interest on demand. The Subadviser may purchase other types of tax-exempt
instruments as long as they are of a quality equivalent to the bond or commercial paper ratings
stated above.
The Subadviser has the authority to purchase securities at a price which would result in a yield to
maturity lower than that generally offered by the seller at the time of purchase when they can
simultaneously acquire the right to sell the securities back to the seller, the issuer, or a
third-party (the writer) at an agreed-upon price at any time during a stated period or on a
certain date. Such a right is generally denoted as a standby commitment or a put. The purpose
of engaging in transactions involving puts is to maintain flexibility and liquidity in order to
meet redemptions and remain as fully invested as possible in municipal securities. The right to put
the securities depends on the writers ability to pay for the securities at the time the put is
exercised. The Funds will limit their put transactions to those with institutions which the
Subadvisers believe present minimum credit risks, and the Subadvisers will use their best efforts
to initially determine and thereafter monitor the financial strength of the put providers by
evaluating their financial statements and such other information as is available in the
marketplace. It may, however, be difficult to monitor the financial strength of the writers where
adequate current financial information is not available. In the event that any writer is unable to
honor a put for financial reasons, the affected Fund would be a general creditor (i.e., on parity
with all other unsecured creditors) of the writer. Furthermore, particular provisions of the
contract between a Fund and the writer may excuse the writer from repurchasing the securities in
certain circumstances (for example, a change in the published rating of the underlying municipal
securities or any similar event that has an adverse effect on the issuers credit); or a provision
in the contract may provide that the put will not be exercised except in certain special cases, for
example, to maintain portfolio liquidity. A Fund could, however, sell the underlying portfolio
security in the open market or wait until the
17
portfolio security matures, at which time it should realize the full par value of the security.
Municipal securities purchased subject to a put may be sold to third persons at any time, even
though the put is outstanding, but the put itself, unless it is an integral part of the security as
originally issued, may not be marketable or otherwise assignable. Sale of the securities to third
parties or lapse of time with the put unexercised may terminate the right to put the securities.
Prior to the expiration of any put option, a Fund could seek to negotiate terms for the extension
of such an option. If such a renewal cannot be negotiated on terms satisfactory to a Fund, the Fund
could, of course, sell the portfolio security. The maturity of the underlying security will
generally be different from that of the put. There will be no limit to the percentage of portfolio
securities that the Funds may purchase subject to a put. For the purpose of determining the
maturity of securities purchased subject to an option to put, and for the purpose of determining
the dollar-weighted average maturity of the Funds including such securities, the Trust will
consider maturity to be the first date on which it has the right to demand payment from the
writer of the put although the final maturity of the security is later than such date.
Other types of tax-exempt instruments which are permissible investments include floating rate
notes. Investments in such floating rate instruments will normally involve industrial development
or revenue bonds which provide that the rate of interest is set as a specific percentage of a
designated base rate (such as the prime rate) at a major commercial bank, and that the Fund can
demand payment of the obligation at all times or at stipulated dates on short notice (not to exceed
30 days) at par plus accrued interest. Such obligations are frequently secured by letters of credit
or other credit support arrangements provided by banks. The quality of the underlying credit or of
the bank, as the case may be, must, in the Subadvisers opinion, be equivalent to the long-term
bond or commercial paper ratings stated above. The Subadviser will monitor the earning power, cash
flow and liquidity ratios of the issuers of such instruments and the ability of an issuer of a
demand instrument to pay principal and interest on demand. The Funds may also purchase
participation interests in municipal securities (such as industrial development bonds and municipal
lease/purchase agreements). A participation interest gives a Fund an undivided interest in the
underlying municipal security. If it is unrated, the participation interest will be backed by an
irrevocable letter of credit or guarantee of a credit-worthy financial institution or the payment
obligations otherwise will be collateralized by U.S. government securities. Participation interests
may have fixed, variable or floating rates of interest and may include a demand feature. A
participation interest without a demand feature or with a demand feature exceeding seven days may
be deemed to be an illiquid security subject to a Funds investment limitations restricting its
purchases of illiquid securities. A Fund may purchase other types of tax-exempt instruments as long
as they are of a quality equivalent to the bond or commercial paper ratings stated above.
Opinions relating to the validity of municipal securities and to the exemption of interest thereon
from federal income tax are rendered by bond counsel to the respective issuers at the time of
issuance. Neither the Funds nor the Subadvisers will review the proceedings relating to the
issuance of municipal securities or the basis for such opinions.
Special Considerations Relating to Municipal Obligations of Designated States
As described in the prospectuses, except for investments in temporary investments, each Tax-Exempt
Bond Fund will invest substantially all of its net assets (at least 80%) in municipal bonds that
are exempt from federal and state tax in that state (Municipal Obligations), generally Municipal
Obligations issued in its respective state. Each Fund is therefore more susceptible to political,
economic or regulatory factors adversely affecting issuers of Municipal Obligations in its state.
Set forth below is additional information that bears upon the risk of investing in Municipal
Obligations issued by public authorities in the states of currently offered Funds. This information
was obtained from official statements of issuers located in the respective states as well as from
other publicly available official documents and statements. The Funds have not independently
verified any of the information contained in such statements and documents. The information below
is intended only as a general summary and is not intended as a discussion of any specific factor
that may affect any particular obligation or issuer.
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Factors Pertaining to Georgia |
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The State of Georgia ended March 2008 with revenue collections for the fiscal year to
date exceeding 2007 levels by 1.6%, led by the 2.5% advance in individual income tax
receipts. |
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In a November, 2007 report, Moodys Investors Service continued to praise the State of
Georgias conservative fiscal practices, replenishment of reserves from revenues, and
well-funded pensions, while acknowledging the states lack of some financial best
practices, slowing revenue growth, and education funding pressures. |
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The States unemployment rate for March, 2008 was 5.3%, 0.2% above the national average
of 5.1%. |
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Georgias general obligation debt continues to carry Aaa/AAA ratings from Moodys,
Standard and Poors, and Fitch. These ratings reflect the States credit quality only
and do not indicate the creditworthiness of other tax-exempt securities in which the Fund
may invest. Furthermore, it cannot be assumed that the State will maintain its current
credit ratings. |
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Factors Pertaining to Maryland |
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Marylands economy continues to expand though at a slower pace than earlier in the
decade. The Port of Baltimores activity, the States proximity to the Washington D C
metropolitan area, and higher defense and homeland security spending all benefit the
States economy which remains as affected, proportionately, by Federal government
spending as any state in the nation. According to Moodys Investors Service,
manufacturing continues to decline as a source of employment for residents and in 2007 is
estimated to have provided jobs for only 5% of the workforce, about one-half the national
level. Military base realignment is expected to have a positive impact by increasing
military presence and related service industry employment. Marylands average
unemployment rate for 2007 was estimated at 3.8% compared to the national rate of 4.6%
and per capita income is approximately 120% of the national average, ranking the State as
the 4th wealthiest by this measurement. |
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The States revenue growth has slowed in recent years and forecasted growth rates have
been adjusted lower following housing market weakness and general economic uncertainties.
Moodys reports that the States revenues grew 7.3% in 2006, down from a 13% growth rate
in 2005. Revenues grew just 4.4% in 2007 and 2008 growth is estimated to grow only 2.2%.
Based on this lower growth rate and expenditure pressures, tax changes were implemented
earlier in the current fiscal year to increase revenue but challenges remain as sales tax
collections remain below forecast with a slower economy. |
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The States general obligation bonds are rated AAA by all of the rating services and are
amortized rapidly, over 15 years, as required by the States Constitution. This is a
credit strength which replenishes debt capacity. According to Moodys, net tax supported
debt at $1,297 per capita ranks Maryland 16th highest of the states. However,
when compared to per capita income, the State ranks better due to its high income levels
with net debt as a percentage of personal income at 3% compared to the 50-state mean of
3.2%. Moodys also cites the States strong financial management, revenue reserves and
economy as strengths. |
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The AAA ratings apply to the States direct debt and may not be indicative of the credit
rating of other securities purchased by the Maryland Municipal Bond Fund. It also cannot
be assumed that the State will maintain its current debt profile and ratings. |
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Factors Pertaining to North Carolina |
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The State of North Carolina ended March 2008 with revenue collections for the fiscal year
to date exceeding 2007 levels by 1.3%, led by the 5.3% advance in individual income tax
receipts. Total General Fund revenues year to date are currently at 68.7% of annual
budgeted levels, compared to 74% at this time last year. |
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In an April, 2007 rating update, Moodys Investors Service lauded the states financial
performance and history of strong financial management, while acknowledging the
challenges posed by education financing needs and a rising debt burden. |
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The States unemployment rate for March, 2008 was 5.2%, 0.1% above the national average
of 5.1%. |
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North Carolinas general obligation debt carries Aaa/AAA ratings from Moodys, Standard
and Poors, and Fitch. These ratings reflect the States credit quality only and do not
indicate the creditworthiness of other tax-exempt securities in which the Fund may
invest. Furthermore, it cannot be assumed that the State will maintain its current
credit ratings. |
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Factors Pertaining to Virginia |
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Virginias economy and employment have grown at a pace exceeding the nation in most
years, however, in 2007 employment growth was just 0.9% compared to the national growth
rate of 1.1% according to Moodys Investors Service. Moodys reports that statewide home
sales fell 15% in 2007 from 2006 and pending home sales, as of December 2007, were off
33%. Slowing real estate markets have had a significant impact on sales and personal
income tax collections, pushing state revenue growth rates downward. The States
unemployment rate at 3.0% for 2007 remained below the national average of 4.6%. Virginia
continues to benefit from a diverse economy and higher than average governmental
employment and defense related spending, especially in the Northern Virginia suburbs of
Washington DC and in the Hampton Roads region, an area with significant military
installations. Personal income remains the highest in the southeast and, at 107% of
national averages, Virginia ranked 9th of the states in 2007, according to
Moodys. |
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General Fund Revenue growth was 8.4% in 2006 but fell to just 4.9% for fiscal 2007,
missing the forecast of 6.5% for the same period. Fiscal 2008 growth has been revised
lower on several occasions as the State prepares its biennial budget for 2009-10. General
revenues for 2008 are now expected to grow just 1.2% and 2.2% in 2009 before climbing to
6.8% in 2010, according to Moodys reports. The State has had to draw on its Revenue
Stabilization Fund and impose spending reductions in many areas to maintain structurally
balanced budget. |
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Virginia has, historically, maintained low debt ratios, however, the minimal issuance of
general obligation debt has been offset of significant growth in appropriation backed
debt issued by various state authorities. Moodys calculates Virginias net tax supported
debt per capita at $764 compared to the state average of $1,158, ranking Virginia
29th. Comparing debt per capita to personal income, Virginia ranked
34th of the states at 1.9% compared to the state average of 3.2%. |
|
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All three major debt rating agencies rate Virginias general obligation bonds AAA and
Moodys cites its conservative fiscal management, diverse economy and low debt burden as
strengths. This rating applies only to the States direct debt and may not be indicative
of the rating on other securities that the Virginia Intermediate Municipal Bond Fund may
invest in. There is no assurance that the State will maintain its current debt profile or
ratings. |
20
Non-Publicly Traded Securities; Rule 144A Securities. The Funds may purchase securities that are
not registered under the Securities Act of 1933, as amended (the 1933 Act), but that can be sold
to qualified institutional buyers in accordance with Rule 144A under the 1933 Act (Rule 144A
Securities). An investment in Rule 144A Securities will be considered illiquid and therefore
subject to a Funds limitation on the purchase of illiquid securities (usually 15% of a funds net
assets, 10% for the Money Market Funds), unless a Funds governing Board of Trustees determines on
an ongoing basis that an adequate trading market exists for the security. In addition to an
adequate trading market, the Board of Trustees will also consider factors such as trading activity,
availability of reliable price information and other relevant information in determining whether a
Rule 144A Security is liquid. This investment practice could have the effect of increasing the
level of illiquidity in a Fund to the extent that qualified institutional buyers become
uninterested for a time in purchasing Rule 144A Securities. The Board of Trustees will carefully
monitor any investments by a Fund in Rule 144A Securities. The Board of Trustees may adopt
guidelines and delegate to the Subadvisers the daily function of determining and monitoring the
liquidity of Rule 144A Securities, although the Board of Trustees will retain ultimate
responsibility for any determination regarding liquidity.
Non-publicly traded securities (including Rule 144A Securities) may involve a high degree of
business and financial risk and may result in substantial losses. These securities may be less
liquid than publicly traded securities, and a Fund may take longer to liquidate these positions
than would be the case for publicly traded securities. Although these securities may be resold in
privately negotiated transactions, the prices realized on such sales could be less than those
originally paid by a Fund. Further, companies whose securities are not publicly traded may not be
subject to the disclosure and other investor protection requirements applicable to companies whose
securities are publicly traded. A Funds investments in illiquid securities are subject to the risk
that should a Fund desire to sell any of these securities when a ready buyer is not available at a
price that is deemed to be representative of their value, the value of the Funds net assets could
be adversely affected.
Options. A Fund may purchase and write put and call options on securities or securities indices
(traded on U.S. exchanges or over-the-counter markets) and enter into related closing transactions.
A put option on a security gives the purchaser of the option the right to sell, and the writer of
the option the obligation to buy, the underlying security at any time during the option period. A
call option on a security gives the purchaser of the option the right to buy, and the writer of the
option the obligation to sell, the underlying security at any time during the option period. The
premium paid to the writer is the consideration for undertaking the obligations under the option
contract.
Put and call options on indices are similar to options on securities except that options on an
index give the holder the right to receive, upon exercise of the option, an amount of cash if the
closing level of the underlying index is greater than (or less than, in the case of puts) the
exercise price of the option. This amount of cash is equal to the difference between the closing
price of the index and the exercise price of the option, expressed in dollars multiplied by a
specified number. Thus, unlike options on individual securities, all settlements are in cash, and
gain or loss depends on price movements in the particular market represented by the index
generally, rather than the price movements in individual securities.
The initial purchase (sale) of an option contract is an opening transaction. In order to close
out an option position, a Fund may enter into a closing transaction, which is simply the sale
(purchase) of an option contract on the same security with the same exercise price and expiration
date as the option contract originally opened. If a Fund is unable to effect a closing purchase
transaction with respect to an option it has written, it will not be able to sell the underlying
security until the option expires or the Fund delivers the security upon exercise.
A Fund may purchase and write options on an exchange or over-the-counter. Over-the-counter options
(OTC options) differ from exchange-traded options in several respects. They are transacted
directly with dealers and not with a clearing corporation, and therefore entail the risk of
non-performance by the dealer. OTC options are available for a greater variety of securities and
for a wider range of expiration dates and exercise prices than are
21
available for exchange-traded options. Because OTC options are not traded on an exchange, pricing
is done normally by reference to information from a market maker. It is the SECs position that OTC
options are generally illiquid.
The market value of an option generally reflects the market price of an underlying security. Other
principal factors affecting market value include supply and demand, interest rates, the pricing
volatility of the underlying security and the time remaining until the expiration date.
A Fund must cover all options it writes. For example, when a Fund writes an option on a security,
index or foreign currency, it will segregate or earmark liquid assets with the Funds custodian in
an amount at least equal to the market value of the option and will maintain such coverage while
the option is open. A Fund may otherwise cover the transaction by means of an offsetting
transaction or other means permitted by the 1940 Act or the rules and SEC interpretations
thereunder.
Each Fund may trade put and call options on securities, securities indices or currencies, as the
Subadviser determines is appropriate in seeking the Funds investment objective. For example, a
Fund may purchase put and call options on securities or indices to protect against a decline in the
market value of the securities in its portfolio or to anticipate an increase in the market value of
securities that the Fund may seek to purchase in the future. A Fund purchasing put and call options
pays a premium therefor. If price movements in the underlying securities are such that exercise of
the options would not be profitable for the Fund, loss of the premium paid may be offset by an
increase in the value of the Funds securities or by a decrease in the cost of acquisition of
securities by the Fund.
In another instance, a Fund may write covered call options on securities as a means of increasing
the yield on its assets and as a means of providing limited protection against decreases in its
market value. When a Fund writes an option, if the underlying securities do not increase or
decrease to a price level that would make the exercise of the option profitable to the holder
thereof, the option generally will expire without being exercised and the Fund will realize as
profit the premium received for such option. When a call option written by the Fund is exercised,
the Fund will be required to sell the underlying securities to the option holder at the strike
price, and will not participate in any increase in the price of such securities above the strike
price. When a put option written by the Fund is exercised, the Fund will be required to purchase
the underlying securities at a price in excess of the market value of such securities.
There are significant risks associated with a Funds use of options, including the following: (1)
the success of a hedging strategy may depend on the Subadvisers ability to predict movements in
the prices of individual securities, fluctuations in markets and movements in interest rates; (2)
there may be an imperfect or no correlation between the movement in prices of options held by the
Fund and the securities underlying them; (3) there may not be a liquid secondary market for
options; and (4) while a Fund will receive a premium when it writes covered call options, it may
not participate fully in a rise in the market value of the underlying security.
Other Investments. The Funds are not prohibited from investing in bank obligations issued by
clients of the Funds administrator or distributor or their respective parent or affiliated
companies. The purchase of Fund shares by these banks or their customers will not be a
consideration in deciding which bank obligations the Funds will purchase. The Funds will not
purchase obligations issued by the Adviser, Subadvisers or the Funds distributor.
Parallel Pay Securities; PAC Bonds. Parallel pay CMOs and REMICs are structured to provide payments
of principal on each payment date to more than one class. These simultaneous payments are taken
into account in calculating the stated maturity date or final distribution date of each class,
which must be retired by its stated maturity date or final distribution date, but may be retired
earlier. Planned Amortization Class CMOs (PAC Bonds) generally require payments of a specified
amount of principal on each payment date. PAC Bonds are
22
always parallel pay CMOs with the required principal payment on such securities having the highest
priority after interest has been paid to all classes.
Pay-In-Kind Securities. Pay-In-Kind securities are debt obligations or preferred stock that pay
interest or dividends in the form of additional debt obligations or preferred stock.
Preferred Stock. Preferred stock is a corporate equity security that pays a fixed or variable
stream of dividends. Preferred stock is generally a non-voting security.
Real Estate Investment Trusts. A REIT is a corporation or business trust (that would otherwise be
taxed as a corporation) which meets the definitional requirements of the Internal Revenue Code of
1986, as amended (the Code). The Code permits a qualifying REIT to deduct from taxable income the
dividends paid, thereby effectively eliminating corporate level federal income tax and making the
REIT a pass-through vehicle for federal income tax purposes. A REIT primarily invests in real
estate and real estate mortgages. If a corporation, trust or association meets the REIT
requirements, it will be taxed only on its undistributed income and capital gains.
REITs are sometimes informally characterized as Equity REITs and Mortgage REITs. An Equity REIT
invests primarily in the fee ownership or leasehold ownership of land and buildings; a Mortgage
REIT invests primarily in mortgages on real property, which may secure construction, development or
long-term loans.
REITs in which a Fund invests may be affected by changes in underlying real estate values, which
may have an exaggerated effect to the extent that REITs in which a Fund invests may concentrate
investments in particular geographic regions or property types. Additionally, rising interest rates
may cause investors in REITs to demand a higher annual yield from future distributions, which may
in turn decrease market prices for equity securities issued by REITs. Rising interest rates also
generally increase the costs of obtaining financing, which could cause the value of the Funds
investments to decline. During periods of declining interest rates, certain Mortgage REITs may hold
mortgages that the mortgagors elect to prepay, which prepayment may diminish the yield on
securities issued by such Mortgage REITs. In addition, Mortgage REITs may be affected by the
ability of borrowers to repay when due the debt extended by the REIT and Equity REITs may be
affected by the ability of tenants to pay rent.
Certain REITs have relatively small market capitalization, which may tend to increase the
volatility of the market price of securities issued by such REITs. Furthermore, REITs are dependent
upon specialized management skills, have limited diversification and are, therefore, subject to
risks inherent in operating and financing a limited number of projects. By investing in REITs
indirectly through the Fund, a shareholder will bear not only his proportionate share of the
expenses of the Fund, but also, indirectly, similar expenses of the REITs. REITs depend generally
on their ability to generate cash flow to make distributions to shareholders.
In addition to these risks, Equity REITs may be affected by changes in the value of the underlying
property owned by the trusts, while Mortgage REITs may be affected by the quality of any credit
extended. Further, Equity and Mortgage REITs are dependent upon management skills and generally may
not be diversified. Equity and Mortgage REITs are also subject to heavy cash flow dependency
defaults by borrowers and self-liquidation. In addition, Equity and Mortgage REITs could possibly
fail to qualify for tax free pass-through of income under the Code or to maintain their exemptions
from registration under the 1940 Act. The above factors may also adversely affect a borrowers or a
lessees ability to meet its obligations to the REIT. In the event of default by a borrower or
lessee, the REIT may experience delays in enforcing its rights as a mortgagee or lessor and may
incur substantial costs associated with protecting its investments.
Real Estate Securities. A Fund may be subject to the risks associated with the direct ownership of
real estate because of its policy of concentration in the securities of companies principally
engaged in the real estate industry. For example, real estate values may fluctuate as a result of
general and local economic conditions,
23
overbuilding and increased competition, increases in property taxes and operating expenses,
demographic trends and variations in rental income, changes in zoning laws, casualty or
condemnation losses, regulatory limitations on rents, changes in neighborhood values, related party
risks, changes in how appealing properties are to tenants, changes in interest rates and other real
estate capital market influences. The value of securities of companies, which service the real
estate business sector may also be affected by such risks.
Because a Fund may invest a substantial portion of its assets in REITs, a Fund may also be subject
to certain risks associated with the direct investments of the REITs. REITs may be affected by
changes in the value of their underlying properties and by defaults by borrowers or tenants.
Mortgage REITs may be affected by the quality of the credit extended. Furthermore, REITs are
dependent on specialized management skills. Some REITs may have limited diversification and may be
subject to risks inherent in financing a limited number of properties. REITs depend generally on
their ability to generate cash flow to make distributions to shareholders or unitholders, and may
be subject to defaults by borrowers and to self-liquidations. In addition, the performance of a
REIT may be affected by its failure to qualify for tax-free pass-through of income under the Code
or its failure to maintain exemption from registration under the 1940 Act. Changes in prevailing
interest rates may inversely affect the value of the debt securities in which a Fund will invest.
Changes in the value of portfolio securities will not necessarily affect cash income derived from
these securities but will affect a Funds net asset value. Generally, increases in interest rates
will increase the costs of obtaining financing which could directly and indirectly decrease the
value of a Funds investments.
Repurchase Agreements. A Fund may enter into repurchase agreements with financial institutions. The
Funds each follow certain procedures designed to minimize the risks inherent in such agreements.
These procedures include effecting repurchase transactions only with creditworthy financial
institutions whose condition will be continually monitored by the Subadviser. The repurchase
agreements entered into by a Fund will provide that the underlying collateral at all times shall
have a value at least equal to 102% of the resale price stated in the agreement. Under all
repurchase agreements entered into by a Fund, the custodian or its agent must take possession of
the underlying collateral. In the event of a default or bankruptcy by a selling financial
institution, a Fund will seek to liquidate such collateral. However, the exercising of each Funds
right to liquidate such collateral could involve certain costs or delays and, to the extent that
proceeds from any sale upon a default of the obligation to repurchase were less than the repurchase
price, the Fund could suffer a loss. It is the current policy of each of the Funds, not to invest
in repurchase agreements that do not mature within seven days if any such investment, together with
any other illiquid assets held by that Fund, amounts to more than 15% of the Funds net assets. The
investments of each of the Funds in repurchase agreements, at times, may be substantial when, in
the view of the Subadviser, liquidity or other considerations so warrant.
Resource Recovery Bonds. Resource recovery bonds are a type of revenue bond issued to build
facilities such as solid waste incinerators or waste-to-energy plants. Typically, a private
corporation will be involved, at least during the construction phase, and the revenue stream will
be secured by fees or rents paid by municipalities for use of the facilities. The viability of a
resource recovery project, environmental protection regulations, and project operator tax
incentives may affect the value and credit quality of resource recovery bonds.
Reverse Repurchase Agreements. A reverse repurchase agreement is a contract under which a Fund
sells a security for cash for a relatively short period (usually not more than one week) subject to
the obligation of the Fund to repurchase such security at a fixed time and price (representing the
sellers cost plus interest). Reverse repurchase agreements involve the risk that the market value
of the securities a Fund is obligated to repurchase under the agreement may decline below the
repurchase price. In the event the buyer of securities under a reverse repurchase agreement files
for bankruptcy or becomes insolvent, a Funds use of proceeds of the agreement may be restricted
pending a determination by the other party, or its trustee or receiver, whether to enforce the
Funds obligation to repurchase the securities. In addition, reverse repurchase agreements are
techniques involving leverage, and are subject to asset coverage requirements. Under the
requirements of the 1940 Act, a Fund is required to maintain an asset coverage (including the
proceeds of the borrowings) of at least 300% of all
24
borrowings. To avoid any leveraging concerns, the Fund will segregate or earmark liquid assets with
the Funds custodian in an amount sufficient to cover its repurchase obligations.
Revolving Credit Facilities (Revolvers). Revolvers are borrowing arrangements in which the
lender agrees to make loans up to a maximum amount upon demand by the borrower during a specified
term. As the borrower repays the loan, an amount equal to the repayment may be borrowed again
during the term of the Revolver and usually provides for floating or variable rates of interest.
These commitments may have the effect of requiring a Fund to increase its investment in a company
at a time when it might not otherwise decide to do so (including at a time when the companys
financial condition makes it unlikely that such amounts will be repaid). To avoid any leveraging
concerns, the Fund will segregate or earmark liquid assets with the Funds custodian in an amount
sufficient to cover its repurchase obligations.
A Fund may invest in Revolvers with credit quality comparable to that of issuers of its other
investments. Revolvers may be subject to restrictions on transfer, and only limited opportunities
may exist to resell such instruments. As a result, a Fund may be unable to sell such investments at
an opportune time or may have to resell them at less than fair market value. Each Fund currently
intends to treat Revolvers for which there is no readily available market as illiquid for purposes
of that Funds limitation on illiquid investments.
Securities Lending. Each Fund may lend portfolio securities to brokers, dealers and other financial
organizations that meet capital and other credit requirements or other criteria established by the
Funds Board. These loans, if and when made, may not exceed 33 1/3% of the total asset value of the
Fund (including the loan collateral). No Fund will lend portfolio securities to its investment
adviser, subadviser or their affiliates unless it has applied for and received specific authority
to do so from the SEC. Loans of portfolio securities will be fully collateralized by cash, letters
of credit or U.S. government securities, and the collateral will be maintained in an amount equal
to at least 100% of the current market value of the loaned securities by marking to market daily.
Any gain or loss in the market price of the securities loaned that might occur during the term of
the loan would be for the account of the Fund. A Fund may pay a part of the interest earned from
the investment of collateral, or other fee, to an unaffiliated third party for acting as the Funds
securities lending agent.
By lending its securities, a Fund may increase its income by receiving payments from the borrower
that reflect the amount of any interest or any dividends payable on the loaned securities as well
as by either investing cash collateral received from the borrower in short-term instruments or
obtaining a fee from the borrower when U.S. government securities or letters of credit are used as
collateral. Each Fund will adhere to the following conditions whenever its portfolio securities are
loaned: (i) the Fund must receive at least 100% cash collateral or equivalent securities of the
type discussed in the preceding paragraph from the borrower; (ii) the borrower must increase such
collateral whenever the market value of the securities rises above the level of such collateral;
(iii) the Fund must be able to terminate the loan on demand; (iv) the Fund must receive reasonable
interest on the loan, as well as any dividends, interest or other distributions on the loaned
securities and any increase in market value; (v) the Fund may pay only reasonable fees in
connection with the loan (which fees may include fees payable to the lending agent, the borrower,
the Funds administrator and the custodian); and (vi) voting rights on the loaned securities may
pass to the borrower, provided, however, that if a matter comes up for a vote which would have a
material effect on a Fund or its investment, the Fund must attempt to terminate the loan and regain
the right to vote the securities. Any securities lending activity in which a Fund may engage will
be undertaken pursuant to Board approved procedures reasonably designed to ensure that the
foregoing criteria will be met. Loan agreements involve certain risks in the event of default or
insolvency of the borrower, including possible delays or restrictions upon a Funds ability to
recover the loaned securities or dispose of the collateral for the loan, which could give rise to
loss because of adverse market action, expenses and/or delays in connection with the disposition of
the underlying securities.
Senior Loans
25
Structure of Senior Loans. A senior floating rate loan (Senior Loan) is typically originated,
negotiated and structured by a U.S. or foreign commercial bank, insurance company, finance company
or other financial institution (the Agent) for a group of loan investors (Loan Investors). The
Agent typically administers and enforces the Senior Loan on behalf of the other Loan Investors in
the syndicate. In addition, an institution, typically but not always the Agent, holds any
collateral on behalf of the Loan Investors.
Senior Loans primarily include senior floating rate loans and secondarily senior floating rate debt
obligations (including those issued by an asset-backed pool), and interests therein. Loan
interests primarily take the form of assignments purchased in the primary or secondary market.
Loan interests may also take the form of participation interests in, or novations of a Senior Loan.
Such loan interests may be acquired from U.S. or foreign commercial banks, insurance companies,
finance companies or other financial institutions who have made loans or are Loan Investors or from
other investors in loan interests.
A Fund typically purchases Assignments from the Agent or other Loan Investors. The purchaser of
an Assignment typically succeeds to all the rights and obligations under the Loan Agreement of the
assigning Loan Investor and becomes a Loan Investor under the Loan Agreement with the same rights
and obligations as the assigning Loan Investor. Assignments may, however, be arranged through
private negotiations between potential assignees and potential assignors, and the rights and
obligations acquired by the purchaser of an Assignment may differ from, and be more limited than,
those held by the assigning Loan Investor.
A Fund may invest up to 10% of its total assets in Participations. Participations by a Fund in a
Loan Investors portion of a Senior Loan typically will result in a Fund having a contractual
relationship only with such Loan Investor, not with the borrower. As a result, a Fund may have the
right to receive payments of principal, interest and any fees to which it is entitled only from the
Loan Investor selling the Participation and only upon receipt by such Loan Investor of such
payments from the borrower. In connection with purchasing Participations, a Fund generally will
have no right to enforce compliance by the borrower with the terms of the loan agreement, nor any
rights with respect to any funds acquired by other Loan Investors through set-off against the
borrower and a Fund may not directly benefit from the collateral supporting the Senior Loan in
which it has purchased the Participation. As a result, a Fund may assume the credit risk of both
the borrower and the Loan Investor selling the Participation. In the event of the insolvency of
the Loan Investor selling a participation, a Fund may be treated as a general creditor of such Loan
Investor. The selling Loan Investors and other persons interpositioned between such Loan Investors
and a Fund with respect to such Participations will likely conduct their principal business
activities in the banking, finance and financial services industries. Persons engaged in such
industries may be more susceptible to, among other things, fluctuations in interest rates, changes
in the Federal Open Market Committees monetary policy, governmental regulations concerning such
industries and capital raising activities generally, and fluctuations in the financial markets
generally.
A Fund will only acquire Participations if the Loan Investor selling the Participation, and any
other persons interpositioned between a Fund and the Loan Investor, at the time of investment has
outstanding debt or deposit obligations rated investment grade (BBB or A-3 or higher by Standard &
Poors Ratings Group (S&P) or Baa or P-3 or higher by Moodys Investors Service, Inc. (Moodys)
or comparably rated by another nationally recognized rating agency (each a Rating Agency)) or
determined by the Subadviser to be of comparable quality. Securities rated Baa by Moodys have
speculative characteristics. Similarly, a Fund will purchase an Assignment or Participation or act
as a Loan Investor with respect to a syndicated Senior Loan only where the Agent with respect to
such Senior Loan at the time of investment has outstanding debt or deposit obligations rated
investment grade or determined by the Subadviser to be of comparable quality. Long-term debt rated
BBB by S&P is regarded by S&P as having adequate capacity to pay interest and repay principal and
debt rated Baa by Moodys is regarded by Moodys as a medium grade obligation, i.e., it is neither
highly protected nor poorly secured. Commercial paper rated A-3 by S&P indicates that S&P believes
such obligations exhibit adequate protection parameters but that adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation and issues of commercial paper rated P-
26
3 by Moodys are considered by Moodys to have an acceptable ability for repayment of senior
short-term obligations. The effect of industry characteristics and market compositions may be more
pronounced.
Loan Collateral. In order to borrow money pursuant to a Senior Loan, a borrower will frequently,
for the term of the Senior Loan, pledge collateral, including but not limited to, (i) working
capital assets, such as accounts receivable and inventory; (ii) tangible fixed assets, such as real
property, buildings and equipment; (iii) intangible assets, such as trademarks and patent rights
(but excluding goodwill); and/or (iv) security interests in shares of stock of subsidiaries or
affiliates. In the case of Senior Loans made to non-public companies, the companys shareholders
or owners may provide collateral in the form of secured guarantees and/or security interests in
assets that they own. In many instances, a Senior Loan may be secured only by stock in the borrower
or its subsidiaries. Collateral may consist of assets that may not be readily liquidated, and there
is no assurance that the liquidation of such assets would satisfy a borrowers obligations under a
Senior Loan.
Certain Fees Paid to the Fund. In the process of buying, selling and holding Senior Loans, a Fund
may receive and/or pay certain fees. These fees are in addition to interest payments received and
may include facility fees, commitment fees, commissions and prepayment penalty fees. When a Fund
buys a Senior Loan it may receive a facility fee and when it sells a Senior Loan it may pay a
facility fee. On an ongoing basis, a Fund may receive a commitment fee based on the undrawn portion
of the underlying line of credit portion of a Senior Loan. In certain circumstances, a Fund may
receive a prepayment penalty fee upon the prepayment of a Senior Loan by a borrower. Other fees
received by a Fund may include amendment fees.
Borrower Covenants. A borrower must comply with various restrictive covenants contained in a loan
agreement or note purchase agreement between the borrower and the holders of the Senior Loan (the
Loan Agreement). Such covenants, in addition to requiring the scheduled payment of interest and
principal, may include restrictions on dividend payments and other distributions to stockholders,
provisions requiring the borrower to maintain specific minimum financial ratios, and limits on
total debt. In addition, the Loan Agreement may contain a covenant requiring the borrower to prepay
the Loan with any free cash flow. Free cash flow is generally defined as net cash flow after
scheduled debt service payments and permitted capital expenditures, and includes the proceeds from
asset dispositions or sales of securities. A breach of a covenant which is not waived by the Agent,
or by the Loan Investors directly, as the case may be, is normally an event of acceleration; i.e.,
the Agent, or the Loan Investors directly, as the case may be, has the right to call the
outstanding Senior Loan. The typical practice of an Agent or a Loan Investor in relying exclusively
or primarily on reports from the borrower may involve a risk of fraud by the borrower. In the case
of a Senior Loan in the form of a Participation, the agreement between the buyer and seller may
limit the rights of the holder to vote on certain changes which may be made to the Loan Agreement,
such as waiving a breach of a covenant. However, the holder of the Participation will, in almost
all cases, have the right to vote on certain fundamental issues such as changes in principal
amount, payment dates and interest rate.
Administration of Loans. In a typical Senior Loan, the Agent administers the terms of the Loan
Agreement. In such cases, the Agent is normally responsible for the collection of principal and
interest payments from the borrower and the apportionment of these payments to the credit of all
institutions which are parties to the Loan Agreement. A Fund will generally rely upon the Agent or
an intermediate participant to receive and forward to a Fund its portion of the principal and
interest payments on the Senior Loan. Furthermore, unless under the terms of a Participation
Agreement a Fund has direct recourse against the borrower, a Fund will rely on the Agent and the
other Loan Investors to use appropriate credit remedies against the borrower. The Agent is
typically responsible for monitoring compliance with covenants contained in the Loan Agreement
based upon reports prepared by the borrower. The seller of the Senior Loan usually does, but is
often not obligated to, notify holders of Senior Loans of any failures of compliance. The Agent may
monitor the value of the collateral and, if the value of the collateral declines, may accelerate
the Senior Loan, may give the borrower an opportunity to provide additional collateral or may seek
other protection for the benefit of the participants in the Senior Loan. The Agent is compensated
by the borrower for providing these services under a Loan Agreement, and such compensation
27
may include special fees paid upon structuring and funding the Senior Loan and other fees paid on a
continuing basis. With respect to Senior Loans for which the Agent does not perform such
administrative and enforcement functions, a Fund will perform such tasks on its own behalf,
although a collateral bank will typically hold any collateral on behalf of a Fund and the other
Loan Investors pursuant to the applicable Loan Agreement.
A financial institutions appointment as Agent may usually be terminated in the event that it fails
to observe the requisite standard of care or becomes insolvent, enters Federal Deposit Insurance
Corporation (FDIC) receivership, or, if not FDIC insured, enters into bankruptcy proceedings. A
successor Agent would generally be appointed to replace the terminated Agent, and assets held by
the Agent under the Loan Agreement should remain available to holders of Senior Loans. However, if
assets held by the Agent for the benefit of a Fund were determined to be subject to the claims of
the Agents general creditors, a Fund might incur certain costs and delays in realizing payment on
a Senior Loan, or suffer a loss of principal and/or interest. In situations involving intermediate
participants similar risks may arise.
Prepayments. Senior Loans can require, in addition to scheduled payments of interest and
principal, the prepayment of the Senior Loan from free cash flow, as defined above. The degree to
which borrowers prepay Senior Loans, whether as a contractual requirement or at their election, may
be affected by general business conditions, the financial condition of the borrower and competitive
conditions among Loan Investors, among others. As such, prepayments cannot be predicted with
accuracy. Upon a prepayment, either in part or in full, the actual outstanding debt on which a
Fund derives interest income will be reduced. However, a Fund may receive both a prepayment
penalty fee from the prepaying borrower and a facility fee upon the purchase of a new Senior Loan
with the proceeds from the prepayment of the former. Prepayments generally will not materially
affect a Funds performance because a Fund should be able to reinvest prepayments in other Senior
Loans that have similar yields (subject to market conditions) and because receipt of such fees may
mitigate any adverse impact on a Funds yield.
Other Information Regarding Senior Loans. From time to time the Subadviser and its affiliates may
borrow money from various banks in connection with their business activities. Such banks may also
sell interests in Senior Loans to or acquire them from a Fund or may be intermediate participants
with respect to Senior Loans in which a Fund owns interests. Such banks may also act as Agents for
Senior Loans held by a Fund.
A Fund may purchase and retain in its portfolio a Senior Loan where the borrower has experienced,
or may be perceived to be likely to experience, credit problems, including involvement in or recent
emergence from bankruptcy reorganization proceedings or other forms of debt restructuring. Such
investments may provide opportunities for enhanced income as well as capital appreciation. At
times, in connection with the restructuring of a Senior Loan either outside of bankruptcy court or
in the context of bankruptcy court proceedings, a Fund may determine or be required to accept
equity securities or junior debt securities in exchange for all or a portion of a Senior Loan. As
soon as reasonably practical, a Fund will divest itself of any equity securities or any junior debt
securities received if it is determined that the security is an ineligible holding for a Fund. As
a matter of policy, a Fund will not consider equity securities to be eligible holdings.
A Fund may acquire interests in Senior Loans which are designed to provide temporary or bridge
financing to a borrower pending the sale of identified assets or the arrangement of longer-term
loans or the issuance and sale of debt obligations. Bridge loans are often unrated. A Fund may
also invest in Senior Loans of borrowers that have obtained bridge loans from other parties. A
borrowers use of bridge loans involves a risk that the borrower may be unable to locate permanent
financing to replace the bridge loan, which may impair the borrowers perceived creditworthiness.
A Fund will be subject to the risk that collateral securing a loan will decline in value or have no
value. Such a decline, whether as a result of bankruptcy proceedings or otherwise, could cause the
Senior Loan to be undercollateralized or unsecured. In most credit agreements there is no formal
requirement to pledge additional
28
collateral. In addition, a Fund may invest in Senior Loans guaranteed by, or secured by assets of,
shareholders or owners, even if the Senior Loans are not otherwise collateralized by assets of the
borrower; provided, however, that such guarantees are fully secured. There may be temporary periods
when the principal asset held by a borrower is the stock of a related company, which may not
legally be pledged to secure a Senior Loan. On occasions when such stock cannot be pledged, the
Senior Loan will be temporarily unsecured until the stock can be pledged or is exchanged for or
replaced by other assets, which will be pledged as security for the Senior Loan. However, the
borrowers ability to dispose of such securities, other than in connection with such pledge or
replacement, will be strictly limited for the protection of the holders of Senior Loans and,
indirectly, Senior Loans.
If a borrower becomes involved in bankruptcy proceedings, a court may invalidate a Funds security
interest in the loan collateral or subordinate a Funds rights under the Senior Loan to the
interests of the borrowers unsecured creditors or cause interest previously paid to be refunded to
the borrower. If a court required interest to be refunded, it could negatively affect a Funds
performance. Such action by a court could be based, for example, on a fraudulent conveyance
claim to the effect that the borrower did not receive fair consideration for granting the security
interest in the loan collateral to a Fund. For Senior Loans made in connection with a highly
leveraged transaction, consideration for granting a security interest may be deemed inadequate if
the proceeds of the Loan were not received or retained by the borrower, but were instead paid to
other persons (such as shareholders of the borrower) in an amount which left the borrower insolvent
or without sufficient working capital. There are also other events, such as the failure to perfect
a security interest due to faulty documentation or faulty official filings, which could lead to the
invalidation of a Funds security interest in loan collateral. If a Funds security interest in
loan collateral is invalidated or the Senior Loan is subordinated to other debt of a borrower in
bankruptcy or other proceedings, a Fund would have substantially lower recovery, and perhaps no
recovery on the full amount of the principal and interest due on the Loan, or a Fund could also
have to refund interest (see the prospectus for additional information).
A Fund may acquire warrants and other equity securities as part of a unit combining a Senior Loan
and equity securities of a borrower or its affiliates. The acquisition of such equity securities
will only be incidental to a Funds purchase of a Senior Loan. A Fund may also acquire equity
securities or debt securities (including non-dollar denominated debt securities) issued in exchange
for a Senior Loan or issued in connection with the debt restructuring or reorganization of a
borrower, or if such acquisition, in the judgment of the subadviser, may enhance the value of a
Senior Loan or would otherwise be consistent with a Funds investment policies.
Regulatory Changes. To the extent that legislation or state or federal regulators that regulate
certain financial institutions impose additional requirements or restrictions with respect to the
ability of such institutions to make loans, particularly in connection with highly leveraged
transactions, the availability of Senior Loans for investment may be adversely affected. Further,
such legislation or regulation could depress the market value of Senior Loans.
Short Sales. As consistent with each Funds investment objective, a Fund may engage in short sales
that are either uncovered or against the box. A short sale is against the box if at all times
during which the short position is open, a Fund owns at least an equal amount of the securities or
securities convertible into, or exchangeable without further consideration for, securities of the
same issue as the securities that are sold short. A short sale against-the-box is a taxable
transaction to a Fund with respect to the securities that are sold short.
Uncovered short sales are transactions under which a Fund sells a security it does not own. To
complete such a transaction, a Fund must borrow the security to make delivery to the buyer. A Fund
then is obligated to replace the security borrowed by purchasing the security at the market price
at the time of the replacement. The price at such time may be more or less than the price at which
the security was sold by a Fund. Until the security is replaced, a Fund is required to pay the
lender amounts equal to any dividends or interest that accrue during the period of the loan. To
borrow the security, a Fund is required to pay a premium or daily interest, which will
29
increase the total cost of the security sold. The proceeds of the short sale will be retained by
the broker, to the extent necessary to meet margin requirements, until the short position is closed
out.
Until a Fund closes its short position or replaces the borrowed security, a Fund will: (a) earmark
or maintain in a segregated account cash or liquid securities at such a level that (i) the amount
earmarked or deposited in the account plus the amount deposited with the broker as collateral will
equal the current value of the security sold short; and (ii) the amount earmarked or deposited in
the segregated account plus the amount deposited with the broker as collateral will not be less
than the current market value of the security sold short, or (b) otherwise cover a Funds short
positions. Uncovered short sales incur a higher level of risk because to cover the short sale, the
security may have to be purchased in the open market at a much higher price.
Short-Term Obligations. Short-term obligations are debt obligations maturing (becoming payable) in
397 days or less, including commercial paper and short-term corporate obligations. Short-term
corporate obligations are short-term obligations issued by corporations.
Standby Commitments and Puts. The Funds may purchase securities at a price which would result in a
yield to maturity lower than that generally offered by the seller at the time of purchase when they
can simultaneously acquire the right to sell the securities back to the seller, the issuer or a
third-party (the writer) at an agreed-upon price at any time during a stated period or on a
certain date. Such a right is generally denoted as a standby commitment or a put. The purpose
of engaging in transactions involving puts is to maintain flexibility and liquidity to permit the
Funds to meet redemptions and remain as fully invested as possible in municipal securities. The
Funds reserve the right to engage in put transactions. The right to put the securities depends on
the writers ability to pay for the securities at the time the put is exercised. A Fund would limit
its put transactions to institutions which the Subadviser believes present minimal credit risks,
and the Subadviser would use its best efforts to initially determine and continue to monitor the
financial strength of the sellers of the options by evaluating their financial statements and such
other information as is available in the marketplace. It may, however be difficult to monitor the
financial strength of the writers because adequate current financial information may not be
available. In the event that any writer is unable to honor a put for financial reasons, a Fund
would be a general creditor (i.e., on a parity with all other unsecured creditors) of the writer.
Furthermore, particular provisions of the contract between the Fund and the writer may excuse the
writer from repurchasing the securities; for example, a change in the published rating of the
underlying securities or any similar event that has an adverse effect on the issuers credit or a
provision in the contract that the put will not be exercised except in certain special cases, for
example, to maintain portfolio liquidity. The Fund could, however, at any time sell the underlying
portfolio security in the open market or wait until the portfolio security matures, at which time
it should realize the full par value of the security.
The securities purchased subject to a put may be sold to third persons at any time, even though the
put is outstanding, but the put itself, unless it is an integral part of the security as originally
issued, may not be marketable or otherwise assignable. Therefore, the put would have value only to
the Fund. Sale of the securities to third parties or lapse of time with the put unexercised may
terminate the right to put the securities. Prior to the expiration of any put option, the Fund
could seek to negotiate terms for the extension of such an option. If such a renewal cannot be
negotiated on terms satisfactory to the Fund, the Fund could, of course, sell the portfolio
security. The maturity of the underlying security will generally be different from that of the put.
There will be no limit to the percentage of portfolio securities that the Fund may purchase subject
to a standby commitment or put, but the amount paid directly or indirectly for all standby
commitments or puts which are not integral parts of the security as originally issued held in the
Fund will not exceed one-half of 1% of the value of the total assets of such Fund calculated
immediately after any such put is acquired.
STRIPS. Separately Traded Interest and Principal Securities (STRIPS) are component parts of U.S.
Treasury securities traded through the federal book-entry system. A Subadviser will only purchase
STRIPS that it determines are liquid or, if illiquid, do not violate the affected Funds investment
policy concerning investments
30
in illiquid securities. Consistent with Rule 2a-7 under the 1940 Act, the Subadviser will only
purchase, for Money Market Funds, STRIPS that have a remaining maturity of 397 days or less;
therefore, the Money Market Funds currently may only purchase interest component parts of U.S.
Treasury securities. While there is no limitation on the percentage of a Funds assets that may be
comprised of STRIPS, the Subadviser will monitor the level of such holdings to avoid the risk of
impairing shareholders redemption rights and of deviations in the value of shares of the Money
Market Funds.
Structured Investments. Structured Investments are derivatives in the form of a unit or units
representing an undivided interest(s) in assets held in a trust that is not an investment company
as defined in the 1940 Act. A trust unit pays a return based on the total return of securities and
other investments held by the trust and the trust may enter into one or more swaps to achieve its
objective. For example, a trust may purchase a basket of securities and agree to exchange the
return generated by those securities for the return generated by another basket or index of
securities. The Fund will purchase structured investments in trusts that engage in such swaps only
where the counterparties are approved by the Subadviser in accordance with credit-risk guidelines
established by the Board of Trustees.
Structured Notes. Notes are derivatives where the amount of principal repayment and or interest
payments is based upon the movement of one or more factors. These factors include, but are not
limited to, currency exchange rates, interest rates (such as the prime lending rate and LIBOR) and
stock indices such as the S&P 500® Index. In some cases, the impact of the movements of
these factors may increase or decrease through the use of multipliers or deflators. The use of
structured notes allows the Fund to tailor its investments to the specific risks and returns the
Subadviser wishes to accept while avoiding or reducing certain other risks.
Supranational Agency Obligations. Supranational agency obligations are obligations of supranational
entities established through the joint participation of several governments, including the Asian
Development Bank, Inter-American Development Bank, International Bank for Reconstruction and
Development (also known as the World Bank), African Development Bank, European Union, European
Investment Bank, and the Nordic Investment Bank.
Swap Agreements. The Funds may enter into swap agreements for purposes of attempting to gain
exposure to the securities making up an index without actually purchasing those instruments, to
hedge a position or to gain exposure to a particular instrument or currency. Swap agreements are
two-party contracts entered into primarily by institutional investors for periods ranging from a
day to more than one-year. In a standard swap transaction, two parties agree to exchange the
returns (or differentials in rates of return) earned or realized on particular predetermined
investments or instruments. The gross returns to be exchanged or swapped between the parties are
calculated with respect to a notional amount, i.e., the return on or increase in value of a
particular dollar amount invested in a basket of securities representing a particular index.
Forms of swap agreements include interest rate caps, under which, in return for a premium, one
party agrees to make payments to the other to the extent that interest rates exceed a specified
rate, or cap, interest rate floors, under which, in return for a premium, one party agrees to
make payments to the other to the extent that interest rates fall below a specified level, or
floor; and interest rate dollars, under which a party sells a cap and purchases a floor or vice
versa in an attempt to protect itself against interest rate movements exceeding given minimum or
maximum levels. A credit default swap is a specific kind of counterparty agreement designed to
transfer the third party credit risk between parties. One party in the swap is a lender and faces
credit risk from a third party and the counterparty in the credit default swap agrees to insure
this risk in exchange for regular periodic payments (essentially an insurance premium). If the
third party defaults, the party providing insurance will have to purchase from the insured party
the defaulted asset. The Select Aggregate Market Index (SAMI) is a basket of credit default
swaps whose underlying reference obligations are floating rate loans. Investments in SAMIs
increase exposure to risks that are not typically associated with investments in other floating
rate debt instruments, and involve many of the risks associated with investments in derivative
instruments. The liquidity of the market for SAMIs is subject to liquidity in the secured loan and
credit derivatives markets.
31
A Funds current obligations under a swap agreement will be accrued daily (offset against any
amounts owing to the Fund) and any accrued but unpaid net amounts owed to a swap counterparty will
be covered by earmarking or segregating assets determined to be liquid. Obligations under swap
agreements so covered will not be construed to be senior securities for purposes of a Funds
investment restriction concerning senior securities. Because they are two party contracts and
because they may have terms of greater than seven days, swap agreements may be considered to be
illiquid for the Funds illiquid investment limitations. A Fund will not enter into any swap
agreement unless the Subadviser believes that the other party to the transaction is creditworthy. A
Fund bears the risk of loss of the amount expected to be received under a swap agreement in the
event of the default or bankruptcy of a swap agreement counterparty. Each Fund may enter into swap
agreements to invest in a market without owning or taking physical custody of securities in
circumstances in which direct investment is restricted for legal reasons or is otherwise
impracticable. The counterparty to any swap agreement will typically be a bank, investment banking
firm or broker/dealer. The counter-party will generally agree to pay the Fund the amount, if any,
by which the notional amount of the swap agreement would have increased in value had it been
invested in the particular stocks, plus the dividends that would have been received on those
stocks. The Fund will agree to pay to the counter-party a floating rate of interest on the notional
amount of the swap agreement plus the amount, if any, by which the notional amount would have
decreased in value had it been invested in such stocks. Therefore, the return to the Fund on any
swap agreement should be the gain or loss on the notional amount plus dividends on the stocks less
the interest paid by the Fund on the notional amount.
Swap agreements typically are settled on a net basis, which means that the two payment streams are
netted out, with the Fund receiving or paying, as the case may be, only the net amount of the two
payments. Payments may be made at the conclusion of a swap agreement or periodically during its
term. Swap agreements do not involve the delivery of securities or other underlying assets.
Accordingly, the risk of loss with respect to swap agreements is limited to the net amount of
payments that a Fund is contractually obligated to make. If the other party to a swap agreement
defaults, a Funds risk of loss consists of the net amount of payments that such Fund is
contractually entitled to receive, if any. The net amount of the excess, if any, of a Funds
obligations over its entitlements with respect to each equity swap will be accrued on a daily basis
and cash or liquid assets, having an aggregate net asset value at least equal to such accrued
excess will be earmarked or maintained in a segregated account by the Funds custodian. In as much
as these transactions are entered into for hedging purposes or are offset by segregated cash of
liquid assets, as permitted by applicable law, the Funds and their Subadviser believe that these
transactions do not constitute senior securities under the 1940 Act and, accordingly, will not
treat them as being subject to a Funds borrowing restrictions.
The swap market has grown substantially in recent years with a large number of banks and investment
banking firms acting both as principals and as agents utilizing standardized swap documentation. As
a result, the swap market has become relatively liquid in comparison with the markets for other
similar instruments, which are traded in the over-the-counter market. The Subadviser, under the
supervision of the Board of Trustees, is responsible for determining and monitoring the liquidity
of Fund transactions in swap agreements.
The use of equity swaps is a highly specialized activity, which involves investment techniques and
risks different from those associated with ordinary portfolio securities transactions.
Taxable Municipal Securities. Taxable municipal securities are municipal securities the interest on
which is not exempt from federal income tax. Taxable municipal securities include private activity
bonds that are issued by or on behalf of states or political subdivisions thereof to finance
privately-owned or operated facilities for business and manufacturing, housing, sports, and
pollution control and to finance activities of and facilities for charitable institutions. Private
activity bonds are also used to finance public facilities such as airports, mass transit systems,
ports, parking lots, and low income housing. The payment of the principal and interest on private
activity bonds is not backed by a pledge of tax revenues, and is dependent solely on the ability of
the facilitys user to
32
meet its financial obligations, and may be secured by a pledge of real and personal property so
financed. Interest on these bonds may not be exempt from federal income tax.
Trust Preferred Securities. Trust preferred securities are convertible preferred shares issued by a
trust where proceeds from the sale are used to purchase convertible subordinated debt from the
issuer. The convertible subordinated debt is the sole asset of the trust. The coupon from the
issuer to the trust exactly mirrors the preferred dividend paid by the trust. Upon conversion by
the investors, the trust in turn converts the convertible debentures and passes through the shares
to the investors.
U.S. Government Securities. Examples of types of U.S. government obligations in which the Funds may
invest include U.S. Treasury obligations and the obligations of U.S. government agencies such as
Federal Home Loan Banks, Federal Farm Credit Banks, Federal Land Banks, the Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the United States, Small
Business Administration, Federal National Mortgage Association, Government National Mortgage
Association, General Services Administration, Student Loan Marketing Association, Central Bank for
Cooperatives, Freddie Mac (formerly Federal Home Loan Mortgage Corporation), Federal Intermediate
Credit Banks, Maritime Administration, and other similar agencies. Whether backed by the full faith
and credit of the U.S. Treasury or not, U.S. government securities are not guaranteed against price
movements due to fluctuating interest rates. The Student Loan Marketing Association can issue debt
both as a U.S. government agency or as corporation. If the debt is issued as a corporation, it is
not considered a U.S. government obligation.
U.S. Treasury Obligations. U.S. Treasury obligations consist of bills, notes and
bonds issued by the U.S. Treasury and separately traded interest and principal
component parts of such obligations that are transferable through the federal
book-entry system known as STRIPS and Treasury Receipts (TRs).
Receipts. Interests in separately traded interest and principal component parts
of U.S. government obligations that are issued by banks or brokerage firms and are
created by depositing U.S. government obligations into a special account at a
custodian bank. The custodian holds the interest and principal payments for the
benefit of the registered owners of the certificates or receipts. The custodian
arranges for the issuance of the certificates or receipts evidencing ownership and
maintains the register. TRs and STRIPS are interests in accounts sponsored by the
U.S. Treasury. Receipts are sold as zero coupon securities.
Treasury Inflation Protected Notes (TIPS). TIPS are securities issued by the
U.S. Treasury that are designed to provide inflation protection to investors. TIPS
are income-generating instruments whose interest and principal payments are
adjusted for inflation. The inflation adjustment, which is typically applied
monthly to the principal of the bond, follows a designated inflation index, such as
the consumer price index. A fixed coupon rate is applied to the inflation-adjusted
principal so that as inflation rises, both the principal value and the interest
payments increase. This can provide investors with a hedge against inflation, as it
helps preserve the purchasing power of an investment. Because of this inflation
adjustment feature, inflation-protected bonds typically have lower yields than
conventional fixed-rate bonds.
Zero Coupon Obligations. Zero coupon obligations are debt obligations that do not
bear any interest, but instead are issued at a deep discount from face value or
par. The value of a zero coupon obligation increases over time to reflect the
interest accumulated. These obligations will not result in the payment of interest
until maturity, and will have greater price volatility than similar securities that
are issued at face value or par and pay interest periodically.
33
U.S. Government Zero Coupon Securities. STRIPS and receipts are sold as zero
coupon securities, that is, fixed income securities that have been stripped of
their unmatured interest coupons. Zero coupon securities are sold at a (usually
substantial) discount and redeemed at face value at their maturity date without
interim cash payments of interest or principal. The amount of this discount is
accreted over the life of the security, and the accretion constitutes the income
earned on the security for both accounting and tax purposes. Because of these
features, the market prices of zero coupon securities are generally more volatile
than the market prices of securities that have similar maturity but that pay
interest periodically. Zero coupon securities are likely to respond to a greater
degree to interest rate changes than are non-zero coupon securities with similar
maturity and credit qualities. See Mortgage-Backed Securities.
U.S. Government Agencies. Some obligations issued or guaranteed by agencies of
the U.S. Government are supported by the full faith and credit of the U.S.
Treasury, others are supported by the right of the issuer to borrow from the
Treasury, while still others are supported only by the credit of the
instrumentality. Guarantees of principal by agencies or instrumentalities of the
U.S. Government may be a guarantee of payment at the maturity of the obligation so
that in the event of a default prior to maturity there might not be a market and
thus no means of realizing on the obligation prior to maturity. Guarantees as to
the timely payment of principal and interest do not extend to the value or yield of
these securities nor to the value of a Funds shares.
Variable and Floating Rate Instruments. Certain of the obligations purchased by the Funds may carry
variable or floating rates of interest, may involve a conditional or unconditional demand feature
and may include variable amount master demand notes. Such instruments bear interest at rates that
are not fixed, but which vary with changes in specified market rates or indices. The interest rates
on these securities may be reset daily, weekly, quarterly or some other reset period, and may have
a floor or ceiling on interest rate changes. There is a risk that the current interest rate on such
obligations may not accurately reflect existing market interest rates. A demand instrument with a
demand notice exceeding seven days may be considered illiquid if there is no secondary market for
such securities.
Variable Rate Master Demand Notes. Variable rate master demand notes permit the investment of
fluctuating amounts at varying market rates of interest pursuant to direct arrangements between a
Fund, as lender, and a borrower. Such notes provide that the interest rate on the amount
outstanding varies on a daily, weekly or monthly basis depending upon a stated short-term interest
rate index. Both the lender and the borrower have the right to reduce the amount of outstanding
indebtedness at any time. There is no secondary market for the notes and it is not generally
contemplated that such instruments will be traded. The quality of the note or the underlying credit
must, in the opinion of the Subadviser, be equivalent to the ratings applicable to permitted
investments for the particular Fund. The Subadviser will monitor on an ongoing basis the earning
power, cash flow and liquidity ratios of the issuers of such instruments and will similarly monitor
the ability of an issuer of a demand instrument to pay principal and interest on demand. Variable
rate master demand notes may or may not be backed by bank letters of credit.
When-Issued Securities and Forward Commitment Securities. When-issued securities are securities
that are delivered and paid for normally within 45 days after the date of commitment to purchase.
When-issued securities are subject to market fluctuation, and accrue no interest to the purchaser
during this pre-settlement period. The payment obligation and the interest rate that will be
received on the securities are each fixed at the time the purchaser enters into the commitment.
Purchasing when-issued and forward commitment securities entails leveraging and can involve a risk
that the yields available in the market when the delivery takes place may actually be higher than
those obtained in the transaction itself. In that case, there could be an unrealized loss at the
time of delivery.
34
To avoid any leveraging concerns, a Fund will segregate or earmark liquid assets in an amount at
least equal in value to its commitments to purchase when-issued and forward commitment securities.
INVESTMENT LIMITATIONS
Except with respect to a Funds non-fundamental policy relating to liquidity, if a percentage
limitation stated in the fundamental and non-fundamental policies below is adhered to at the time
of investment, a later increase or decrease in percentage resulting from any change in value will
not result in a violation of such restriction.
Fundamental Policies
In addition to the 80% investment policy of the Institutional Municipal Cash Reserve Money Market
Fund, Georgia Tax-Exempt Bond Fund, High Grade Municipal Bond Fund, Investment Grade Tax-Exempt
Bond Fund, Maryland Municipal Bond Fund, North Carolina Tax-Exempt Bond Fund, Tax-Exempt Money
Market Fund, Virginia Intermediate Municipal Bond Fund and Virginia Tax-Free Money Market Fund, the
following investment limitations are fundamental policies of the Funds. Fundamental policies cannot
be changed without the consent of the holders of a majority of each Funds outstanding shares. The
term majority of the outstanding shares means the vote of (i) 67% or more of the Funds shares
present at a meeting, if more than 50% of the outstanding shares of the Fund are present or
represented by proxy, or (ii) more than 50% of the Funds outstanding shares, whichever is less.
No Fund may:
1. With respect to 75% of each Funds total assets (50% in the case of the Real
Estate 130/30 Fund, Maryland Municipal Bond Fund, North Carolina Tax-Exempt Bond
Fund and Virginia Intermediate Municipal Bond Fund), invest more than 5% of the
value of the total assets of a Fund in the securities of any one issuer (other than
securities issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities, repurchase agreements involving such securities, and securities
issued by investment companies), or purchase the securities of any one issuer if
such purchase would cause more than 10% of the voting securities of such issuer to
be held by a Fund.
2. Borrow money in an amount exceeding 33 1/3% of the value of its total assets,
provided that, for the purposes of this limitation, investment strategies that
either obligate a Fund to purchase securities or require a Fund to segregate assets
are not considered to be borrowing. Asset coverage of at least 300% is required for
all borrowing, except where the Fund has borrowed money for temporary purposes (less
than 60 days), and in an amount not exceeding 5% of its total assets.
3. Underwrite securities issued by others, except to the extent that the Fund may be
considered an underwriter within the meaning of the 1933 Act in the sale of
portfolio securities.
4. Issue senior securities (as defined in the 1940 Act), except as permitted by
rule, regulation or order of the SEC.
5. Purchase the securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities and securities
issued by investment companies) if, as a result, more than 25% of the Funds total
assets would be invested in the securities of companies whose principal business
activities are in the same industry.
35
|
a. |
|
With respect to the Money Market Funds, this
limitation does not apply to obligations issued by domestic
branches of U.S. banks or U.S. branches of foreign banks
subject to the same regulations as U.S. banks. |
|
|
b. |
|
No Life Vision Fund may invest more than 25%
of its assets in underlying RidgeWorth Funds that, as a matter
of policy, concentrate their assets in any one industry.
However, a Life Vision Fund may indirectly invest more than
25% of its total assets in one industry through its
investments in the underlying RidgeWorth Funds. Each Life
Vision Fund may invest up to 100% of its assets in securities
issued by investment companies. |
|
|
c. |
|
The Real Estate 130/30 Fund will invest more
than 25% of its total assets in securities issued by real
estate investment trusts and by companies that derive at least
50% of revenues from the ownership, construction, management,
financing or sale of commercial, industrial or residential
real estate or has 50% of assets in such real estate. |
6. Purchase or sell real estate, unless acquired as a result of ownership of
securities or other instruments (but this shall not prevent a Fund from investing in
securities or other instruments either issued by companies that invest in real
estate, backed by real estate or securities of companies engaged in the real estate
business).
7. Purchase or sell physical commodities, unless acquired as a result of ownership
of securities or other instruments.
8. Make loans, except that a Fund may: (i) purchase or hold debt instruments in
accordance with its investment objectives and policies; (ii) enter into repurchase
agreements; and (iii) lend its portfolio securities.
36
Non-Fundamental Policies
The following investment policies are non-fundamental policies of the Funds and may be changed by
the Funds Board of Trustees:
1. With respect to each Fund that is subject to Rule 35d-1 under the 1940 Act,
except the Institutional Municipal Cash Reserve Money Market Fund, Georgia
Tax-Exempt Bond Fund, High Grade Municipal Bond Fund, Investment Grade Tax-Exempt
Bond Fund, Maryland Municipal Bond Fund, North Carolina Tax-Exempt Bond Fund,
Virginia Intermediate Municipal Bond Fund, Tax-Exempt Money Market Fund, Virginia
Tax-Free Money Market Fund and Strategic Income Fund, any change to a Funds
investment policy of investing at least 80% of such Funds net assets in a
particular type or category of securities is subject to 60 days prior notice to
shareholders.
2. No Fund may purchase or hold illiquid securities (i.e., securities that cannot be
disposed of for their approximate carrying value in seven days or less (which term
includes repurchase agreements and time deposits maturing in more than seven days)
if, in the aggregate, more than 15% of its net assets (10% for the Money Market
Funds) would be invested in illiquid securities.
3. No Life Vision Fund currently intends to purchase securities on margin, except
that a Life Vision Fund may obtain such short-term credits as are necessary for the
clearance of transactions.
4. No Life Vision Fund currently intends to sell securities short.
5. No Life Vision Fund currently intends to purchase or sell futures contracts or
put or call options.
6. No Life Vision Fund may invest in shares of unaffiliated money market funds,
except as permitted by applicable law or the SEC.
7. The Intermediate Bond Fund will not engage in the strategy of establishing or
rolling forward TBA mortgage commitments.
THE ADVISER
General. The Adviser is a professional investment management firm registered with the SEC under the
Investment Advisers Act of 1940 and serves as investment adviser to the Funds. The Adviser
oversees the Subadvisers to ensure compliance with the respective Funds investment policies and
guidelines and monitors each Subadvisers adherence to its investment style. The Board supervises
the Adviser and establishes policies that the Adviser must follow in its management activities.
The principal business address of the Adviser is 50 Hurt Plaza, Suite 1400, Atlanta, Georgia 30303.
As of June 30, 2008, the Adviser had discretionary management authority with respect to
approximately $[ ] billion of assets under management. The Adviser is a wholly-owned subsidiary
of SunTrust Banks, Inc.
Advisory Agreement with the Trust. The Adviser serves as the investment adviser to each Fund
pursuant to an agreement (the Advisory Agreement) with the Trust. The continuance of the
Advisory Agreement must be specifically approved at least annually (i) by the vote of the Board or
by a vote of the shareholders of the Funds and (ii) by the vote of a majority of the Trustees who
are not parties to the Advisory Agreements or interested persons of any party thereto, as defined
in the 1940 Act, cast in person at a meeting called for the purpose of
37
voting on such approval. The Advisory Agreement will terminate automatically in the event of its
assignment, and is terminable at any time without penalty by the Board or, with respect to any
Fund, by a majority of the outstanding shares of that Fund, on not less than 30 days nor more than
60 days written notice to the Adviser, or by the Adviser on 90 days written notice to the Trust.
The Advisory Agreement provides that the Adviser shall not be protected against any liability to
the Trust or its shareholders by reason of willful misfeasance, bad faith or gross negligence on
its part in the performance of its duties or from reckless disregard of its obligations or duties
thereunder.
The Advisory Agreement provides that if, for any fiscal year, the ratio of expenses of any Fund
(including amounts payable to the Adviser but excluding taxes, brokerage commissions, substitute
dividend expenses on securities sold short, extraordinary expenses and estimated indirect expenses
attributable to investments in other funds, such as ETFs) exceeds limitations established by
certain states, the Adviser and/or the administrator will bear the amount of such excess. The
Adviser will not be required to bear expenses of the Trust to an extent which would result in a
Funds inability to qualify as a regulated investment company under provisions of the ICode.
|
|
|
|
|
Fund |
|
Fee |
Aggressive Growth Stock Fund |
|
|
1.10 |
% |
Emerging Growth Stock Fund |
|
|
1.10 |
% |
Georgia Tax-Exempt Bond Fund |
|
|
0.55 |
% |
High Grade Municipal Bond Fund |
|
|
0.55 |
% |
High Income Fund |
|
|
0.60 |
% |
Intermediate Bond Fund |
|
|
0.25 |
% |
Institutional Cash Management Money Market Fund |
|
|
0.13 |
% |
Institutional Municipal Cash Reserve Money Market Fund |
|
|
0.15 |
% |
Institutional U.S. Government Securities Money Market Fund |
|
|
0.15 |
% |
Institutional U.S. Treasury Securities Money Market Fund |
|
|
0.15 |
% |
International Equity Fund |
|
|
1.15 |
% |
International Equity Index Fund |
|
|
0.50 |
% |
International Equity 130/30 Fund |
|
|
1.25 |
% |
Investment Grade Bond Fund |
|
|
0.50 |
% |
Investment Grade Tax-Exempt Bond Fund |
|
|
0.50 |
% |
Large Cap Core Equity Fund |
|
|
0.85 |
% |
Large Cap Growth Stock Fund |
|
|
0.97 |
% |
Large Cap Quantitative Equity Fund |
|
|
0.85 |
% |
Large Cap Value Equity Fund |
|
|
0.80 |
% |
Life Vision Aggressive Growth Fund |
|
|
0.10 |
% |
Life Vision Conservative Fund |
|
|
0.10 |
% |
Life Vision Growth and Income Fund |
|
|
0.10 |
% |
Life Vision Moderate Growth Fund |
|
|
0.10 |
% |
Life Vision Target Date 2015 Fund |
|
|
0.10 |
% |
Life Vision Target Date 2025 Fund |
|
|
0.10 |
% |
Life Vision Target Date 2035 Fund |
|
|
0.10 |
% |
Limited Duration Fund |
|
|
0.10 |
% |
Limited-Term Federal Mortgage Securities Fund |
|
|
0.50 |
% |
Maryland Municipal Bond Fund |
|
|
0.55 |
% |
Mid-Cap Core Equity Fund |
|
|
1.00 |
% |
Mid-Cap Value Equity Fund |
|
|
1.00 |
% |
North Carolina Tax-Exempt Bond Fund |
|
|
0.55 |
% |
Prime Quality Money Market Fund |
|
|
0.55 |
% |
38
|
|
|
|
|
Fund |
|
Fee |
Real Estate 130/30 Fund |
|
|
1.25 |
% |
Seix Floating Rate High Income Fund |
|
|
0.45 |
% |
Seix High Yield Fund |
|
|
0.45 |
% |
Select Large Cap Growth Stock Fund |
|
|
0.85 |
% |
Short-Term Bond Fund |
|
|
0.40 |
% |
Short-Term U.S. Treasury Securities Fund |
|
|
0.40 |
% |
Small Cap Growth Stock Fund |
|
|
1.15 |
% |
Small Cap Value Equity Fund |
|
|
1.15 |
% |
Strategic Income Fund |
|
|
0.60 |
% |
Tax-Exempt Money Market Fund |
|
|
0.45 |
% |
Total Return Bond Fund |
|
|
0.25 |
% |
U.S. Equity 130/30 Fund |
|
|
1.10 |
% |
U.S. Government Securities Fund |
|
|
0.50 |
% |
U.S. Government Securities Money Market Fund |
|
|
0.55 |
% |
U.S. Government Securities Ultra-Short Bond Fund |
|
|
0.20 |
% |
U.S. Treasury Money Market Fund |
|
|
0.55 |
% |
Ultra-Short Bond Fund |
|
|
0.22 |
% |
Virginia Intermediate Municipal Bond Fund |
|
|
0.55 |
% |
Virginia Tax-Free Money Market Fund |
|
|
0.40 |
% |
The above fees are also subject to the following breakpoint discounts:
Equity and Fixed Income Funds:
First $500 million = full fee
Next $500 million = 5% discount from full fee
Over $1.0 billion = 10% discount from full fee
Money Market Funds:
First $1.0 billion = full fee
Next $1.5 billion = 5% discount from full fee
Next $2.5 billion = 10% discount from full fee
Over $5.0 billion = 20% discount from full fee
As discussed in the prospectuses, the Adviser has contractually agreed to waive a portion of its
fees or reimburse expenses, with respect to certain Funds, in order to limit Fund expenses.
For the fiscal years ended March 31, 2008, March 31, 2007, and March 31, 2006, the Funds paid the
following advisory fees:
39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Paid (in thousands) |
|
Fees Waived (in thousands) |
Fund* |
|
2008 |
|
2007 |
|
2006 |
|
2008 |
|
2007 |
|
2006 |
Aggressive Growth Stock Fund |
|
|
|
|
|
$ |
3,425 |
|
|
$ |
1,230 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
39 |
|
Emerging Growth Stock Fund |
|
|
|
|
|
|
905 |
|
|
|
342 |
|
|
|
|
|
|
|
0 |
|
|
|
24 |
|
Georgia Tax-Exempt Bond Fund |
|
|
|
|
|
|
780 |
|
|
|
687 |
|
|
|
|
|
|
|
0 |
|
|
|
69 |
|
High Grade Municipal Bond Fund |
|
|
|
|
|
|
960 |
|
|
|
1,076 |
|
|
|
|
|
|
|
0 |
|
|
|
18 |
|
High Income Fund |
|
|
|
|
|
|
430 |
|
|
|
574 |
|
|
|
|
|
|
|
0 |
|
|
|
74 |
|
Institutional Cash Management
Money Market Fund |
|
|
|
|
|
|
4,190 |
|
|
|
4,413 |
|
|
|
|
|
|
|
0 |
|
|
|
626 |
|
Institutional Municipal Cash
Reserve Money Market Fund |
|
|
|
|
|
|
134 |
|
|
|
82 |
|
|
|
|
|
|
|
18 |
|
|
|
7 |
|
Institutional U.S. Government
Securities Money Market Fund |
|
|
|
|
|
|
1,372 |
|
|
|
1,520 |
|
|
|
|
|
|
|
0 |
|
|
|
3 |
|
Institutional U.S. Treasury
Securities Money Market Fund |
|
|
|
|
|
|
4,129 |
|
|
|
4,426 |
|
|
|
|
|
|
|
0 |
|
|
|
8 |
|
Intermediate Bond Fund |
|
|
|
|
|
$ |
201 |
|
|
$ |
170 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
International Equity 130/30 Fund |
|
|
|
|
|
|
|
*** |
|
|
|
*** |
|
|
|
|
|
|
|
*** |
|
|
|
*** |
International Equity Fund |
|
|
|
|
|
|
11,905 |
|
|
|
8,023 |
|
|
|
|
|
|
|
0 |
|
|
|
113 |
|
International Equity Index Fund |
|
|
|
|
|
|
4,313 |
|
|
|
3,831 |
|
|
|
|
|
|
|
0 |
|
|
|
4 |
|
Investment Grade Bond Fund |
|
|
|
|
|
|
2,259 |
|
|
|
3,394 |
|
|
|
|
|
|
|
0 |
|
|
|
|
|
Investment Grade Tax- Exempt
Bond Fund |
|
|
|
|
|
|
1,808 |
|
|
|
1,855 |
|
|
|
|
|
|
|
0 |
|
|
|
3 |
|
Large Cap Core Equity Fund |
|
|
|
|
|
|
13,020 |
|
|
|
11,260 |
|
|
|
|
|
|
|
0 |
|
|
|
|
*** |
Large Cap Growth Stock Fund |
|
|
|
|
|
|
12,363 |
|
|
|
15,897 |
|
|
|
|
|
|
|
0 |
|
|
|
10 |
|
Large Cap Quantitative Equity
Fund |
|
|
|
|
|
|
2,761 |
|
|
|
1,505 |
|
|
|
|
|
|
|
0 |
|
|
|
51 |
|
Large Cap Value Equity Fund |
|
|
|
|
|
|
7,163 |
|
|
|
7,082 |
|
|
|
|
|
|
|
0 |
|
|
|
|
*** |
Life Vision Aggressive Growth
Fund |
|
|
|
|
|
|
64 |
|
|
|
79 |
|
|
|
|
|
|
|
0 |
|
|
|
23 |
|
Life Vision Conservative Fund |
|
|
|
|
|
|
10 |
|
|
|
13 |
|
|
|
|
|
|
|
10 |
|
|
|
21 |
|
Life Vision Grow and Income Fund |
|
|
|
|
|
|
135 |
|
|
|
169 |
|
|
|
|
|
|
|
0 |
|
|
|
42 |
|
Life Vision Moderate Growth Fund |
|
|
|
|
|
|
189 |
|
|
|
243 |
|
|
|
|
|
|
|
0 |
|
|
|
58 |
|
Life Vision Target Date 2015
Fund |
|
|
|
|
|
|
1 |
|
|
|
0 |
|
|
|
|
|
|
|
20 |
|
|
|
13 |
|
Life Vision Target Date 2025
Fund |
|
|
|
|
|
|
2 |
|
|
|
0 |
|
|
|
|
|
|
|
21 |
|
|
|
13 |
|
Life Vision Target Date 2035
Fund |
|
|
|
|
|
|
1 |
|
|
|
0 |
|
|
|
|
|
|
|
21 |
|
|
|
13 |
|
Limited Duration Fund |
|
|
|
|
|
|
731 |
|
|
|
64 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Limited-Term Federal Mortgage
Securities Fund |
|
|
|
|
|
|
2,058 |
|
|
|
2 |
|
|
|
|
|
|
|
0 |
|
|
|
45 |
|
Maryland Municipal Bond Fund |
|
|
|
|
|
|
211 |
|
|
|
250 |
|
|
|
|
|
|
|
0 |
|
|
|
9 |
|
Mid-Cap Core Equity Fund |
|
|
|
|
|
|
4,050 |
|
|
|
3,242 |
|
|
|
|
|
|
|
0 |
|
|
|
2 |
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Paid (in thousands) |
|
Fees Waived (in thousands) |
Fund* |
|
2008 |
|
2007 |
|
2006 |
|
2008 |
|
2007 |
|
2006 |
Mid-Cap Value Equity Fund |
|
|
|
|
|
|
2,667 |
|
|
|
2,338 |
|
|
|
|
|
|
|
0 |
|
|
|
51 |
|
North Carolina Tax- Exempt Bond
Fund |
|
|
|
|
|
|
239 |
|
|
|
236 |
|
|
|
|
|
|
|
0 |
|
|
|
6 |
|
Prime Quality Money Market Fund |
|
|
|
|
|
|
38,890 |
|
|
|
321,146 |
|
|
|
|
|
|
|
0 |
|
|
|
1,596 |
|
Real Estate 130/30 Fund |
|
|
|
|
|
|
|
*** |
|
|
|
*** |
|
|
|
|
|
|
|
*** |
|
|
|
*** |
Seix-Floating Rate High Income
Fund |
|
|
|
|
|
|
1,859 |
|
|
|
38 |
|
|
|
|
|
|
|
0 |
|
|
|
18,000 |
|
Seix High Yield Fund |
|
|
|
|
|
|
5,343 |
|
|
|
5,825 |
|
|
|
|
|
|
|
0 |
|
|
|
69 |
|
Select Large Cap Growth Stock
Fund |
|
|
|
|
|
|
885 |
|
|
|
1,403 |
|
|
|
|
|
|
|
0 |
|
|
|
|
*** |
Short-Term Bond Fund |
|
|
|
|
|
|
1,428 |
|
|
|
1,453 |
|
|
|
|
|
|
|
0 |
|
|
|
51 |
|
Short-Term U.S. Treasury
Securities Fund |
|
|
|
|
|
|
293 |
|
|
|
463 |
|
|
|
|
|
|
|
0 |
|
|
|
40 |
|
Small Cap Growth Stock Fund |
|
|
|
|
|
|
14,936 |
|
|
|
14,692 |
|
|
|
|
|
|
|
0 |
|
|
|
|
*** |
Small Cap Value Equity Fund |
|
|
|
|
|
|
8,476 |
|
|
|
8,673 |
|
|
|
|
|
|
|
0 |
|
|
|
|
*** |
Strategic Income Fund |
|
|
|
|
|
|
1,058 |
|
|
|
2,089 |
|
|
|
|
|
|
|
28 |
|
|
|
93 |
|
Tax-Exempt Money Market Fund |
|
|
|
|
|
|
8,272 |
|
|
|
8,036 |
|
|
|
|
|
|
|
0 |
|
|
|
463 |
|
Total Return Bond Fund |
|
|
|
|
|
|
1364 |
|
|
|
969 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
U.S. Equity 130/30 Fund |
|
|
|
|
|
|
|
*** |
|
|
|
*** |
|
|
|
|
|
|
|
*** |
|
|
|
*** |
U.S. Government Securities Fund |
|
|
|
|
|
|
2,311 |
|
|
|
2,072 |
|
|
|
|
|
|
|
0 |
|
|
|
5 |
|
U.S. Government Securities
Money Market Fund |
|
|
|
|
|
|
4,184 |
|
|
|
4,261 |
|
|
|
|
|
|
|
0 |
|
|
|
203 |
|
U.S. Government Securities
Ultra-Short Bond Fund |
|
|
|
|
|
|
69 |
|
|
|
150 |
|
|
|
|
|
|
|
11 |
|
|
|
63 |
|
U.S. Treasury Money Market Fund |
|
|
|
|
|
|
7,550 |
|
|
|
8,471 |
|
|
|
|
|
|
|
0 |
|
|
|
338 |
|
Ultra-Short Bond Fund |
|
|
|
|
|
|
343 |
|
|
|
703 |
|
|
|
|
|
|
|
0 |
|
|
|
206 |
|
Virginia Intermediate Municipal
Bond Fund |
|
|
|
|
|
|
1,144 |
|
|
|
1,053 |
|
|
|
|
|
|
|
0 |
|
|
|
11 |
|
Virginia Tax-Free Money Market
Fund |
|
|
|
|
|
|
2,227 |
|
|
|
1,996 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
*** |
|
Not in operation during the period. |
THE SUBADVISERS
Each Subadviser is a professional investment management firm registered with the SEC under the
Investment Advisers Act of 1940. Each Subadviser, (excluding Alpha Equity Management LLC and
Zevenbergen Capital Investments LLC), is a wholly-owned subsidiary of the Adviser. Alpha Equity
Management LLC and Zevenbergen Capital Investments LLC are minority-owned subsidiaries of the
Adviser.
The Subadvisers (excluding Alpha Equity Management LLC and Zevenbergen Capital Investments LLC)
began operations on [March 31, 2008] and did not receive fees for the fiscal year ended March 31,
2008.
41
Alpha Equity Management LLC (Alpha) serves as the subadviser to the International Equity 130/30
Fund, Real Estate 130/30 Fund and U.S. Equity 130/30 Fund and manages the portfolios of the Funds
on a day-to-day basis. Alpha was founded in 2007 through a transaction in which its predecessor
organization (Predecessor) transferred all its investment advisory business to Alpha. This
transfer included all of the personnel providing research and making investment decisions, senior
management personnel overseeing the investment advisory
business and the same control and compliance operations that existed at the Predecessor and manages
equity hedge funds. The firms client base is comprised of hedge funds and related separately
managed accounts. As a hedge fund manager, Alpha manages assets for a variety of institutions and
individuals. Alpha selects, buys, and sells securities for the Funds under the supervision of the
Adviser and the Board of Trustees. The principal business addresses of Alpha are 90 State House
Square, Suite 1100, Hartford, CT 06103 and 405 Park Avenue, Suite 803, New York, NY 10022. The
Predecessor was founded in 2000 and as of June 30, 2008, had approximately $[ ] million of assets
under management.
The Adviser owns less than 25% of Alpha and the remainder of Alpha is owned by its employees.
For its subadvisory services, Alpha is entitled to receive an annual fee paid by the Adviser, which
is calculated daily and paid quarterly by the Adviser, at an annual rate based on the average daily
net assets of each of the each of the Funds as follows:
|
|
|
|
|
- International Equity 130/30 Fund: |
|
|
0.75 |
% |
- Real Estate 130/30 Fund: |
|
|
0.75 |
% |
- U.S. Equity 130/30 Fund: |
|
|
0.66 |
% |
For the period (commencement of operations) through March 31, 2008, Alpha received subadvisory fees
for the International Equity 130/30 Fund, Real Estate 130/30 Fund and U.S. Equity 130/30 Fund of $[
], $[ ] and $[ ], respectively.
Ceredex Value Advisors LLC ( Ceredex) serves as the subadviser to the Large Cap Value Equity
Fund, Mid-Cap Value Equity Fund and Small Cap Value Equity Fund under the terms of an Investment
Subadvisory Agreement between the Adviser and this Subadviser. For its subadvisory services, this
Subadviser is entitled to receive an annual fee paid by the Adviser equal to 40% of the net
advisory fee paid by each Fund for which Ceredex provides advisory services.
Certium Asset Management LLC (Certium) serves as the subadviser to the International Equity Fund
and International Equity Index Fund under the terms of an Investment Subadvisory Agreement between
the Adviser and this Subadviser. For its subadvisory services, this Subadviser is entitled to
receive an annual fee paid by the Adviser equal to 40% of the net advisory fee paid by each Fund
for which Certium provides advisory services.
IronOak Advisors LLC (IronOak) serves as the subadviser to the Large Cap Core Equity Fund and the
Mid-Cap Core Equity Fund under the terms of an Investment Subadvisory Agreement between the Adviser
and this Subadviser. For its subadvisory services, this Subadviser is entitled to receive an
annual fee paid by the Adviser equal to 40% of the net advisory fee paid by each Fund for which
IronOak provides advisory services.
Seix Investment Advisors LLC (Seix) serves as the subadviser to the High Income Fund,
Intermediate Bond Fund, Investment Grade Bond Fund, Limited Duration Fund, Limited-Term Federal
Mortgage Securities Fund, Seix Floating Rate High Income Fund, Seix High Yield Fund, Strategic
Income Fund, Total Return Bond Fund and U.S. Government Securities Fund under the terms of an
Investment Subadvisory Agreement between the Adviser and this Subadviser. For its subadvisory
services, this Subadviser is entitled to receive an annual fee paid by the Adviser equal to 60% of
the net advisory fee paid by each Fund for which Seix provides advisory services.
42
Silvant Capital Management LLC (Silvant) serves as the subadviser to the Large Cap Growth Stock
Fund, Select Large Cap Growth Stock Fund and the Small Cap Growth Stock Fund under the terms of an
Investment Subadvisory Agreement between the Adviser and this Subadviser. For its subadvisory
services, this Subadviser is entitled to receive an annual fee paid by the Adviser equal to 40% of
the net advisory fee paid by each Fund for which Silvant provides advisory services.
StableRiver Capital Management LLC (StableRiver) serves as the subadviser to the Georgia
Tax-Exempt Bond Fund, High Grade Municipal Bond Fund, Investment Grade Tax-Exempt Bond Fund,
Institutional Cash Management Fund, Institutional Municipal Cash Reserve Fund, Institutional U.S.
Government Securities Fund, Institutional U.S. Treasury Securities Money Market Fund, Maryland
Municipal Bond Fund, North Carolina Tax-Exempt Bond Fund, Short-Term Bond Fund, Short-Term U.S.
Treasury Securities Bond Fund, Ultra-Short Bond Fund, U.S. Government Securities Ultra-Short Bond
Fund and Virginia Intermediate Municipal Bond Fund under the terms of an Investment Subadvisory
Agreement between the Adviser and this Subadviser. For its subadvisory services, this Subadviser
is entitled to receive an annual fee paid by the Adviser equal to 40% of the net advisory fee paid
by each Fund for which StableRiver provides advisory services.
Zevenbergen Capital Investments LLC ( ZCI) serves as the subadviser to the Aggressive Growth
Stock Fund and the Emerging Growth Stock Fund and manages the portfolios of the Funds on a
day-to-day basis. ZCI was founded in 1987 and manages domestic growth equity assets. The firms
client base is comprised of a blend of institutional tax-exempt and taxable separately managed
accounts. As a domestic growth equity manager, ZCI manages assets for a variety of entities,
including public funds, foundations, endowments, corporations, banking and thrift institutions and
private individuals. ZCI selects, buys, and sells securities for the Aggressive Growth Stock Fund
and the Emerging Growth Stock Fund under the supervision of the Adviser and the Board of Trustees.
The Adviser has a controlling interest in ZCI.
For its services under the Subadvisory Agreement, ZCI is entitled to a fee, which is calculated
daily and paid quarterly by the Adviser, at an annual rate of 0.625% based on the average daily net
assets of the Aggressive Growth Stock Fund and the Emerging Growth Stock Fund.
For the fiscal years ended March 31, 2008, March 31, 2007 and March 31, 2006, ZCI received
subadvisory fees for the Aggressive Growth Stock Fund of $[ ], $1,946,000 and $661,000,
respectively, and for the Emerging Growth Stock Fund of $[ ], $505,000 and $185,000,
respectively.
Investment Subadvisory Agreement. The Adviser and each Subadviser have entered into separate
investment subadvisory agreements (each a Subadvisory Agreement) under which the Subadviser makes
the investment decisions for and continuously reviews, supervises, and administers the investment
program of their respective Funds, subject to the supervision of, and policies established by, the
Adviser and the Trustees of the Trust. After an initial two year term, the continuance of each
Subadvisory Agreement must be specifically approved at least annually by (i) the vote of the
Trustees or a vote of the shareholders of the Fund and (ii) the vote of a majority of the Trustees
who are not parties to the Subadvisory Agreement or interested persons of any party thereto, cast
in person at a meeting called for the purpose of voting on such approval. Each Subadvisory
Agreement will terminate automatically in the event of its assignment and is terminable at any time
without penalty by (i) the Trustees of the Trust or, with respect to each Fund, by a majority of
the outstanding shares of that Fund, (ii) the Adviser at any time on not less than 30 days nor more
than 60 days written notice to the Subadviser, or (iii) the Subadviser on 90 days written notice to
the Adviser. Each Subadvisory Agreement provides that the Subadviser shall not be protected against
any liability by reason of willful misfeasance, bad faith, or negligence on its part in the
performance of its duties or from reckless disregard of its obligations or duties thereunder.
43
THE PORTFOLIO MANAGERS
Set forth below is information regarding the individuals who are primarily responsible for the
day-to-day management of the Funds (portfolio managers). All information is as of March 31, 2008,
except as otherwise noted.
Management of Other Accounts. The table below shows the number of other accounts managed by each
portfolio manager and the approximate total assets in the accounts in each of the following
categories: registered investment companies, other pooled investment vehicles and other accounts.
For each category, the table also shows the number of accounts and the approximate total assets in
the accounts with respect to which the advisory fee is based on account performance.
|
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|
Number of Other Accounts |
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Other Accounts with |
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|
Managed/ |
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Performance-Based |
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Total Assets in Accounts (millions) |
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Fees |
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Other |
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Registered |
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Pooled |
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Number |
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Total |
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Portfolio |
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RidgeWorth Fund(s) |
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Investment |
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Investment |
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Other |
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& |
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Assets |
|
Manager |
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Managed |
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Companies |
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Vehicles |
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Accounts |
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Category |
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(millions) |
|
Charles B. Arrington |
|
Mid-Cap Core Equity Fund |
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Brett Barner |
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Small Cap Value Equity Fund |
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George E. Calvert
Jr. |
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Maryland Municipal Bond Fund |
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Virginia Intermediate Bond Fund |
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|
Chris Carter |
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Georgia Tax-Exempt Bond Fund |
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North Carolina Tax-Exempt Bond Fund |
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Robert Corner |
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Short-Term Bond Fund |
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Short-Term U.S. Treasury Securities Fund |
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Ultra-Short Bond Fund |
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|
U.S. Government Securities Ultra-Short Bond Fund |
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Chad Deakins |
|
International Equity Fund |
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|
International Equity Index Fund |
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|
Large Cap Quantitative Fund |
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44
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|
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|
Number of Other Accounts |
|
|
Other Accounts with |
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|
|
|
|
Managed/ |
|
|
Performance-Based |
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|
|
|
|
Total Assets in Accounts (millions) |
|
|
Fees |
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|
|
|
|
|
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|
|
Other |
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|
|
|
|
|
|
|
|
|
|
|
|
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Registered |
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|
Pooled |
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|
|
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|
|
Number |
|
|
Total |
|
Portfolio |
|
RidgeWorth Fund(s) |
|
Investment |
|
|
Investment |
|
|
Other |
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& |
|
|
Assets |
|
Manager |
|
Managed |
|
Companies |
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|
Vehicles |
|
|
Accounts |
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|
Category |
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(millions) |
|
Brook deBoutray |
|
Aggressive Growth Stock Fund |
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|
Emerging Growth Stock Fund |
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|
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|
Vincent Fiormati |
|
International Equity 130/30 Fund |
|
|
|
|
|
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|
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|
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|
|
|
|
|
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|
Alan Gayle |
|
Life Vision Aggressive Growth Fund |
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|
Life Vision Conservative Fund |
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|
|
|
|
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|
Life Vision Growth and Income Fund |
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|
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|
Life Vision Moderate Growth Fund |
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|
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|
|
Life Vision Target Date 2015 Fund |
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|
Alan Gayle |
|
Life Vision Target Date 2025 Fund |
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|
Life Vision Target Date 2035 Fund |
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|
George Goudelias |
|
Seix Floating Rate High Income Fund |
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|
Chris Guinther |
|
Large Cap Growth Stock Fund |
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|
Select Large Cap Growth Stock Fund |
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|
Small Cap Growth Stock Fund |
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|
Michael Kirkpatrick |
|
Seix High Yield Fund |
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|
Neil Kochen |
|
International Equity 130/30 Fund |
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|
Real Estate 130/30 Fund |
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|
U.S. Equity 130/30 Fund |
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|
Jeffrey E. Markunas |
|
Large Cap Core Equity Fund |
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|
Michael McEachern |
|
High Income Fund |
|
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|
|
|
|
|
|
|
|
|
|
Seix Floating Rate High Income Fund |
|
|
|
|
|
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|
Seix High Yield Fund |
|
|
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|
Strategic Income Fund |
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45
|
|
|
|
|
|
|
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|
|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
Number of Other Accounts |
|
|
Other Accounts with |
|
|
|
|
|
Managed/ |
|
|
Performance-Based |
|
|
|
|
|
Total Assets in Accounts (millions) |
|
|
Fees |
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Registered |
|
|
Pooled |
|
|
|
|
|
|
Number |
|
|
Total |
|
Portfolio |
|
RidgeWorth Fund(s) |
|
Investment |
|
|
Investment |
|
|
Other |
|
|
& |
|
|
Assets |
|
Manager |
|
Managed |
|
Companies |
|
|
Vehicles |
|
|
Accounts |
|
|
Category |
|
|
(millions) |
|
Kevin Means |
|
Real Estate 130/30 Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H. Rick Nelson |
|
Short-Term Bond Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-Term U.S. Treasury Securities Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ultra-Short Bond Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government Securities Ultra-Short Bond Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian Nold |
|
High Income Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic Income Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joe Ransom |
|
Select Large Cap Growth Stock Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mills Riddick |
|
Large Cap Value Equity Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Rieger |
|
Limited Duration Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Limited-Term Federal Mortgage Securities Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Return Bond Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government Securities Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael A.
Sansoterra |
|
Large Cap Growth Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Select Large Cap Growth Stock Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Small Cap Growth Stock Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ron Schwartz |
|
High Grade Municipal Bond Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Grade Tax-Exempt Bond Fund |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chad Stephens |
|
Short-Term Bond Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-Term U.S. Treasury Securities Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ultra-Short Bond Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government Securities Ultra-Short Bond Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Don Townsick |
|
U.S. Equity 130/30 Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Other Accounts |
|
|
Other Accounts with |
|
|
|
|
|
Managed/ |
|
|
Performance-Based |
|
|
|
|
|
Total Assets in Accounts (millions) |
|
|
Fees |
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Registered |
|
|
Pooled |
|
|
|
|
|
|
Number |
|
|
Total |
|
Portfolio |
|
RidgeWorth Fund(s) |
|
Investment |
|
|
Investment |
|
|
Other |
|
|
& |
|
|
Assets |
|
Manager |
|
Managed |
|
Companies |
|
|
Vehicles |
|
|
Accounts |
|
|
Category |
|
|
(millions) |
|
Perry Troisi |
|
Intermediate Bond Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Grade Bond Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Limited Duration Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Limited-Term Federal Mortgage Securities Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Return Bond Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government Securities Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leslie Tubbs |
|
Aggressive Growth Stock Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Emerging Growth Stock Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adrien Webb |
|
Intermediate Bond Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Grade Bond Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic Income Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Return Bond Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matthew Welden |
|
International Equity Index Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Don Wordell |
|
Mid-Cap Value Equity Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott Yushak |
|
Mid-Cap Core Equity Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nancy Zevenbergen |
|
Aggressive Growth Stock Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Emerging Growth Stock Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Conflicts of Interest in Managing Multiple Accounts. A portfolio managers management of
both a Fund and the other accounts listed in the table above at the same time may give rise to
potential conflicts of interest. If a Fund and the other accounts have identical investment
objectives, the portfolio manager could favor
one or more accounts over the Fund. Another potential conflict may arise from the portfolio
managers knowledge about the size, timing and possible market impact of Fund trades if the
portfolio manager used this information to the advantage of other accounts and to the disadvantage
of the Fund. In addition, aggregation of trades may create the potential for unfairness to a Fund
or another account if one account is favored over another in allocating the securities purchased or
sold. Each Subadviser has established policies and procedures to ensure that the purchase and sale
of securities among all accounts it manages are allocated in a manner the Subadviser believes is
fair and equitable.
47
Portfolio Manager Compensation Structure. Portfolio managers earn competitive salaries and
participate in an incentive bonus plan designed to retain high quality investment professionals.
The portfolio managers receive a salary commensurate with the individuals experience and
responsibilities with the firm. Except as discussed below, incentive bonuses are based on the
relative performance of the RidgeWorth Fund(s), and in some cases other investment products,
managed or supervised by the investment professional, a quantitative scorecard that subjectively
measures other performance attributes (such as corporate citizenship, contributions to the firm and
adherence to compliance policies) and a business performance component.
Investment performance is determined by comparing the relevant RidgeWorth Funds pre-tax total
returns to the returns of the relevant RidgeWorth Funds benchmarks and peer groups over multi-year
periods, as applicable. Where portfolio managers manage multiple RidgeWorth Funds, each Fund is
weighted based on its market value and its relative strategic importance to the Adviser. Other
performance attributes are also based on a scorecard that objectively measures key performance
attributes, which is then evaluated by management to determine the award amount.
As a tool to minimize personnel turnover, the portfolio managers incentive bonus will usually have
one portion of the incentive paid promptly following the calendar year end and another portion
subject to a mandatory deferral which vests over three years subject to the terms and conditions of
the plan.
On occasion, a portfolio manager may receive a guaranteed incentive for a fixed period in
conjunction with accepting a new position when the Subadviser fees it necessary to recruit the
talent.
All full-time employees of a Subadviser, including the Funds portfolio managers, are provided a
benefits package on substantially similar terms. The percentage of each individuals compensation
provided by these benefits is dependent upon length of employment, salary level, and several other
factors. In addition, certain portfolio managers may be eligible for one or more of the following
additional benefit plans:
401(k) Excess Plan This plan provides benefits which would otherwise be provided under
the qualified cash or deferred ESOP plan adopted by the Advisers parent company (SunTrust
Banks, Inc.), were it not for the imposition of certain statutory limits on qualified plan
benefits. Certain select individuals within specific salary levels may be eligible for this
plan. Participation in the plan must be approved by the individuals senior executive for the
business.
ERISA Excess Retirement Plan This plan provides for benefits to certain executives that
cannot be paid to them under tax qualified pension plans as a result of federal restrictions.
Certain select individuals within specific salary levels may be eligible for this plan.
Participation in the plan must be approved by the individuals senior executive for the
business.
Voluntary Functional Incentive Plan Deferral This plan is a provision of a SunTrust
Deferred Compensation Plan, which allows participants of selected annual incentive plans to
voluntarily defer portions of their incentive. Eligibility to participate in this plan is
offered to employees of selected incentive plans who earn above a specified level of total
compensation in the year prior to their deferral. The Advisers annual incentive plans offer
this provision to employees who meet the compensation criteria level.
Restricted Stock Awards Restricted stock awards are granted to certain select individuals
on a case-by-case basis as a form of long-term compensation and as an additional incentive to
retain these professionals. The awards often vest based on the recipients continued
employment with the Subadviser, but these awards may also carry additional vesting
requirements, including performance conditions.
48
Securities Ownership of Portfolio Managers. The table below shows the range of equity securities
beneficially owned by each portfolio manager in the Fund or Funds managed by the portfolio manager.
The information is as of March 31, 2008, except as otherwise noted.
|
|
|
|
|
|
|
Portfolio Manager |
|
RidgeWorth Fund(s) Managed |
|
Range of Securities Owned |
|
Charles Arrington |
|
Mid-Cap Core Equity |
|
|
|
|
|
|
|
|
|
|
|
Brett Barner |
|
Small Cap Value Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
Maryland Municipal Bond
|
|
|
|
|
George Calvert, Jr. |
|
Virginia Intermediate Municipal Bond |
|
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Tax-Exempt Bond
|
|
|
|
|
Chris Carter |
|
North Carolina Tax-Exempt Bond |
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-Term Bond
|
|
|
|
|
|
|
Short-Term U.S. Treasury Securities
|
|
|
|
|
|
|
U.S. Government Securities Ultra-Short Bond
|
|
|
|
|
Robert Corner |
|
Ultra-Short Bond |
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggressive Growth Stock
|
|
|
|
|
Brooke de Boutray |
|
Emerging Growth Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
International Equity
|
|
|
|
|
|
|
International Equity Index
|
|
|
|
|
Chad Deakins |
|
Large Cap Quantitative Equity |
|
|
|
|
|
|
|
|
|
|
|
Vincent Fiormati |
|
International Equity 130/30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Vision Aggressive Growth
|
|
|
|
|
|
|
Life Vision Conservative
|
|
|
|
|
|
|
Life Vision Growth and Income
|
|
|
|
|
|
|
Life Vision Moderate Growth
|
|
|
|
|
|
|
Life Vision Target Date 2025
|
|
|
|
|
|
|
Life Vision Target Date 2015
|
|
|
|
|
Alan Gayle |
|
Life Vision Target Date 2035 |
|
|
|
|
|
|
|
|
|
|
|
George Goudelias |
|
Seix Floating Rate High Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
Large Cap Growth Stock
|
|
|
|
|
|
|
Select Large Cap Growth Stock
|
|
|
|
|
Chris Guinther |
|
Small Cap Growth Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
Seix High Yield
|
|
|
|
|
|
|
International Equity 130/30
|
|
|
|
|
Mike Kirkpatrick |
|
Real Estate 130/30 |
|
|
|
|
|
|
|
|
|
|
|
Neil Kochen |
|
U.S. Equity 130/30 |
|
|
|
|
|
|
|
|
|
|
|
Jeff Markunas |
|
Large Cap Core Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
High Income
|
|
|
|
|
|
|
Seix Floating Rate High Income
|
|
|
|
|
|
|
Seix High Yield
|
|
|
|
|
Michael McEachern |
|
Strategic Income |
|
|
|
|
49
|
|
|
|
|
|
|
Portfolio Manager |
|
RidgeWorth Fund(s) Managed |
|
Range of Securities Owned |
|
Kevin Means |
|
Real Estate 130/30 |
|
|
|
|
|
|
Short-Term Bond
|
|
|
|
|
|
|
Short-Term U.S. Treasury Securities
|
|
|
|
|
|
|
U.S. Government Securities Ultra-Short Bond
|
|
|
|
|
Rick Nelson |
|
Ultra-Short Bond |
|
|
|
|
|
|
High Income
|
|
|
|
|
Brian Nold |
|
Strategic Income |
|
|
|
|
Joe Ransom |
|
Select Large Cap Growth Stock |
|
|
|
|
Mills Riddick |
|
Large Cap Value Equity |
|
|
|
|
|
|
Limited Duration
|
|
|
|
|
|
|
Limited-Term Federal Mortgage Securities
|
|
|
|
|
|
|
Total Return Bond
|
|
|
|
|
Michael Rieger |
|
U.S. Government Securities |
|
|
|
|
|
|
Large Cap Growth Stock
|
|
|
|
|
|
|
Select Large Cap Growth Stock
|
|
|
|
|
Michael Sansoterra |
|
Small Cap Growth Stock |
|
|
|
|
|
|
High Grade Municipal Bond
|
|
|
|
|
|
|
Investment Grade Tax-Exempt Bond
|
|
|
|
|
|
|
Short-Term Bond |
|
|
|
|
|
|
Short-Term U.S. Treasury Securities
|
|
|
|
|
|
|
U.S. Government Securities Ultra-Short Bond
|
|
|
|
|
Chad Stephens |
|
Ultra-Short Bond |
|
|
|
|
Don Townsick |
|
U.S. Equity 130/30 |
|
|
|
|
|
|
Intermediate Bond
|
|
|
|
|
|
|
Investment Grade Bond
|
|
|
|
|
|
|
Limited Duration
|
|
|
|
|
|
|
Limited-Term Federal Mortgage Securities
|
|
|
|
|
|
|
Total Return Bond
|
|
|
|
|
Perry Troisi |
|
U.S. Government Securities |
|
|
|
|
|
|
Aggressive Growth Stock
|
|
|
|
|
Leslie Tubbs |
|
Emerging Growth Stock |
|
|
|
|
|
|
Intermediate Bond
|
|
|
|
|
|
|
Investment Grade Bond
|
|
|
|
|
|
|
Strategic Income
|
|
|
|
|
Adrien Webb |
|
Total Return Bond |
|
|
|
|
Matthew Welden |
|
International Equity Index Fund |
|
|
|
|
Don Wordell |
|
Mid-Cap Value Equity |
|
|
|
|
Scott Yuschak |
|
Mid-Cap Core Equity |
|
|
|
|
50
|
|
|
|
|
|
|
Portfolio Manager |
|
RidgeWorth Fund(s) Managed |
|
Range of Securities Owned |
|
|
|
Aggressive Growth Stock
|
|
|
|
|
Nancy Zevenbergen |
|
Emerging Growth Stock |
|
|
|
|
THE ADMINISTRATOR
General. Citi Fund Services Ohio, Inc. (the Administrator) serves as administrator of the Trust.
Prior to the acquisition of the Administrator by a subsidiary of Citibank N.A. on August 1, 2007,
the Administrator was known as BISYS Fund Services Ohio, Inc. The Administrator, an Ohio
corporation, has its principal business offices at 3435 Stelzer Road, Columbus, Ohio 43219. The
Administrator provides administration services to other investment companies.
Master Services Agreement with the Trust. The Trust, RidgeWorth Variable Trust and the
Administrator have entered into a master services agreement (the Master Services Agreement)
effective July 26, 2004. Under the Master Services Agreement, the Administrator provides the Trust
with administrative services, including day-to-day administration of matters necessary to each
Funds operations, maintenance of records and the books of the Trust, preparation of reports,
assistance with compliance monitoring of the Funds activities, and certain supplemental services
in connection with the Trusts obligations under the Sarbanes-Oxley Act of 2002; fund accounting
services, transfer agency services and shareholder services.
The Master Services Agreement shall remain in effect until July 31, 2010, and shall continue in
effect for successive one year periods subject to review at least annually by the Trustees of the
Trust unless terminated by either party on not less than 90 days written notice to the other party.
Administration Fees to be Paid to the Administrator. Under the Master Services Agreement, the
Administrator is entitled to receive an asset-based fee for administration, fund accounting,
transfer agency and shareholder services (expressed as a percentage of the combined average daily
net assets of the Trust and the RidgeWorth Variable Trust) of 2.75 basis points (0.0275%) on the
first $25 billion, 2.25 basis points (0.0225%) on the next $5 billion, and 1.75 basis points
(0.0175%) on the amounts over $30 billion, plus an additional class fee of $2,593 per class
annually, applicable to each additional class of shares over 145 classes of shares. The
Administrator may waive a portion of its fee.
The Master Services Agreement provides for the Administrator to pay certain insurance premiums for
the Trust and RidgeWorth Variable Trust, including $300,000 toward the premium for Directors and
Officers Liability/Errors and Omissions insurance coverage, and $25,000 toward the premium for
Fidelity Bond coverage. The Administrator has also separately agreed to provide, for the benefit
of shareholders, (i) annual fee waivers and certain administrative services at an annual value of
at least $950,000, and (ii) additional fee waivers of [$___] of its administrative fees annually
for the remaining term of the Master Services Agreement. The waivers described in (i) above are
not applied uniformly across the Funds. In certain instances, the waivers may be applied to Funds
subject to a contractual expense limitation or cap. In other instances, the waivers may be applied
to non-capped Funds on a voluntary basis. The application of the Administrators waivers to capped
Funds decreases the Advisers obligation to reimburse the Funds for expenses incurred in excess of
the expense cap. The administrative services described in (i) above include: (a) paying for
certain legal expenses for the benefit of the Funds associated with fund administration matters
such as mergers and acquisitions, proxy statements, exemptive relief, contract review, and
preparation of filings and prospectuses with respect to the Funds; (b) providing certain
shareholder services; and (c) AccessData services. The waivers described in (ii) above are applied
pro rata to reduce the expenses of each Fund in the Trust and RidgeWorth Variable Trust. Such
payments and fee waivers will not be recouped by the Administrator in subsequent years.
For the fiscal years ended March 31, 2008, March 31, 2007, and March 31, 2006, the Funds paid the
following administrative fees to the Administrator:
51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Paid (in thousands) |
|
Fees Waived (in thousands) |
Fund* |
|
2008 |
|
2007 |
|
2006 |
|
2008 |
|
2007 |
|
2006 |
Aggressive Growth Stock Fund |
|
|
|
|
|
$ |
79 |
|
|
$ |
28 |
|
|
|
|
|
|
$ |
2 |
|
|
$ |
7 |
|
Emerging Growth Stock Fund |
|
|
|
|
|
|
21 |
|
|
|
8 |
|
|
|
|
|
|
|
9 |
|
|
|
2 |
|
Georgia Tax-Exempt Bond Fund |
|
|
|
|
|
|
36 |
|
|
|
31 |
|
|
|
|
|
|
|
1 |
|
|
|
2 |
|
High Grade Municipal Bond Fund |
|
|
|
|
|
|
44 |
|
|
|
49 |
|
|
|
|
|
|
|
12 |
|
|
|
0 |
|
High Income Fund |
|
|
|
|
|
|
36 |
|
|
|
22 |
|
|
|
|
|
|
|
8 |
|
|
|
14 |
|
Institutional Cash Management
Money Market Fund |
|
|
|
|
|
|
855 |
|
|
|
786 |
|
|
|
|
|
|
|
32 |
|
|
|
15 |
|
Institutional Municipal Cash
Reserve Money Market Fund |
|
|
|
|
|
|
22 |
|
|
|
14 |
|
|
|
|
|
|
|
8 |
|
|
|
14 |
|
Institutional U.S. Government
Securities Money Market Fund |
|
|
|
|
|
|
231 |
|
|
|
241 |
|
|
|
|
|
|
|
9 |
|
|
|
3 |
|
Institutional U.S. Treasury
Securities Money Market Fund |
|
|
|
|
|
|
724 |
|
|
|
721 |
|
|
|
|
|
|
|
16 |
|
|
|
16 |
|
Intermediate Bond Fund |
|
|
|
|
|
|
20 |
|
|
|
18 |
|
|
|
|
|
|
|
2 |
|
|
|
|
|
International Equity 130/30 Fund |
|
|
|
|
|
|
|
*** |
|
|
|
*** |
|
|
|
|
|
|
|
*** |
|
|
|
*** |
International Equity Fund |
|
|
|
|
|
|
270 |
|
|
|
181 |
|
|
|
|
|
|
|
7 |
|
|
|
68 |
|
International Equity Index Fund |
|
|
|
|
|
|
223 |
|
|
|
164 |
|
|
|
|
|
|
|
17 |
|
|
|
59 |
|
Investment Grade Bond Fund |
|
|
|
|
|
|
114 |
|
|
|
153 |
|
|
|
|
|
|
|
3 |
|
|
|
16 |
|
Investment Grade Tax-Exempt Bond
Fund |
|
|
|
|
|
|
91 |
|
|
|
85 |
|
|
|
|
|
|
|
2 |
|
|
|
1 |
|
Large Cap Core Equity Fund |
|
|
|
|
|
|
409 |
|
|
|
353 |
|
|
|
|
|
|
|
9 |
|
|
|
23 |
|
Large Cap Quantitative Equity Fund |
|
|
|
|
|
|
82 |
|
|
|
43 |
|
|
|
|
|
|
|
2 |
|
|
|
0 |
|
Large Cap Value Equity Fund |
|
|
|
|
|
|
232 |
|
|
|
237 |
|
|
|
|
|
|
|
6 |
|
|
|
44 |
|
Life Vision Aggressive Growth Fund |
|
|
|
|
|
|
16 |
|
|
|
14 |
|
|
|
|
|
|
|
0 |
|
|
|
5 |
|
Life Vision Conservative Fund |
|
|
|
|
|
|
2 |
|
|
|
2 |
|
|
|
|
|
|
|
1 |
|
|
|
2 |
|
Life Vision Growth and Income Fund |
|
|
|
|
|
|
34 |
|
|
|
30 |
|
|
|
|
|
|
|
1 |
|
|
|
7 |
|
Life Vision Moderate Growth Fund |
|
|
|
|
|
|
48 |
|
|
|
43 |
|
|
|
|
|
|
|
1 |
|
|
|
8 |
|
Life Vision Target Date 2015 Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Life Vision Target Date 2025 Fund |
|
|
|
|
|
|
1 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Life Vision Target Date 2035 Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Limited Duration Fund |
|
|
|
|
|
|
18 |
|
|
|
24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Limited-Term Federal Mortgage
Securities Fund |
|
|
|
|
|
|
104 |
|
|
|
103 |
|
|
|
|
|
|
|
3 |
|
|
|
15 |
|
Maryland Municipal Bond Fund |
|
|
|
|
|
|
10 |
|
|
|
11 |
|
|
|
|
|
|
|
0 |
|
|
|
2 |
|
Mid-Cap Core Equity Fund |
|
|
|
|
|
|
102 |
|
|
|
82 |
|
|
|
|
|
|
|
2 |
|
|
|
32 |
|
Mid-Cap Value Equity Fund |
|
|
|
|
|
|
67 |
|
|
|
57 |
|
|
|
|
|
|
|
2 |
|
|
|
15 |
|
North Carolina Tax-Exempt Bond
Fund |
|
|
|
|
|
|
11 |
|
|
|
11 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Prime Quality Money Market Fund |
|
|
|
|
|
|
2,020 |
|
|
|
1,545 |
|
|
|
|
|
|
|
52 |
|
|
|
175 |
|
Real Estate 130/30 Fund |
|
|
|
|
|
|
|
*** |
|
|
|
*** |
|
|
|
|
|
|
|
*** |
|
|
|
*** |
Seix Floating Rate High Income
Fund |
|
|
|
|
|
|
104 |
|
|
|
2 |
|
|
|
|
|
|
|
17 |
|
|
|
2 |
|
Seix High Yield Fund |
|
|
|
|
|
|
312 |
|
|
|
327 |
|
|
|
|
|
|
|
7 |
|
|
|
|
|
Select Large Cap Growth Stock Fund |
|
|
|
|
|
|
26 |
|
|
|
39 |
|
|
|
|
|
|
|
6 |
|
|
|
24 |
|
52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Paid (in thousands) |
|
Fees Waived (in thousands) |
Fund* |
|
2008 |
|
2007 |
|
2006 |
|
2008 |
|
2007 |
|
2006 |
Short-Term Bond Fund |
|
|
|
|
|
|
90 |
|
|
|
79 |
|
|
|
|
|
|
|
2 |
|
|
|
11 |
|
Short-Term U.S. Treasury
Securities Fund |
|
|
|
|
|
|
18 |
|
|
|
25 |
|
|
|
|
|
|
|
0 |
|
|
|
15 |
|
Small Cap Growth Stock Fund |
|
|
|
|
|
|
344 |
|
|
|
348 |
|
|
|
|
|
|
|
45 |
|
|
|
69 |
|
Small Cap Value Equity Fund |
|
|
|
|
|
|
189 |
|
|
|
201 |
|
|
|
|
|
|
|
4 |
|
|
|
12 |
|
Strategic Income Fund |
|
|
|
|
|
|
45 |
|
|
|
80 |
|
|
|
|
|
|
|
12 |
|
|
|
7 |
|
Tax Exempt Money Market Fund |
|
|
|
|
|
|
475 |
|
|
|
446 |
|
|
|
|
|
|
|
10 |
|
|
|
|
*** |
Total Return Bond Fund |
|
|
|
|
|
|
138 |
|
|
|
102 |
|
|
|
|
|
|
|
3 |
|
|
|
|
|
U.S. Equity 130/30 Fund |
|
|
|
|
|
|
|
*** |
|
|
|
*** |
|
|
|
|
|
|
|
*** |
|
|
|
*** |
U.S. Government Securities Fund |
|
|
|
|
|
|
117 |
|
|
|
95 |
|
|
|
|
|
|
|
3 |
|
|
|
9 |
|
U.S. Government Securities Money
Market Fund |
|
|
|
|
|
|
192 |
|
|
|
|
|
|
|
|
|
|
|
5 |
|
|
|
|
|
U.S. Government Securities
Ultra-Short Bond Fund |
|
|
|
|
|
|
9 |
|
|
|
15 |
|
|
|
|
|
|
|
5 |
|
|
|
10 |
|
U.S. Treasury Money Market Fund |
|
|
|
|
|
|
352 |
|
|
|
387 |
|
|
|
|
|
|
|
7 |
|
|
|
6 |
|
Ultra-Short Bond Fund |
|
|
|
|
|
|
40 |
|
|
|
59 |
|
|
|
|
|
|
|
6 |
|
|
|
8 |
|
Virginia Intermediate Municipal
Bond Fund |
|
|
|
|
|
|
52 |
|
|
|
47 |
|
|
|
|
|
|
|
11 |
|
|
|
3 |
|
Virginia Tax Free Money Market
Fund |
|
|
|
|
|
|
141 |
|
|
|
131 |
|
|
|
|
|
|
|
3 |
|
|
|
0 |
|
|
|
|
*** |
|
Not in operation during the period. |
THE DISTRIBUTOR
[The Trust and Foreside Distribution Services, L.P. (the Distributor) are parties to a
Distribution Agreement whereby the Distributor acts as principal underwriter for the Trusts
shares. The principal business address of the Distributor is 100 Summer Street, Suite 1500, Boston,
Massachusetts 02110. Prior to its acquisition by Foreside Distributors, LLC on August 1, 2007, the
Distributor was known as BISYS Fund Services Limited Partnership (BISYS). ]Under the Distribution
Agreement, the Distributor must use all reasonable efforts, consistent with its other business, in
connection with the continuous offering of shares of the Trust. [The Distributor receives an annual
fee of $37,500, which will be borne by the Investment Adviser, for the services it performs
pursuant to the Distribution Agreement.] In addition, the A Shares of the Funds have a distribution
and service plan (the A Plan), the B Shares of the Funds have a
distribution and service plan (the B Plan), and the C Shares of the Funds have a distribution and
service plan (the C Plan).
The continuance of a distribution agreement must be specifically approved at least annually (i) by
the vote of the trustees or by a vote of the shareholders of the funds and (ii) by the vote of a
majority of the trustees who are not parties to such distribution agreement or interested persons
of any party thereto, as defined in the 1940 Act, cast in person at a meeting called for the
purpose of voting on such approval. A distribution agreement will terminate automatically in the
event of its assignment, and is terminable at any time without penalty by the trustees, the
distributor, or, with respect to any fund, by a majority of the outstanding shares of that fund,
upon 60 days written notice by either party. The Distributor has no obligation to sell any
specific quantity of Fund shares.
53
For the fiscal years ended March 31, 2008, March 31, 2007 and March 31, 2006, the Funds paid the
following aggregate sales charge payable to the Distributor with respect to the A Shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Sales Charge Payable |
|
Amount Retained by Distributor |
|
|
to Distributor (in thousands) |
|
(in thousands) |
Fund* |
|
2008 |
|
2007 |
|
2006 |
|
2008 |
|
2007 |
|
2006 |
Aggressive Growth Stock
Fund |
|
|
|
|
|
$ |
0 |
|
|
$ |
1 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
Emerging Growth Stock Fund |
|
|
|
|
|
|
1 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Georgia Tax-Exempt Bond
Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
High Grade Municipal Bond
Fund |
|
|
|
|
|
|
0 |
|
|
|
2 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
High Income Fund |
|
|
|
|
|
|
1 |
|
|
|
3 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Intermediate Bond Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
International Equity
130/30 Fund |
|
|
|
|
|
|
|
*** |
|
|
|
*** |
|
|
|
|
|
|
|
*** |
|
|
|
*** |
International Equity Fund |
|
|
|
|
|
|
9 |
|
|
|
5 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
International Equity Index
Fund |
|
|
|
|
|
|
5 |
|
|
|
5 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Investment Grade Bond Fund |
|
|
|
|
|
|
0 |
|
|
|
3 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Investment Grade
Tax-Exempt Bond Fund |
|
|
|
|
|
|
0 |
|
|
|
8 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Large Cap Core Equity Fund |
|
|
|
|
|
|
8 |
|
|
|
15 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Large Cap Growth Stock Fund |
|
|
|
|
|
|
17 |
|
|
|
20 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Large Cap Quantitative
Equity Fund |
|
|
|
|
|
|
1 |
|
|
|
5 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Large Cap Value Equity Fund |
|
|
|
|
|
|
11 |
|
|
|
18 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Life Vision Aggressive
Growth Fund |
|
|
|
|
|
|
6 |
|
|
|
14 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Life Vision Conservative
Fund |
|
|
|
|
|
|
1 |
|
|
|
7 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Life Vision Growth and
Income Fund |
|
|
|
|
|
|
41 |
|
|
|
71 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Life Vision Moderate
Growth Fund |
|
|
|
|
|
|
27 |
|
|
|
54 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Life Vision Target Date
2015 Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Life Vision Target Date
2025 Fund |
|
|
|
|
|
|
1 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Life Vision Target Date
2035 Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Limited Duration Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Limited-Term Federal
Mortgage Securities Fund |
|
|
|
|
|
|
0 |
|
|
|
2 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Sales Charge Payable |
|
Amount Retained by Distributor |
|
|
to Distributor (in thousands) |
|
(in thousands) |
Fund* |
|
2008 |
|
2007 |
|
2006 |
|
2008 |
|
2007 |
|
2006 |
Maryland Municipal Bond
Fund |
|
|
|
|
|
|
0 |
|
|
|
5 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Mid-Cap Core Equity Fund |
|
|
|
|
|
|
2 |
|
|
|
7 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Mid-Cap Value Equity Fund |
|
|
|
|
|
|
4 |
|
|
|
5 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
North Carolina Tax-Exempt
Bond Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Prime Quality Money Market
Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Real Estate 130/30 Fund |
|
|
|
|
|
|
|
*** |
|
|
|
*** |
|
|
|
|
|
|
|
*** |
|
|
|
*** |
Seix Floating Rate High
Income Fund |
|
|
|
|
|
|
11 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Seix High Yield Fund |
|
|
|
|
|
|
6 |
|
|
|
25 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Select Large Cap Growth
Stock Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Short-Term Bond Fund |
|
|
|
|
|
|
0 |
|
|
|
3 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Short-Term U.S. Treasury
Securities Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Small Cap Growth Stock Fund |
|
|
|
|
|
|
9 |
|
|
|
37 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Small Cap Quantitative
Equity Fund |
|
|
|
|
|
|
0 |
|
|
|
|
*** |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Small Cap Value Equity Fund |
|
|
|
|
|
|
0 |
|
|
|
2 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Strategic Income Fund |
|
|
|
|
|
|
0 |
|
|
|
7 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Tax-Exempt Money Market
Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Total Return Bond Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
U.S. Equity 130/30 Fund |
|
|
|
|
|
|
|
*** |
|
|
|
*** |
|
|
|
|
|
|
|
*** |
|
|
|
*** |
U.S. Government Securities
Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
U.S. Government Securities
Money Market Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
U.S. Treasury Money Market
Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Virginia Intermediate
Municipal Bond Fund |
|
|
|
|
|
|
1 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Virginia Tax Free Money
Market Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
*** |
|
Not in operation during the period. |
The following table shows the amount of front-end sales charge that is paid to Investment
Consultants (Dealers) as a percentage of the offering price of A Shares:
55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
More |
|
More |
|
More |
|
More |
|
|
|
|
|
|
|
|
than |
|
than |
|
than |
|
than |
|
|
|
|
|
|
|
|
$50,000 |
|
$100,000 |
|
$250,000 |
|
$500,000 |
|
|
|
|
Less |
|
but less |
|
but less |
|
but less |
|
but less |
|
|
|
|
than |
|
than |
|
than |
|
than |
|
than |
|
$1,000,000 |
Funds |
|
$50,000 |
|
$100,000 |
|
$250,000 |
|
$500,000 |
|
$1,000,000 |
|
and over* |
Aggressive Growth
Stock Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Emerging Growth
Stock Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Equity
130/30 Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Equity
Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Equity
Index Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Large Cap Core
Equity Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Large Cap Growth
Stock Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Large Cap
Quantitative Equity
Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Large Cap Value
Equity Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Vision
Aggressive Growth
Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Vision Growth
and Income Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Vision Moderate
Growth Fund |
|
|
5.00 |
% |
|
|
4.00 |
% |
|
|
3.00 |
% |
|
|
2.00 |
% |
|
|
1.75 |
% |
|
|
0.00 |
% |
Life Vision Target
Date 2015 Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Vision Target
Date 2025 Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Vision Target
Date 2035 Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mid-Cap Core Equity
Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mid-Cap Value Equity
Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate 130/30
Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Select Large Cap
Growth Stock Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Small Cap Growth
Stock Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Small Cap
Quantitative Equity
Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Small Cap Value
Equity Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Equity 130/30
Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Tax-Exempt
Bond Fund |
|
|
4.00 |
% |
|
|
3.75 |
% |
|
|
2.75 |
% |
|
|
2.00 |
% |
|
|
1.75 |
% |
|
|
0.00 |
% |
High Grade Municipal
Bond Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High Income Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intermediate Bond
Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Grade
Bond Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Grade
Tax-Exempt Bond Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Vision
Conservative Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maryland Municipal
Bond Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North Carolina
Tax-Exempt Bond Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Seix High Yield Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic Income Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Return Bond
Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government
Securities Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
More |
|
More |
|
More |
|
More |
|
|
|
|
|
|
|
|
than |
|
than |
|
than |
|
than |
|
|
|
|
|
|
|
|
$50,000 |
|
$100,000 |
|
$250,000 |
|
$500,000 |
|
|
|
|
Less |
|
but less |
|
but less |
|
but less |
|
but less |
|
|
|
|
than |
|
than |
|
than |
|
than |
|
than |
|
$1,000,000 |
Funds |
|
$50,000 |
|
$100,000 |
|
$250,000 |
|
$500,000 |
|
$1,000,000 |
|
and over* |
Virginia
Intermediate
Municipal Bond Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Limited Duration Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Limited-Term Federal
Mortgage Securities
Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Seix Floating Rate
High Income Fund |
|
|
2.25 |
% |
|
|
2.00 |
% |
|
|
1.75 |
% |
|
|
1.50 |
% |
|
|
1.25 |
% |
|
|
0.00 |
% |
Short-Term Bond Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-Term U.S.
Treasury Securities
Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government
Securities Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
While investments of more than $1,000,000 are not subject to a front-end sales charge,
the Distributor may pay Dealers commissions ranging from 0.25% to 1.00% on such purchases. |
For the fiscal years ended March 31, 2008, March 31, 2007 and March 31, 2006, the Funds paid the
following aggregate sales charge payable to the Distributor with respect to the B Shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Sales Charge Payable |
|
Amount Retained by Distributor |
|
|
to Distributor (in thousands) |
|
(in thousands) |
Fund |
|
2008 |
|
2007 |
|
2006 |
|
2008 |
|
2007 |
|
2006 |
Life Vision
Aggressive Growth
Fund |
|
|
|
|
|
$ |
0 |
|
|
$ |
12 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
Life Vision
Conservative Fund |
|
|
|
|
|
|
0 |
|
|
|
5 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Life Vision Growth
and Income Fund |
|
|
|
|
|
|
0 |
|
|
|
46 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Life Vision
Moderate Growth
Fund |
|
|
|
|
|
|
0 |
|
|
|
23 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
For the fiscal years ended March 31, 2008, March 31, 2007 and March 31, 2006, the Funds paid the
following aggregate sales charge payable to the Distributor with respect to the C Shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Sales Charge |
|
|
|
|
Payable to Distributor (in |
|
Amount Retained by |
|
|
thousands) |
|
Distributor (in thousands) |
Fund** |
|
2008 |
|
2007 |
|
2006 |
|
2008 |
|
2007 |
|
2006 |
Aggressive Growth Stock Fund |
|
|
|
|
|
$ |
1 |
|
|
$ |
1 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
Emerging Growth Stock Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Georgia Tax-Exempt Bond Fund |
|
|
|
|
|
|
0 |
|
|
|
2 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
High Grade Municipal Bond Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Sales Charge |
|
|
|
|
Payable to Distributor (in |
|
Amount Retained by |
|
|
thousands) |
|
Distributor (in thousands) |
Fund** |
|
2008 |
|
2007 |
|
2006 |
|
2008 |
|
2007 |
|
2006 |
High Income Fund |
|
|
|
|
|
|
6 |
|
|
|
3 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Intermediate Bond Fund |
|
|
|
|
|
|
0 |
|
|
|
1 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
International Equity 130/30 Fund |
|
|
|
|
|
|
|
*** |
|
|
|
*** |
|
|
|
|
|
|
|
*** |
|
|
|
*** |
International Equity Fund |
|
|
|
|
|
|
2 |
|
|
|
2 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
International Equity Index Fund |
|
|
|
|
|
|
2 |
|
|
|
1 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Investment Grade Bond Fund |
|
|
|
|
|
|
1 |
|
|
|
3 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Investment Grade Tax-Exempt Bond
Fund |
|
|
|
|
|
|
0 |
|
|
|
1 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Large Cap Core Equity Fund |
|
|
|
|
|
|
11 |
|
|
|
10 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Large Cap Growth Stock Fund |
|
|
|
|
|
|
4 |
|
|
|
5 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Large Cap Quantitative Equity Fund |
|
|
|
|
|
|
1 |
|
|
|
2 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Large Cap Value Equity Fund |
|
|
|
|
|
|
4 |
|
|
|
3 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Life Vision Aggressive Growth Fund |
|
|
|
|
|
|
4 |
|
|
|
4 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Life Vision Conservative Fund |
|
|
|
|
|
|
2 |
|
|
|
2 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Life Vision Growth and Income Fund |
|
|
|
|
|
|
21 |
|
|
|
12 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Life Vision Moderate Growth Fund |
|
|
|
|
|
|
6 |
|
|
|
4 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Life Vision Target Date 2015 Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Life Vision Target Date 2025 Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Life Vision Target Date 2035 Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Limited-Term Federal Mortgage
Securities Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Maryland Municipal Bond Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Mid-Cap Core Equity Fund |
|
|
|
|
|
|
2 |
|
|
|
4 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Mid-Cap Value Equity Fund |
|
|
|
|
|
|
3 |
|
|
|
1 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
North Carolina Tax-Exempt Bond
Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Prime Quality Money Market Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Real Estate 130/30 Fund |
|
|
|
|
|
|
|
*** |
|
|
|
*** |
|
|
|
|
|
|
|
*** |
|
|
|
*** |
Seix High Yield Fund |
|
|
|
|
|
|
3 |
|
|
|
15 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Select Large Cap Growth Stock Fund |
|
|
|
|
|
|
3 |
|
|
|
3 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Short-Term Bond Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Short-Term U.S. Treasury
Securities Fund |
|
|
|
|
|
|
1 |
|
|
|
1 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Small Cap Growth Stock Fund |
|
|
|
|
|
|
7 |
|
|
|
10 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Small Cap Quantitative Equity Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Small Cap Value Equity Fund |
|
|
|
|
|
|
3 |
|
|
|
4 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Strategic Income Fund |
|
|
|
|
|
|
2 |
|
|
|
2 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Total Return Bond Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Virginia Intermediate Municipal
Bond Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Sales Charge |
|
|
|
|
Payable to Distributor (in |
|
Amount Retained by |
|
|
thousands) |
|
Distributor (in thousands) |
Fund** |
|
2008 |
|
2007 |
|
2006 |
|
2008 |
|
2007 |
|
2006 |
U.S. Equity 130/30 Fund |
|
|
|
|
|
|
|
*** |
|
|
|
*** |
|
|
|
|
|
|
|
*** |
|
|
|
*** |
U.S. Government Securities Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
*** |
|
Not in operation during the period. |
A Shares, B Shares and C Shares Distribution Plans
The Distribution Agreement and the A Plan adopted by the Trust provide that A Shares of the Funds
will pay the Distributor fees for furnishing services related to (a) the distribution and sale of A
Shares and (b) the shareholders servicing of A Shares. The table below shows the maximum amount
approved by the Board of Trustees as (i) aggregate fees for distribution and shareholder service
activities and (ii) the maximum amount of the fee allocated for shareholder servicing.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maximum Amount of |
|
|
|
|
|
|
A Plan Distribution |
|
|
|
|
|
|
and Service Fee |
|
|
Maximum |
|
Payable for |
|
|
A Plan Distribution |
|
Shareholder |
Fund |
|
and Service Fee |
|
Services* |
Aggressive Growth Stock Fund |
|
|
0.35 |
% |
|
|
0.25 |
% |
Emerging Growth Stock Fund |
|
|
0.35 |
% |
|
|
0.25 |
% |
Georgia Tax-Exempt Bond Fund |
|
|
0.18 |
% |
|
|
0.15 |
% |
High Grade Municipal Bond Fund |
|
|
0.18 |
% |
|
|
0.15 |
% |
High Income Fund |
|
|
0.30 |
% |
|
|
0.25 |
% |
Intermediate Bond Fund |
|
|
0.25 |
% |
|
|
0.25 |
% |
International Equity 130/30 Fund |
|
|
0.35 |
% |
|
|
0.25 |
% |
International Equity Fund |
|
|
0.33 |
% |
|
|
0.25 |
% |
International Equity Index Fund |
|
|
0.35 |
% |
|
|
0.25 |
% |
Investment Grade Bond Fund |
|
|
0.35 |
% |
|
|
0.25 |
% |
Investment Grade Tax-Exempt Bond
Fund |
|
|
0.35 |
% |
|
|
0.25 |
% |
Large Cap Core Equity Fund |
|
|
0.25 |
% |
|
|
0.25 |
% |
Large Cap Growth Stock Fund |
|
|
0.35 |
% |
|
|
0.25 |
% |
Large Cap Quantitative Equity Fund |
|
|
0.25 |
% |
|
|
0.25 |
% |
Large Cap Value Equity Fund |
|
|
0.33 |
% |
|
|
0.25 |
% |
Life Vision Aggressive Growth Fund |
|
|
0.35 |
% |
|
|
0.25 |
% |
Life Vision Conservative Fund |
|
|
0.35 |
% |
|
|
0.25 |
% |
Life Vision Growth and Income Fund |
|
|
0.35 |
% |
|
|
0.25 |
% |
Life Vision Moderate Growth Fund |
|
|
0.35 |
% |
|
|
0.25 |
% |
Life Vision Target Date 2015 Fund |
|
|
0.35 |
% |
|
|
0.25 |
% |
Life Vision Target Date 2025 Fund |
|
|
0.35 |
% |
|
|
0.25 |
% |
Life Vision Target Date 2035 Fund |
|
|
0.35 |
% |
|
|
0.25 |
% |
Limited-Term Federal Mortgage
|
|
|
0.23 |
% |
|
|
0.15 |
% |
59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maximum Amount of |
|
|
|
|
|
|
A Plan Distribution |
|
|
|
|
|
|
and Service Fee |
|
|
Maximum |
|
Payable for |
|
|
A Plan Distribution and |
|
Shareholder |
Fund |
|
Service Fee |
|
Services* |
Securities Fund |
|
|
|
|
|
|
|
|
Maryland Municipal Bond Fund |
|
|
0.15 |
% |
|
|
0.15 |
% |
Mid-Cap Core Equity Fund |
|
|
0.35 |
% |
|
|
0.25 |
% |
Mid-Cap Value Equity Fund |
|
|
0.35 |
% |
|
|
0.25 |
% |
North Carolina Tax-Exempt Bond Fund |
|
|
0.15 |
% |
|
|
0.15 |
% |
Prime Quality Money Market Fund |
|
|
0.20 |
% |
|
|
0.15 |
% |
Real Estate 130/30 Fund |
|
|
0.35 |
% |
|
|
0.25 |
% |
Seix Floating Rate High Income Fund |
|
|
0.35 |
% |
|
|
0.25 |
% |
Seix High Yield Fund |
|
|
0.25 |
% |
|
|
0.25 |
% |
Select Large Cap Growth Stock Fund |
|
|
0.35 |
% |
|
|
0.25 |
% |
Short-Term Bond Fund |
|
|
0.23 |
% |
|
|
0.15 |
% |
Short-Term U.S. Treasury Securities Fund |
|
|
0.18 |
% |
|
|
0.15 |
% |
Small Cap Growth Stock Fund |
|
|
0.35 |
% |
|
|
0.25 |
% |
Small Cap Quantitative Equity Fund |
|
|
0.35 |
% |
|
|
0.25 |
% |
Small Cap Value Equity Fund |
|
|
0.33 |
% |
|
|
0.25 |
% |
Strategic Income Fund |
|
|
0.35 |
% |
|
|
0.25 |
% |
Tax-Exempt Money Market Fund |
|
|
0.15 |
% |
|
|
0.15 |
% |
Total Return Bond Fund |
|
|
0.25 |
% |
|
|
0.25 |
% |
U.S. Equity 130/30 Fund |
|
|
0.35 |
% |
|
|
0.25 |
% |
U.S. Government Securities Fund |
|
|
0.35 |
% |
|
|
0.25 |
% |
U.S. Government Securities Money Market Fund |
|
|
0.17 |
% |
|
|
0.15 |
% |
U.S. Treasury Money Market Fund |
|
|
0.15 |
% |
|
|
0.15 |
% |
Virginia Intermediate Municipal Bond Fund |
|
|
0.15 |
% |
|
|
0.15 |
% |
Virginia Tax-Free Money Market Fund |
|
|
0.20 |
% |
|
|
0.15 |
% |
|
|
|
* |
|
Up to the amounts specified may be used to provide compensation for
personal, ongoing servicing and/or maintenance of shareholder accounts with
respect to the A Shares of the applicable Fund. |
The Board has approved the maximum amounts shown in the table above. However, the Board has
currently approved the implementation of only the amounts shown in the table below. Payments under
the A Plan may not exceed the amounts shown below unless the Board approves the implementation of
higher amounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maximum Amount of |
|
|
|
|
|
|
A Plan Distribution |
|
|
Current A Plan |
|
and Service Fee |
|
|
Distribution and Service |
|
Allocated for |
Fund |
|
Fee |
|
Shareholder Services |
Aggressive Growth Stock Fund |
|
|
0.30 |
% |
|
|
0.25 |
% |
Emerging Growth Stock Fund |
|
|
0.30 |
% |
|
|
0.25 |
% |
Georgia Tax-Exempt Bond F Fund und |
|
|
0.15 |
% |
|
|
0.15 |
% |
|
|
|
|
|
|
|
|
|
60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maximum Amount of |
|
|
|
|
|
|
A Plan Distribution |
|
|
Current A Plan |
|
and Service Fee |
|
|
Distribution and Service |
|
Allocated for |
Fund |
|
Fee |
|
Shareholder Services |
High Grade Municipal Bond |
|
|
0.15 |
% |
|
|
0.15 |
% |
High Income Fund |
|
|
0.30 |
% |
|
|
0.25 |
% |
Intermediate Bond Fund |
|
|
0.25 |
% |
|
|
0.25 |
% |
International Equity 130/30 Fund |
|
|
0.30 |
% |
|
|
0.25 |
% |
International Equity Fund |
|
|
0.30 |
% |
|
|
0.25 |
% |
International Equity Index Fund |
|
|
0.30 |
% |
|
|
0.25 |
% |
Investment Grade Bond Fund |
|
|
0.30 |
% |
|
|
0.25 |
% |
Investment Grade Tax-Exempt Bond Fund |
|
|
0.30 |
% |
|
|
0.25 |
% |
Large Cap Core Equity Fund |
|
|
0.25 |
% |
|
|
0.25 |
% |
Large Cap Growth Stock Fund |
|
|
0.30 |
% |
|
|
0.25 |
% |
Large Cap Quantitative Equity Fund |
|
|
0.25 |
% |
|
|
0.25 |
% |
Large Cap Value Equity Fund |
|
|
0.30 |
% |
|
|
0.25 |
% |
Life Vision Aggressive Growth Fund |
|
|
0.30 |
% |
|
|
0.25 |
% |
Life Vision Conservative Fund |
|
|
0.30 |
% |
|
|
0.25 |
% |
Life Vision Growth and Income Fund |
|
|
0.30 |
% |
|
|
0.25 |
% |
Life Vision Moderate Growth Fund |
|
|
0.30 |
% |
|
|
0.25 |
% |
Life Vision Target Date 2015 Fund |
|
|
0.30 |
% |
|
|
0.25 |
% |
Life Vision Target Date 2025 Fund |
|
|
0.30 |
% |
|
|
0.25 |
% |
Life Vision Target Date 2035 Fund |
|
|
0.30 |
% |
|
|
0.25 |
% |
Limited-Term Federal Mortgage Securities Fund |
|
|
0.20 |
% |
|
|
0.15 |
% |
Maryland Municipal Bond Fund |
|
|
0.15 |
% |
|
|
0.15 |
% |
Mid-Cap Core Equity Fund |
|
|
0.30 |
% |
|
|
0.25 |
% |
Mid-Cap Value Equity Fund |
|
|
0.30 |
% |
|
|
0.25 |
% |
North Carolina Tax-Exempt Bond Fund |
|
|
0.15 |
% |
|
|
0.15 |
% |
Prime Quality Money Market Fund |
|
|
0.15 |
% |
|
|
0.15 |
% |
Real Estate 130/30 Fund |
|
|
0.30 |
% |
|
|
0.25 |
% |
Seix Floating Rate High Income Fund |
|
|
0.30 |
% |
|
|
0.25 |
% |
Seix High Yield Fund |
|
|
0.25 |
% |
|
|
0.25 |
% |
Select Large Cap Growth Stock Fund |
|
|
0.30 |
% |
|
|
0.25 |
% |
Short-Term Bond Fund |
|
|
0.20 |
% |
|
|
0.15 |
% |
Short-Term U.S. Treasury Securities Fund |
|
|
0.18 |
% |
|
|
0.15 |
% |
Small Cap Growth Stock Fund |
|
|
0.30 |
% |
|
|
0.25 |
% |
Small Cap Quantitative Equity Fund |
|
|
0.30 |
% |
|
|
0.25 |
% |
Small Cap Value Equity Fund |
|
|
0.25 |
% |
|
|
0.25 |
% |
Strategic Income Fund |
|
|
0.30 |
% |
|
|
0.25 |
% |
Tax-Exempt Money Market Fund |
|
|
0.15 |
% |
|
|
0.15 |
% |
Total Return Bond Fund |
|
|
0.25 |
% |
|
|
0.25 |
% |
U.S. Equity 130/30 Fund |
|
|
0.30 |
% |
|
|
0.25 |
% |
U.S. Government Securities Fund |
|
|
0.30 |
% |
|
|
0.25 |
% |
U.S. Government Securities Money Market Fund |
|
|
0.15 |
% |
|
|
0.15 |
% |
61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maximum Amount of |
|
|
|
|
|
|
A Plan Distribution |
|
|
Current A Plan |
|
and Service Fee |
|
|
Distribution and Service |
|
Allocated for |
Fund |
|
Fee |
|
Shareholder Services |
U.S. Treasury Money Market Fund |
|
|
0.15 |
% |
|
|
0.15 |
% |
Virginia Intermediate Municipal Bond Fund |
|
|
0.15 |
% |
|
|
0.15 |
% |
Virginia Tax-Free Money Market Fund |
|
|
0.15 |
% |
|
|
0.15 |
% |
In addition, the Distribution Agreement, the B Plan and the C Plan adopted by the Trust provide
that B Shares and C Shares of each applicable Fund will pay the Distributor a fee of up to 0.75% of
the average daily net assets of that Fund. The Distributor can use these fees to compensate
broker-dealers and service providers, including SunTrust and its affiliates, which provide
administrative and/or distribution services to B Shares or C Shares shareholders or their customers
who beneficially own B Shares or C Shares. In addition, B Shares and C Shares are subject to a
service fee of up to 0.25% of the average daily net assets of the B Shares and C Shares of each
Fund. This service fee will be used for services provided and expenses incurred in maintaining
shareholder accounts, responding to shareholder inquiries and providing information on their
investments.
Services for which broker-dealers and service providers may be compensated include establishing and
maintaining customer accounts and records; aggregating and processing purchase and redemption
requests from customers; placing net purchase and redemption orders with the Distributor;
automatically investing customer account cash balances; providing periodic statements to customers;
arranging for wires; answering customer inquiries concerning their investments; assisting customers
in changing dividend options, account designations, and addresses; performing sub-accounting
functions; processing dividend payments from the Trust on behalf of customers; and forwarding
shareholder communications from the Trust (such as proxies, shareholder reports, and dividend
distribution and tax notices) to these customers with respect to investments in the Trust. Certain
state securities laws may require those financial institutions providing such distribution services
to register as dealers pursuant to state law. Although banking laws and regulations prohibit banks
from distributing shares of open-end investment companies such as the Trust, according to an
opinion issued to the staff of the SEC by the Office of the Comptroller of the Currency, financial
institutions are not prohibited from acting in other capacities for investment companies, such as
providing shareholder services. Should future legislative, judicial, or administrative action
prohibit or restrict the activities of financial institutions in connection with providing
shareholder services, the Trust may be required to alter materially or discontinue its arrangements
with such financial institutions.
The Trust has adopted the A Plan, the B Plan and the C Plan in each case in accordance with the
provisions of Rule 12b-1 under the 1940 Act, which rule regulates circumstances under which an
investment company may directly or indirectly bear expenses relating to the distribution of its
shares. Continuance of the A Plan, the B Plan and the C Plan must be approved annually by a
majority of the Trustees of the Trust and by a majority of the disinterested Trustees. The A Plan,
the B Plan and the C Plan require that quarterly written reports of amounts spent under the A Plan,
the B Plan and the C Plan, respectively, and the purposes of such expenditures be furnished to and
reviewed by the Trustees. The A Plan, the B Plan and the C Plan may not be amended to increase
materially the amount that may be spent thereunder without approval by a majority of the
outstanding shares of the affected class of shares of the Trust. All material amendments of the
Plans will require approval by a majority of the Trustees of the Trust and of the disinterested
Trustees.
There is no sales charge on purchases of B Shares or C Shares, but B Shares and C Shares are
subject to a contingent deferred sales charge if they are redeemed within five and one years,
respectively, of purchase. Pursuant to the Distribution Agreement, the B Plan and the C Plan, B
Shares and C Shares are subject to an
62
ongoing distribution and service fee calculated on each Funds aggregate average daily net assets
attributable to its B Shares or C Shares.
For the fiscal year ended March 31, 2008, the Funds paid the following amounts as compensation to
broker-dealers pursuant to the A Plan:
|
|
|
|
|
Amount Paid |
Fund |
|
(in thousands) |
Aggressive Growth Stock Fund
|
|
|
Emerging Growth Stock Fund |
|
|
Georgia Tax-Exempt Bond Fund |
|
|
High Grade Municipal Bond Fund |
|
|
High Income Fund |
|
|
Intermediate Bond Fund |
|
|
International Equity 130/30 Fund |
|
|
International Equity Fund |
|
|
International Equity Index Fund |
|
|
Investment Grade Bond Fund |
|
|
Investment Grade Tax-Exempt Bond Fund |
|
|
Large Cap Core Equity Fund |
|
|
Large Cap Growth Stock Fund |
|
|
Large Cap Quantitative Equity Fund |
|
|
Large Cap Value Equity Fund |
|
|
Life Vision Aggressive Growth Fund |
|
|
Life Vision Conservative Fund |
|
|
Life Vision Growth and Income Fund |
|
|
Life Vision Moderate Growth Fund |
|
|
Life Vision Target Date 2015 Fund |
|
|
Life Vision Target Date 2025 Fund |
|
|
Life Vision Target Date 2035 Fund |
|
|
Limited-Term Federal Mortgage Securities Fund |
|
|
Maryland Municipal Bond Fund |
|
|
Mid-Cap Core Equity Fund |
|
|
Mid-Cap Value Equity Fund |
|
|
North Carolina Tax-Exempt Bond Fund |
|
|
Prime Quality Money Market Fund |
|
|
Real Estate 130/30 Fund |
|
|
Seix Floating Rate High Income Fund |
|
|
Seix High Yield Fund |
|
|
Select Large Cap Growth Stock Fund |
|
|
Short-Term Bond Fund |
|
|
Short-Term U.S. Treasury Securities Fund |
|
|
Small Cap Growth Stock Fund |
|
|
Small Cap Quantitative Equity Fund |
|
|
Small Cap Value Equity Fund |
|
|
Strategic Income Fund |
|
|
63
|
|
|
|
|
|
|
Amount Paid |
Fund |
|
(in thousands) |
Tax-Exempt Money Market Fund |
|
|
|
|
Total Return Bond Fund |
|
|
|
|
U.S. Equity 130/30 Fund |
|
|
|
|
U.S. Government Securities Fund |
|
|
|
|
U.S. Government Securities Money Market Fund |
|
|
|
|
U.S. Treasury Money Market Fund |
|
|
|
|
Virginia Intermediate Municipal Bond Fund |
|
|
|
|
Virginia Tax-Free Money Market Fund |
|
|
|
|
For the fiscal year ended March 31, 2008, the Funds paid the following amounts as compensation to
broker-dealers pursuant to the B Plan:
|
|
|
|
|
|
|
Amount Paid |
Fund |
|
(in thousands) |
Life Vision Aggressive Growth Fund |
|
|
|
|
Life Vision Conservative Fund |
|
|
|
|
Life Vision Growth and Income Fund |
|
|
|
|
Life Vision Moderate Growth Fund |
|
|
|
|
For the fiscal year ended March 31, 2008, the Funds paid the following amounts as compensation to
broker-dealers pursuant to the C Plan:
|
|
|
|
|
|
|
Amount Paid |
Fund |
|
(in thousands) |
Aggressive Growth Stock Fund |
|
|
|
|
Emerging Growth Stock Fund |
|
|
|
|
Georgia Tax-Exempt Bond Fund |
|
|
|
|
High Grade Municipal Bond Fund |
|
|
|
|
High Income Fund |
|
|
|
|
Intermediate Bond Fund |
|
|
|
|
International Equity 130/30 Fund |
|
|
|
|
International Equity Fund |
|
|
|
|
International Equity Index Fund |
|
|
|
|
Investment Grade Bond Fund |
|
|
|
|
Investment Grade Tax-Exempt Bond Fund |
|
|
|
|
Large Cap Core Equity Fund |
|
|
|
|
Large Cap Growth Stock Fund |
|
|
|
|
Large Cap Quantitative Equity Fund |
|
|
|
|
Large Cap Value Equity Fund |
|
|
|
|
Life Vision Aggressive Growth Fund |
|
|
|
|
64
|
|
|
|
|
|
|
Amount Paid |
Fund |
|
(in thousands) |
Life Vision Conservative Fund |
|
|
|
|
Life Vision Growth and Income Fund |
|
|
|
|
Life Vision Moderate Growth Fund |
|
|
|
|
Life Vision Target Date 2015 Fund |
|
|
|
|
Life Vision Target Date 2025 Fund |
|
|
|
|
Life Vision Target Date 2035 Fund |
|
|
|
|
Limited-Term Federal Mortgage Securities Fund |
|
|
|
|
Maryland Municipal Bond Fund |
|
|
|
|
Mid-Cap Core Equity Fund |
|
|
|
|
Mid-Cap Value Equity Fund |
|
|
|
|
North Carolina Tax-Exempt Bond Fund |
|
|
|
|
Prime Quality Money Market Fund |
|
|
|
|
Real Estate 130/30 Fund |
|
|
|
|
Seix Floating Rate High Income Fund |
|
|
|
|
Seix High Yield Fund |
|
|
|
|
Select Large Cap Growth Stock Fund |
|
|
|
|
Short-Term Bond Fund |
|
|
|
|
Short-Term U.S. Treasury Securities Fund |
|
|
|
|
Small Cap Growth Stock Fund |
|
|
|
|
Small Cap Quantitative Equity Fund |
|
|
|
|
Small Cap Value Equity Fund |
|
|
|
|
Strategic Income Fund |
|
|
|
|
Tax-Exempt Money Market Fund |
|
|
|
|
Total Return Bond Fund |
|
|
|
|
U.S. Equity 130/30 Fund |
|
|
|
|
U.S. Government Securities Fund |
|
|
|
|
Virginia Intermediate Municipal Bond Fund |
|
|
|
|
Other than any portion of the sales charges imposed on purchases, the following table shows the
level of compensation paid by the Distributor to broker-dealers selling A Shares and C Shares
(purchased prior to August 1, 2005), unless otherwise agreed upon by the Distributor and such
broker-dealer.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Payout |
|
|
|
|
|
|
|
|
12(b)-1 |
|
|
|
|
|
Annual Payout |
|
|
Effective |
|
|
|
|
|
12(b)-1 Effective |
|
|
Immediately |
|
Initial Payment |
|
in the
13th Month |
Fund |
|
(A)* |
|
At Time Of Sale (C) |
|
(C)** |
Equity Funds |
|
|
|
|
|
|
|
|
|
|
|
|
Aggressive Growth Stock Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
Emerging Growth Stock Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
Intermediate Bond Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
International Equity 130/30 Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Payout |
|
|
|
|
|
|
|
|
12(b)-1 |
|
|
|
|
|
Annual Payout |
|
|
Effective |
|
|
|
|
|
12(b)-1 Effective |
|
|
Immediately |
|
Initial Payment |
|
in the
13th Month |
Fund |
|
(A)* |
|
At Time Of Sale (C) |
|
(C)** |
International Equity Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
International Equity Index Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
Large Cap Core Equity Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
Large Cap Growth Stock Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
Large Cap Quantitative Equity Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
Large Cap Value Equity Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
Life Vision Aggressive Growth Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
Life Vision Conservative Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
Life Vision Growth and Income Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
Life Vision Moderate Growth Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
Life Vision Target Date 2015 Fund |
|
|
0.25 |
% |
|
|
n/a |
|
|
|
n/a |
|
Life Vision Target Date 2025 Fund |
|
|
0.25 |
% |
|
|
n/a |
|
|
|
n/a |
|
Life Vision Target Date 2035 Fund |
|
|
0.25 |
% |
|
|
n/a |
|
|
|
n/a |
|
Mid-Cap Core Equity Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
Mid-Cap Value Equity Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
Real Estate 130/30 Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
Select Large Cap Growth Stock Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
Small Cap Growth Stock Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
Small Cap Quantitative Equity Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
Small Cap Value Equity Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
U.S. Equity 130/30 Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
Fixed Income Funds |
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Tax-Exempt Bond Fund |
|
|
0.15 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
High Grade Municipal Bond Fund |
|
|
0.15 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
High Income Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
Investment Grade Bond Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
Investment Grade Tax-Exempt Bond Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
Limited Duration Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
Limited Term Federal Mortgage
Securities Fund |
|
|
0.15 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Payout |
|
|
|
|
|
|
|
|
12(b)-1 |
|
|
|
|
|
Annual Payout |
|
|
Effective |
|
|
|
|
|
12(b)-1 Effective |
|
|
Immediately |
|
Initial Payment |
|
in the 13th Month |
Fund |
|
(A)* |
|
At Time Of Sale (C) |
|
(C)** |
Maryland Municipal Bond Fund |
|
|
0.15 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
North Carolina Tax-Exempt Bond Fund |
|
|
0.15 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
Seix Floating Rate High Income Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
Seix High Yield Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
Short Term Bond Fund |
|
|
0.15 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
Short-Term U.S. Treasury Securities Fund |
|
|
0.15 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
Strategic Income Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
Total Return Bond Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
U.S. Government Securities Fund |
|
|
0.25 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
U.S. Government Securities Ultra-Short
Bond Fund |
|
|
n/a |
|
|
|
1.00 |
% |
|
|
1.00 |
% |
Virginia Intermediate Municipal Bond
Fund |
|
|
0.15 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
Money Market Fund |
|
|
|
|
|
|
|
|
|
|
|
|
Prime Quality Money Market Fund |
|
|
n/a |
|
|
|
n/a |
|
|
|
1.00 |
% |
|
|
|
* |
|
Initial Front End Sales Charge for A Shares ranges from 5.75% maximum
to 1.50% depending on Fund and breakpoints (outlined in prospectus). |
|
|
|
Other than any portion of the sales charges imposed on purchases, and unless otherwise agreed upon
by the Distributor and such broker-dealer the Distributor pays broker-dealers selling C Shares
purchased beginning August 1, 2005, an initial payment at the time of sale of 1.00% and annual
12(b)-1 payout effective in the 13th month of 1.00%. |
|
** |
|
The Class C Contingent Deferred Sales Charge (CDSC) will be waived for certain retirement plan
providers (Intermediary) with whom the Trust has entered into an administrative arrangement under
which the Intermediary agrees to provide certain recordkeeping or administrative services. Under
such arrangements, the Trust will not pay an upfront commission, rather the Trust shall pay (or
cause to be paid) asset-based compensation to the Intermediary of up to 1.00% annually of the
average daily net assets of the plan assets invested in Class C shares of the Funds (of which 0.25%
consists of the Distribution Plan service fee). |
Participation Payment Program. The Adviser, the Subadviser and their affiliates may make payments
to certain intermediaries for marketing support services, including business planning assistance,
educating dealer personnel about the Funds and shareholder financial planning needs, placement on
the intermediarys preferred or recommended fund company list, and access to sales meetings, sales
representatives and management representatives of the dealer. These payments are made to
intermediaries that are registered as holders of record or dealers of record for accounts in a
Fund. These payments are generally based on one or more of the following factors: average net
assets of the Funds attributable to that intermediary, gross or net sales of the Funds
attributable to that intermediary, reimbursement of ticket charges (fees that an intermediary firm
charges its
67
representatives for effecting transactions in fund shares) or a negotiated lump sum
payment for services rendered. The Adviser, the Subadviser and their affiliates compensate dealers
differently depending upon, among other factors, the level and/or type of marketing support
provided by the intermediary. [As of August 1, 2008 no intermediaries are currently receiving
participation payment program payments.]
Shareholder Servicing Plans. The Trust has adopted a shareholder service plan for the Institutional
U.S. Treasury Securities Money Market Funds Corporate Trust Shares (the Service Plan). Under the
Service Plan, the Institutional U.S. Treasury Securities Money Market Fund will pay [financial
intermediaries/banks] ([Intermediaries/Banks) a fee of up to 0.25% of the average daily net
assets attributable to the Corporate Trust Shares. [ ] may perform, or may compensate other
service providers for performing, the following shareholder services: maintaining client accounts;
arranging for bank wires; responding to client inquiries concerning services provided on
investments; assisting clients in changing dividend options, account designations and addresses;
sub-accounting; providing information on share positions to clients; forwarding shareholder
communications to clients; processing purchase, exchange and redemption orders; and processing
dividend payments.
For the fiscal years ended March 31, 2008, March 31, 2007 and March 31, 2006, the Institutional
U.S. Treasury Securities Money Market Fund paid the following amount pursuant to the Service Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Amount Paid (in thousands) |
|
Fees Amount Waived ($) |
Fund |
|
2008 |
|
2007 |
|
2006 |
|
2008 |
|
2007 |
|
2006 |
Institutional U.S.
Treasury
Securities Money
Market Fund |
|
|
|
|
|
$ |
5,159 |
|
|
|
4,603 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
THE TRANSFER AGENT
Citi Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, Ohio 43219, serves as the transfer
agent and dividend paying agent to the Trust.
THE CUSTODIAN
SunTrust Bank, 303 Peachtree Street N.E., 14th Floor, Atlanta, GA 30308 serves as the custodian for
all of the Funds except for the International Equity 130/30, International Equity, International
Equity Index, Real Estate 130/30, Strategic Income, U.S. Equity 130/30 and the Institutional Cash
Management Money Market Fund. SunTrust Bank is paid on the basis of net assets and transactions
costs of the Funds.
Brown Brothers Harriman & Co., 40 Water Street, Boston, MA 02109 serves as custodian for the
International Equity 130/30, International Equity, International Equity Index, Real Estate 130/30,
Strategic Income, U.S. Equity 130/30, Institutional Cash Management Money Market, [Institutional
U.S. Government Securities Money Market and Institutional U.S. Treasury Securities Money Market]
Funds.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
[ ], located at 100 East Broad Street, Columbus, OH 43215, serves as the Trusts independent
registered public accounting firm.
68
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP, located at 1111 Pennsylvania Avenue, NW, Washington, DC 20004, serves
as legal counsel to the Trust.
TRUSTEES AND OFFICERS OF THE TRUST
Board Responsibilities. The management and affairs of the Trust and each of the Funds are
supervised by the Board under the laws of the Commonwealth of Massachusetts. The Board is
responsible for overseeing each of the Funds. The Trustees have approved contracts, as described
above, under which certain companies provide essential management services to the Trust.
Members of the Board. Set forth below are the names, ages, positions with the Trust, principal
occupations for the last five years and other directorships of each of the persons currently
serving as Trustees of the Trust. Each Trustee is also a Trustee of the RidgeWorth Variable Trust
which is comprised of five series. None of the Trustees of the Trust are considered interested
persons as that term is defined in the 1940 Act.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
Portfolios in |
|
|
|
|
|
|
Term of |
|
|
|
the |
|
|
|
|
|
|
Office |
|
|
|
RidgeWorth |
|
|
|
|
Position |
|
and |
|
Principal |
|
Fund |
|
|
Name, Business |
|
Held |
|
Length of |
|
Occupation(s) |
|
Complex |
|
|
Address, State of |
|
With the |
|
Time |
|
During the Past 5 |
|
Overseen by |
|
Other Directorships |
Residence, Ages |
|
Trust |
|
Served |
|
Years |
|
Trustees |
|
Held By Trustee |
Jeffrey M. Biggar
3435 Stelzer Road
Columbus, OH 43219
(Ohio)
Age: 58
|
|
Trustee
|
|
Indefinite; since
January 2007
|
|
Chief Operating
Officer (Cedar
Brook Financial
Partners LLC)
(2008-present).
Retired
(2006-2008). Chief
Executive Officer
and Senior Managing
Director, Sterling
(National City
Corp.) (2002-2006)
|
|
|
57 |
|
|
None |
|
|
|
|
|
|
|
|
|
|
|
|
|
George C. Guynn
3435 Stelzer Road
Columbus, OH 43219
(Georgia)
Age: 65
|
|
Trustee
|
|
Indefinite; since
January 2008
|
|
Retired. President
(1996-October 2006)
and Chief Executive
Officer
(1995-October 2006)
Federal Reserve
Bank of Atlanta
|
|
|
57 |
|
|
Genuine Parts Company;
Oxford Industries; John
Wieland Homes and
Neighborhoods |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sidney E. Harris
3435 Stelzer Road
Columbus, OH
|
|
Trustee
|
|
Indefinite; since
November
|
|
Professor (since
1997), Dean
(1997-2004), J.
Mack
|
|
|
57 |
|
|
Total System Services, Inc. |
69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
Portfolios in |
|
|
|
|
|
|
Term of |
|
|
|
the |
|
|
|
|
|
|
Office |
|
|
|
RidgeWorth |
|
|
|
|
Position |
|
and |
|
Principal |
|
Fund |
|
|
Name, Business |
|
Held |
|
Length of |
|
Occupation(s) |
|
Complex |
|
|
Address, State of |
|
With the |
|
Time |
|
During the Past 5 |
|
Overseen by |
|
Other Directorships |
Residence, Ages |
|
Trust |
|
Served |
|
Years |
|
Trustees |
|
Held By Trustee |
43219
(Georgia)
Age: 59
|
|
Trustee
|
|
2004
|
|
Robinson
College of
Business, Georgia
State University
|
|
|
|
|
|
|
|
Warren Y. Jobe
3435 Stelzer Road
Columbus, OH 43219
(Georgia)
Age: 67
|
|
Trustee
|
|
Indefinite; since
November 2004
|
|
Retired. Executive
Vice President,
Georgia Power
Company and Senior
Vice President,
Southern Company
(1998-2001)
|
|
|
57 |
|
|
WellPoint, Inc; UniSource
Energy Corp.; HomeBanc
Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Connie D. McDaniel
3435 Stelzer Road
Columbus, OH 43219
(Georgia)
Age: 50
|
|
Trustee
|
|
Indefinite; since
May 2005
|
|
Vice President
Global Finance
Transformation
(since 2007), Vice
President and
Controller (1999
2007), The
Coca-Cola Company
|
|
|
57 |
|
|
None |
|
|
|
|
|
|
|
|
|
|
|
|
|
Clarence H. Ridley*
3435 Stelzer Road
Columbus, OH 43219
(Georgia)
Age: 66
|
|
Trustee
|
|
Indefinite; since
November 2001
|
|
Chairman, Haverty
Furniture Companies
|
|
|
57 |
|
|
Crawford & Co.; Haverty
Furniture Companies |
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles D. Winslow
3435 Stelzer Road
Columbus, OH 43219
(Florida)
Age: 73
|
|
Trustee
|
|
Indefinite; since
November 2004
|
|
Retired. Formerly
Partner, Accenture
(consulting)
|
|
|
57 |
|
|
None |
|
|
|
* |
|
Prior to May 12, 2008 Mr. Ridley was deemed to be an interested person of the Trust as that
term is defined in the 1940 Act because he owned stock in SunTrust Banks Inc., the parent company
of the Adviser. As of May 12, 2008 he had divested himself of that stock and was no longer deemed
an interested person of the Trust. |
70
Board Committees. The Board has established the following committees:
|
|
Audit Committee. The Boards Audit Committee is composed exclusively of independent Trustees
of the Trust. The Audit Committee operates under a written charter approved by the Board. The
principal responsibilities of the Audit Committee include: recommending which firm to engage
as the Trusts independent registered public accounting firm and whether to terminate this
relationship; reviewing the independent registered public accounting firms compensation, the
proposed scope and terms of its engagement, and the firms independence; pre-approving audit
and non-audit services provided by the Trusts independent registered public accounting firm
to the Trust and certain other affiliated entities; serving as a channel of communication
between the independent registered public accounting firm and the Trustees; reviewing the
results of each external audit, including any qualifications in the independent registered
public accounting firms opinion, any related management letter, managements responses to
recommendations made by the independent registered public accounting firm in connection with
the audit, reports submitted to the Committee by the internal auditing department of the
Trusts Administrator that are material to the Trust as a whole, if any, and managements
responses to any such reports; reviewing the Trusts audited financial statements and
considering any significant disputes between the Trusts management and the independent
registered public accounting firm that arose in connection with the preparation of those
financial statements; considering, in consultation with the independent registered public
accounting firm and the Trusts senior internal accounting executive, if any, the independent
registered public accounting firms report on the adequacy of the Trusts internal financial
controls; reviewing, in consultation with the Trusts independent registered public accounting
firm, major changes regarding auditing and accounting principles and practices to be followed
when preparing the Trusts financial statements; and other audit related matters. Messrs.
Biggar, Harris and Winslow and Ms. McDaniel currently serve as members of the Audit Committee.
The Audit Committee meets periodically, as necessary, and met [ ] times in the most recently
completed fiscal year. |
|
|
|
Governance and Nominating Committee. The Boards Governance and Nominating Committee is
composed exclusively of independent Trustees of the Trust. The Governance and Nominating
Committee operates under a written charter approved by the Board. The purposes of the
Governance and Nominating Committee are: to evaluate the qualifications of candidates for
Trustee and to make recommendations to the Independent trustees and the entire Board with
respect to nominations for Trustee membership on the Board when necessary or considered
advisable; to review periodically Board governance practices, procedures and operations and to
recommend any appropriate changes to the Board; to review periodically the size and
composition of the Board and to make recommendations to the Independent Trustees and the Board
as to whether it may be appropriate to add to the membership of the Board; to review as
necessary the committees established by the Board and to make recommendations to the Board; to
review periodically Trustee compensation and any other benefits and to recommend any
appropriate changes to the Board and the Independent Trustees; to review periodically and make
recommendations regarding ongoing Trustee education and orientation for new Trustees; to make
recommendations regarding any self-assessment conducted by the Board; and to review as
necessary any other similar matters relating to the governance of the Trust at the request of
any Trustee or on its own initiative. While the Governance and Nominating Committee is solely
responsible for the selection and nomination of Trustees, the Committee may consider nominees
recommended by shareholders. A nomination submission must be sent in writing to the Governance
and Nominating Committee, addressed to the Secretary of the Trust, and must be accompanied by
all information relating to the recommended nominee that is required to be disclosed in
solicitations or proxy statements for the election of Trustees. Nomination submissions must
also be accompanied by a written consent of the individual to stand for election if nominated
by the Board and to serve if elected by the shareholders. Additional information must be
provided regarding the recommended nominee as reasonably requested by the Governance and
Nominating Committee. Messrs. Guynn, Harris, Jobe and Ridley currently serve as members of the
Nominating Committee. The Governance and Nominating |
71
|
|
Committee meets periodically as necessary. The Governance and Nominating Committee met [
] during the most recently completed fiscal year. |
|
|
Valuation Committee. The Board has established the Trusts Valuation Committee, which is
composed of two Trustees, as non-voting members, and various representatives of the Trusts
service providers, as appointed by the Board. The Valuation Committee operates under
procedures approved by the Board. The principal responsibility of the Valuation Committee is
to determine the fair value of securities for which current market quotations are not readily
available. The Valuation Committees determinations are reviewed by the Board. The Valuation
Committee meets periodically, as necessary, and met [ ] times during the most recently
completed fiscal year. |
Fund Shares Owned by Board Members. The following table shows the dollar amount range of each
Trustees beneficial ownership of shares of each of the Funds as of the end of the most recently
completed calendar year. Dollar amount ranges disclosed are established by the SEC. Beneficial
ownership is determined in accordance with Rule 16a-1(a)(2) under the 1934 Act. The Family of
Investment Companies referenced in the table consists of the Trust and the RidgeWorth Variable
Trust.
|
|
|
|
|
|
|
|
|
Aggregate Dollar |
|
|
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Range of Shares in All |
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Investment Companies |
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Overseen By Trustee in |
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Family of Investment |
Trustee |
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Dollar Range of Fund Shares |
|
Companies |
Jeffrey M. Biggar
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Life Vision Aggressive Growth Fund
Life Vision Growth and Income Fund
Life Vision Moderate Growth Fund
|
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Over $100,000 |
George C. Guynn*
|
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None
|
|
None |
Sidney E. Harris
|
|
Emerging Growth Stock Fund
Georgia Tax-Exempt Bond Fund
International Equity Fund
Investment Grade Tax-Exempt Bond Fund
Prime Quality Money Market Fund
|
|
Over $100,000 |
Warren Jobe
|
|
Prime Quality Money Market Fund
Small Cap Growth Stock Fund
|
|
[TBD] |
Connie D. McDaniel
|
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Large Cap Core Equity Fund
Mid-Cap Core Equity Fund
Prime Quality Money Market Fund
Small Cap Growth Stock Fund
|
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Over $100,000 |
Clarence H. Ridley*
|
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Institutional Cash Management Money Market Fund
Small Cap Value Equity Fund
Tax-Exempt Money Market Fund
|
|
$50,001-$100,000 |
Charles D. Winslow
|
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Aggressive Growth Stock Fund
Large Cap Growth Stock Fund
Large Cap Value Equity Fund
Small Cap Growth Stock Fund
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$50,001-$100,000 |
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* |
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Mr. Guynn became a Trustee on January 30, 2008. |
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|
Prior to May 12, 2008 Mr. Ridley was deemed to be an interested person of the Trust as that
term is defined in the 1940 Act because he owned stock in SunTrust Banks Inc., the parent
company of the Adviser. As of |
72
|
|
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|
May 12, 2008 he had divested himself of that stock and was no longer deemed an interested
person of the Trust. |
As of [June 30], 2008, the Trustees and Officers of the Trust as a group owned less that 1% of the
outstanding shares of each class of each Fund.
Board Compensation. The table below shows the compensation paid to the Trustees during the fiscal
year ended March 31, 2008. The Fund Complex referenced in the table consists of the Trust and the
RidgeWorth Variable Trust.
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Pension or |
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Retirement |
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Benefits |
|
Estimated |
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Aggregate |
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Accrued as Part |
|
Annual Benefits |
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Total Compensation From |
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Compensation from |
|
of Fund |
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Upon |
|
the Trust and Fund |
Name of Trustee |
|
the Trust ($)1 |
|
Expenses |
|
Retirement |
|
Complex ($) |
Independent Trustees |
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Jeffrey M. Biggar2
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N/A
|
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N/A |
|
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F. Wendell Gooch2
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|
N/A
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N/A |
|
|
George C. Guynn2 |
|
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Sidney E. Harris
|
|
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|
N/A
|
|
N/A |
|
|
Warren Y. Jobe
|
|
|
|
N/A
|
|
N/A |
|
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Connie McDaniel
|
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N/A
|
|
N/A |
|
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Clarence H. Ridley3
|
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N/A
|
|
N/A |
|
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James O. Robbins
|
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N/A
|
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N/A |
|
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Charles D. Winslow
|
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N/A
|
|
N/A |
|
|
|
|
|
1 |
|
Amounts include payments deferred by Trustees for the fiscal year ended March 31,
2008. The total amount of deferred compensation (including interest) accrued for the Trustees
is as follows: Biggar ($), Gooch ($), Harris ($) and Robbins ($). |
|
2 |
|
Mr. Guynn became a Trustee on January 30, 2008. Mr. Robbins is deceased and Mr. Gooch
retired as Trustees on December 31, 2007. |
|
3 |
|
Prior to May 12, 2008 Mr. Ridley was deemed to be an interested person of the Trust
as that term is defined in the 1940 Act because he owned stock in SunTrust Banks Inc., the parent
company of the Adviser. As of May 12, 2008 he had divested himself of that stock and was no
longer deemed an interested person of the Trust. |
Deferred Compensation Plan. A Deferred Compensation Plan designed to comply with section 409A of
the Internal Revenue Code was in effect during the fiscal year ended March 31, 2008. Pursuant to
the Deferred Compensation Plan, each Trustee could elect to defer receipt of between 30% to 100% of
his or her aggregate annual compensation from the Trust and the RidgeWorth Variable Trust, and such
amount was placed into a deferral account. Deferred amounts accumulated at an earnings rate
determined by the return of one or more Funds as designated by the Trustees. Amounts deferred and
accumulated earning on such amounts are unfunded and are general unsecured liabilities of the Trust
and the RidgeWorth Variable Trust until paid to the Trustees. The Board terminated the Deferred
Contribution Plan effective May 20, 2008.
Trust Officers. The officers of the Trust, their respective ages, and their principal occupations
for the last five years are set forth below. The officers of the Trust may also serve as officers
to one or more mutual funds for which Citi Fund Services or its affiliates act as administrator,
distributor or transfer agent. None of the officers receive compensation from the Trust for their
services. Officers of the Trust are elected annually by the Board and
73
hold office until their respective successors are chosen and qualified, or in each case until he or
she sooner dies, resigns, is removed or becomes disqualified.
|
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|
Position(s) |
|
Term of Office |
|
|
Name, Address |
|
Held with |
|
and Length |
|
|
and Ages |
|
Trust |
|
of Time Served |
|
Principal Occupation(s) During the Past 5 Years |
Officers: |
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|
|
Julia R. Short
50 Hurt Plaza
Suite 1400
Atlanta, GA 30303
|
|
President and Chief
Executive Officer
|
|
One year; since
June 2007
|
|
Managing Director,
Product Manager,
RidgeWorth Capital
Management, Inc.
(since 2004);
Relationship
Manager, SEI
Investments
(financial
services) (1994
2004) |
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Age: 35 |
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|
|
Patrick A. Paparelli
50 Hurt Plaza
Suite 1400
Atlanta, GA 30303
|
|
Vice President;
Chief Compliance
Officer
|
|
One year; since May
2008;
|
|
Managing Director
and Chief
Compliance Officer,
RidgeWorth Capital
Management, Inc.
(since July 2005);
[Employment from
2003-July 2005] |
|
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|
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|
Age: 46 |
|
|
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|
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|
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|
|
|
Diana Hanlin
50 Hurt Plaza
Suite 1400
Atlanta, GA 30303
|
|
Vice President;
Deputy Chief
Compliance Officer
|
|
One year; since
[June ] 2008
|
|
[Title] RidgeWorth
Capital Management,
Inc. (since
[Month], 2008);
Employee of BB&T
Asset Management,
Inc. (from 2007 to
[Month], 2008);
Employee of BISYS
Fund Services Ohio,
Inc. (from
1996-2007) |
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|
Age: [ ] |
|
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|
Martin R. Dean
3435 Stelzer Road
Columbus, OH 43219
|
|
Treasurer; Chief
Financial Officer
and Chief
Accounting Officer
|
|
One year; since
March 2007
|
|
Senior Vice
President, Fund
Administration,
employee of Citi
Fund Services Ohio,
Inc. (since 1994) |
|
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|
Age: 44 |
|
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Aaron J. Masek
3435 Stelzer Road
Columbus, OH 43219
|
|
Assistant Treasurer
|
|
One year; since May
2008
|
|
Senior Vice
President, Fund
Administration,
employee of Citi
Fund Services Ohio,
Inc. (since 1997) |
|
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|
Age: [34] |
|
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Cynthia J. Surprise
3435 Stelzer Road
Columbus, OH 43219
|
|
Secretary and Chief
Legal Officer
|
|
One year; since
February 2005
|
|
Senior Vice
President,
Regulatory
Administration,
employee of Citi
Fund Services
(since 2004);
Employee of
Investors Bank &
Trust Company
(1999-2004) |
|
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|
Age: 62 |
|
|
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|
74
|
|
|
|
|
|
|
|
|
Position(s) |
|
Term of Office |
|
|
Name, Address |
|
Held with |
|
and Length |
|
|
and Ages |
|
Trust |
|
of Time Served |
|
Principal Occupation(s) During the Past 5 Years |
Katherine A. Reilly
3435 Stelzer Road
Columbus, OH 43219
|
|
Assistant Secretary
|
|
One year; since
February 2008
|
|
Vice President,
Regulatory
Administration,
employee of Citi
Fund Services Ohio,
Inc. (since 2006);
Employee of
CitiStreet LLC
(from June 2004 to
May 2005); Employee
of Fidelity
Investments (from
1987 through 2001). |
|
|
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|
Age: 43 |
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|
PURCHASING AND REDEEMING SHARES
Purchases and redemptions of shares of the Equity Funds and Bond Funds may be made on any day the
New York Stock Exchange (NYSE) is open for business. The Trust reserves the right to open the
Bond Funds when the principal bond markets are open for business even if the NYSE is closed.
Purchases and redemptions of shares of the Money Market Funds may be made on any day the NYSE and
the Federal Reserve Bank of New York (the Fed) are open for settlement. The Trust reserves the
right to open the Money Market Funds when the Fed is open for settlement and/or the principal bond
markets are open for business even if the NYSE is closed. Shares of each Fund are offered and
redeemed on a continuous basis. Currently, the NYSE is closed on the days the following holidays
are observed: New Years Day, Martin Luther King, Jr. Day, Presidents Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Currently, the Fed and the
principal bond markets are closed on the same days that the NYSE is closed except for Good Friday.
In addition, the Fed and the principal bond markets are closed on the days that Columbus Day and
Veterans Day are observed.
It is currently the Trusts policy to pay for all redemptions in cash, however, the Trust retains
the right to alter this policy to provide for redemptions in whole or in part by a distribution
in-kind of readily marketable securities held by the Funds in lieu of cash. Shareholders may incur
brokerage charges on the sale of any such securities so received in payment of redemptions. A
shareholder will at all times be entitled to aggregate cash redemptions from all Funds of the Trust
up to the lesser of $250,000 or 1% of the Trusts net assets during any 90-day period. The Board
has adopted procedures which permit the Trust to make in-kind redemptions to those shareholders of
the Trust that are affiliated with the Trust solely by their ownership of a certain percentage of
the Trusts investment portfolios.
The Trust reserves the right to suspend the right of redemption and/or to postpone the date of
payment upon redemption for any period during which trading on the NYSE is restricted, or during
the existence of an emergency (as determined by the SEC by rule or regulation) as a result of which
disposal or valuation of a Funds portfolio securities is not reasonably practicable, or for such
other periods as the SEC has by order permitted. The Trust reserves the right to postpone payment
or redemption proceeds for up to seven days if the redemption would harm existing shareholders. The
Trust also reserves the right to suspend sales of shares of a Fund for any period during which the
NYSE, the Adviser, the Administrator and/or the Custodian are not open for business.
The Trust reserves the right to waive any minimum investment requirements or sales charges for
immediate family members of the Trustees or employees of the Adviser. Immediate Family means a
spouse, mother, father, mother-in-law, father-in-law or children (including step children) age 21
years or under. Currently, the front-end sales charge is waived on A Shares purchased by Trustees
or employees of the Adviser and their respective immediate family members.
75
The Trust will permit an exchange of C Shares of a Fund for A Shares of the same Fund, and will
waive any sales charges that would otherwise apply, for those investors who hold C Shares of the
Fund as a result of (i) reinvesting distributions from qualified employee benefit retirement plans
and rollovers from IRAs previously with the trust department of a bank affiliated with SunTrust or
(ii) investing an amount less than or equal to the value of an account distribution when an account
for which a bank affiliated with SunTrust acted in a fiduciary, administrative, custodial, or
investment advisory capacity is closed.
As of April 30, 2004 (the Close Date), shares of the Small Cap Value Equity Fund are no longer
available to new investors; existing shareholders may continue to invest in the Fund. An existing
shareholder is defined as follows:
|
|
|
Individual investors in the Fund on the Close Date; |
|
|
|
|
All other for-profit or not-for-profit entities with whom an agreement to offer
the Fund had been signed but not funded prior to the Close Date; |
|
|
|
|
401(k) plans with whom an agreement to offer the Fund had been signed but not
funded prior to the Close Date; |
|
|
|
|
Defined benefit plans with whom an agreement to offer the Fund had been signed
but not funded prior to the Close Date; |
|
|
|
|
Pension plans with whom an agreement to offer the Fund had been signed but not
funded prior to the Close Date; and |
|
|
|
|
Non-qualified plans with whom an agreement to offer the Fund had been signed
but not funded prior to the Close Date. |
All of the above referenced shareholders are permitted to make new investments in the Fund. This
includes beneficial owners, whether new or existing, of the existing 401(k) plans, defined benefit
plans, pension plans and non-qualified plans.
As of August 1, 2005, B Shares are not available for purchase, except through dividend or
distribution reinvestments in B Shares and exchanges of B Shares of one Fund for B Shares of
another Fund.
Rights of Accumulation. In calculating the appropriate sales charge rate, rights of accumulation
allow you to add the market value (at the close of business on the day of the current purchase) of
your existing holdings in any class of shares to the amount of A shares you are currently
purchasing.
The funds will combine the value of your current purchases with the current market value of any
shares previously purchased for
|
|
|
your individual account(s), |
|
|
|
|
your spouses account(s), |
|
|
|
|
joint account(s) with your spouse, |
|
|
|
|
your minor childrens trust or custodial accounts. |
A fiduciary purchasing shares for the same fiduciary account, trust or estate may also use this
right of accumulation. To be entitled to a reduced sales charge based on shares already owned, you
must let the Funds know at the time you make the purchase for which you are seeking the reduction
that you qualify for such a reduction. You may be required to provide the Funds with your account
number(s), account name(s), and copies of the account statements, and if applicable, the account
number(s), account name(s), and copies of the account statements, for your spouse and/or children
(and provide the childrens ages). Your financial institution may require documentation or other
information in order to verify your eligibility for a reduced sales charge. The Funds may amend or
terminate this right of accumulation at any time.
76
Letter of Intent. A Letter of Intent allows you to purchase shares over a 13-month period and
receive the same sales charge as if you had purchased all the shares at the same time. Reinvested
dividends or capital gain distributions do not apply toward these combined purchases. To be
entitled to a reduced sales charge based on shares you intend to purchase over the 13-month period,
you must send the Funds a Letter of Intent. In calculating the total amount of purchases, you may
include in your Letter purchases made up to 90 days before the date of the Letter. The 13-month
period begins on the date of the first purchase, including those purchases made in the 90-day
period before the date of the Letter. Please note that the purchase price of these prior purchases
will not be adjusted.
You are not legally bound by the terms of your Letter of Intent to purchase the amount of shares
stated in the Letter. The Letter does, however, authorize the Funds to hold in escrow 5.75% for the
following Funds:
Aggressive Growth Stock Fund
Emerging Growth Stock Fund
International Equity 130/30 Fund
International Equity Fund
International Equity Index Fund
Large Cap Core Equity Fund
Large Cap Growth Stock Fund
Large Cap Quantitative Equity Fund
Large Cap Value Equity Fund
Life Vision Aggressive Growth Fund
Life Vision Growth and Income Fund
Life Vision Moderate Growth Fund
Life Vision Target Date 2015 Fund
Life Vision Target Date 2025 Fund
Life Vision Target Date 2030 Fund
Mid-Cap Core Equity Fund
Mid-Cap Value Equity Fund
Real Estate 130/30 Fund
Select Large Cap Growth Stock Fund
Small Cap Growth Stock Fund
Small Cap Value Equity Fund
U.S. Equity 130/30 Fund
4.75% for the following Funds:
Georgia Tax-Exempt Bond Fund
High Grade Municipal Bond Fund
High Income Fund
Intermediate Bond Fund
Investment Grade Bond Fund
77
Investment Grade Tax-Exempt Bond Fund
Life Vision Conservative Fund
Maryland Municipal Bond Fund
North Carolina Tax-Exempt Bond Fund
Seix High Yield Fund
Strategic Income Fund
Total Return Bond Fund
U.S. Government Securities Fund
U.S. Government Securities Ultra-Short Bond Fund
Ultra-Short Bond Fund
Virginia Intermediate Municipal Bond Fund
And 2.50% for the following Funds:
Limited-Term Federal Mortgage Securities Fund
Seix Floating Rate High Income Fund
Short-Term Bond Fund
Short-Term U.S. Treasury Securities Fund
of the total amount you intend to purchase. If you do not complete the total intended purchase at
the end of the 13-month period, the Funds transfer agent will redeem the necessary portion of the
escrowed shares to make up the difference between the reduced rate sales charge (based on the
amount you intended to purchase) and the sales charge that would normally apply (based on the
actual amount you purchased).
DETERMINATION OF NET ASSET VALUE
General Policy. Each of the Funds adheres to Section 2(a)(41), and Rules 2a-4 and 2a-7 thereunder,
of the 1940 Act with respect to the valuation of portfolio securities. In general, securities for
which market quotations are readily available are valued at current market value, and all other
securities are valued at fair value as determined in good faith by the Trusts Board of Trustees.
In complying with the 1940 Act, the Trust relies on guidance provided by the SEC and by the SEC
staff in various interpretive letters and other guidance.
Equity Securities. Securities listed on a securities exchange, market or automated quotation system
for which quotations are readily available (except securities traded on NASDQ), including
securities traded over the counter, are valued at the official closing price or the last quoted
sale price on the principal exchange or market (foreign or domestic) on which they are traded on
valuation date (or at approximately 4:00 p.m., Eastern Time if a securitys principal exchange is
normally open at that time). If there is no official closing price and there is no such reported
sale on the valuation date, the security is valued at the most recent quoted bid price, or if such
prices are not available, the security will be valued at fair value as determined in good faith by
the Trusts Board of Trustees. For securities traded on NASDAQ, the NASDAQ Official Closing Price
is used.
Money Market Securities and other Debt Securities. If available, Money Market Securities and other
debt securities are priced based upon valuations provided by recognized independent, third-party
pricing agents. Such values generally reflect the last reported sales price if the security is
actively traded. The third-party pricing agents may also value debt securities by employing
methodologies that utilize actual market transactions, broker-supplied valuations, or other
methodologies designed to identify the market value for such securities. Such methodologies
generally consider such factors as security prices, yields, maturities, call features, ratings and
developments relating to specific securities in arriving at valuations. Money Market Securities
and other debt
78
securities with remaining maturities of sixty days or less may be valued at their amortized cost,
which approximates market value. If such prices are not available, the security will be valued at
fair value as determined in good faith by the Trusts Board of Trustees.
The prices for foreign securities are reported in local currency and converted to U.S. dollars at
the exchange rate of such currencies against the U.S. dollar, as of the close of regular trading on
the NYSE (usually 4:00 p.m. Eastern Time) as provided by an independent pricing service approved by
the Trusts Board of Trustees.
Use of Third-Party Pricing Agents. Pursuant to contracts with the Trusts Administrator, prices
for most securities held by the Funds are provided daily by third-party independent pricing agents
that are approved by the Board of Trustees of the Trust. The valuations provided by third-party
independent pricing agents are reviewed daily by the Administrator. If a security price cannot be
obtained from an independent pricing service, the Trusts accounting agent will seek to obtain a
bid price from at least one independent broker.
Investments in other investment companies are valued at their respective daily net asset values.
Amortized Cost Method of Valuation. The amortized cost method involves valuing a security at its
cost on the date of purchase and thereafter (absent unusual circumstances) assuming a constant
amortization to maturity of any discount or premium, regardless of the impact of fluctuations in
general market rates of interest on the value of the instrument. While this method provides
certainty in valuation, it may result in periods during which a securitys value, as determined by
this method, is higher or lower than the price a Fund would receive if it sold the instrument.
During periods of declining interest rates, the daily yield of a Fund may tend to be higher than a
like computation made by a company with identical investments utilizing a method of valuation based
upon market prices and estimates of market prices for all of its portfolio securities. Thus, if the
use of amortized cost by a Fund resulted in a lower aggregate portfolio value on a particular day,
a prospective investor in a Fund would be able to obtain a somewhat higher yield than would result
from investment in a company utilizing solely market values, and existing investors in a Fund would
experience a lower yield. The converse would apply in a period of rising interest rates.
A Funds use of amortized cost and the maintenance of a Funds net asset value at $1.00 are
permitted by regulations promulgated by Rule 2a-7 under the 1940 Act, provided that certain
conditions are met. The regulations also require the Trustees to establish procedures which are
reasonably designed to stabilize the net asset value per share at $1.00 for the Funds. Such
procedures include the determination of the extent of deviation, if any, of the Funds current net
asset value per share calculated using available market quotations from the Funds amortized cost
price per share at such intervals as the Trustees deem appropriate and reasonable in light of
market conditions and periodic reviews of the amount of the deviation and the methods used to
calculate such deviation. In the event that such deviation exceeds one half of 1%, the Trustees are
required to consider promptly what action, if any, should be initiated, and, if the Trustees
believe that the extent of any deviation may result in material dilution or other unfair results to
shareholders, the Trustees are required to take such corrective action as they deem appropriate to
eliminate or reduce such dilution or unfair results to the extent reasonably practicable. Such
actions may include the sale of portfolio instruments prior to maturity to realize capital gains or
losses or to shorten average portfolio maturity; withholding dividends; redeeming shares in kind;
or establishing a net asset value per share by using available market quotations. In addition, if
the Funds incur a significant loss or liability, the Trustees have the authority to reduce pro rata
the number of shares of the Funds in each shareholders account and to offset each shareholders
pro rata portion of such loss or liability from the shareholders accrued but unpaid dividends or
from future dividends while each other Fund must annually distribute at least 90% of its investment
company taxable income.
79
TAXES
The following is a summary of certain federal income tax considerations generally affecting the
Funds and their investors. No attempt is made to present a detailed explanation of the federal tax
treatment of a Fund or its investors, and the discussion here and in the Trusts prospectuses is
not intended as a substitute for careful tax planning.
Federal Income Tax
This discussion of federal income tax considerations is based on the Internal Revenue Code of 1986,
as amended, and the regulations issued thereunder, in effect on the date of this SAI. New
legislation, as well as administrative changes or court decisions may change the conclusions
expressed herein, and may have a retroactive effect with respect to the transactions contemplated
herein. In order to qualify for treatment as a regulated investment company (RIC) under the Code,
the Funds must distribute annually to its shareholders at least the sum of 90% of its net
investment income excludable from gross income plus 90% of its investment company taxable income
(generally, net investment income plus the excess, if any, of net short-term capital gain) (the
Distribution Requirement) and also must meet several additional requirements. Among these
requirements are the following: (i) at least 90% of a Funds gross income each taxable year must be
derived from dividends, interest, payments with respect to securities loans, and gains from the
sale or other disposition of stock or securities or foreign currencies, or other income derived
with respect to its business of investing in such stock, securities or currencies, and net income
derived from interests in qualified publicly traded partnerships, (ii) at the close of each quarter
of a Funds taxable year, at least 50% of the value of its total assets must be represented by cash
and cash items, U.S. government securities, securities of other RICs and other securities, with
such other securities limited, in respect to any one issuer, to an amount that does not exceed 5%
of the value of a Funds assets and that does not represent more than 10% of the outstanding voting
securities of such issuer; and (iii) at the close of each quarter of a Funds taxable year, not
more than 25% of the value of the Funds assets may be invested in securities (other than U.S.
government securities or the securities of other RICs) of any one issuer, or of two or more issuers
engaged in same or similar businesses if a Fund owns at least 20% of the voting power of such
issuers, or of one or more qualified publicly traded partnerships, or the securities of one or more
qualified publicly traded partnerships.
Notwithstanding the Distribution Requirement described above, which only requires a Fund to
distribute at least 90% of its annual investment company taxable income and does not require any
minimum distribution of net capital gains (the excess of net long-term capital gains over net
short-term capital loss), a Fund will be subject to a nondeductible 4% excise tax to the extent it
fails to distribute by the end of any calendar year 98% of its ordinary income for that year and
98% of its capital gain net income for the one-year period ending on October 31 of that year (and
any retained amount from that prior calendar year on which the Fund paid no federal income tax).
The Funds intend to make sufficient distributions prior to the end of each calendar year to avoid
liability for the federal excise tax applicable to regulated investment companies but can make no
assurances that distributions will be sufficient to avoid this tax.
If a Fund fails to maintain qualification as a RIC for a tax year, that Fund will be subject to
federal income tax on its taxable income and gains at corporate rates, without any benefit for
distributions paid to shareholders, and distributions to shareholders will be taxed as ordinary
income to the extent of that Funds current and accumulated earnings and profits. In such case, the
dividends received deduction generally will be available for eligible corporate shareholders
(subject to certain limitations) and the lower tax rates applicable to qualified dividend income
would be available to individual shareholders. The board reserves the right not to maintain
qualification of a Fund as a RIC if it determines such course of action to be beneficial to
shareholders.
Each Fund may invest in complex securities. These investments may be subject to numerous special
and complex tax rules. These rules could affect whether gains and losses recognized by a Fund are
treated as ordinary income
80
or capital gains, accelerate the recognition of income to a Fund, and/or defer a Funds ability to
recognize losses. In turn, these rules may affect the amount, timing or character of the income
distributed to shareholders by a Fund.
With respect to investments in STRIPs, TRs, and other zero coupon securities which are sold at
original issue discount and thus do not make periodic cash interest payments, a Fund will be
required to include as part of its current income the imputed interest on such obligations even
thought the Fund has not received any interest payments on such obligations during that period.
Because each Fund distributes all of its nets investment income to its shareholders, a Fund may
have to sell Fund securities to distribute such imputed income which may occur at a time when the
Adviser would not have chosen to sell such securities and which may result in taxable gain or loss.
The Fixed Income Funds receive income generally in the form of interest derived from Fund
investments. This income, less expenses incurred in the operation of a Fund, constitutes its net
investment income from which dividends may be paid to shareholders. Any distributions by a Fund may
be taxable to shareholders regardless of whether they are received in cash or additional shares. A
Fund may derive capital gains and losses in connection with sales or other dispositions of its
portfolio securities. Distributions of net short-term capital gains will be taxable to shareholders
as ordinary income. In general, the Fixed Income Funds do not expect to realize net-long term
capital gains because the Bond Funds and the portion of such Funds distributions are expected to
be eligible for the corporate dividends received deduction.
The Equity Funds receive income generally in the form of dividends and interest on Fund
investments. This income, less expenses incurred in the operation of a Fund, constitutes its net
investment income from which dividends may be paid to you. All or a portion of the net investment
income distributions may be treated as qualified dividend income (eligible for the reduced maximum
rate to individuals of 15% (5% for individuals in lower tax brackets)) to the extent that a Fund
receives qualified dividend income.
Qualified dividend income is, in general, dividend income from taxable domestic corporations and
certain foreign corporations (e.g., foreign corporations incorporated in a possession of the United
States or in certain countries with a comprehensive tax treaty with the United States, or the stock
of which is readily tradable on an established securities market in the United States). In order
for some portion of the dividends received by a Fund shareholder to be qualified dividend income, a
Fund must meet holding period and other requirements with respect to the dividend paying stocks in
its portfolio, and the shareholder must meet holding period and other requirements with respect to
a Funds shares. Any distributions by a Fund may be taxable to shareholders regardless of whether
they are received in cash or in additional shares. The Equity Funds may derive capital gains and
losses in connection with sales or other dispositions of each Funds portfolio securities.
Distributions from net short-term capital gains will be taxable to you as ordinary income.
Distributions from net long-term capital gains will be taxable to you as long-term capital gains
regardless of how long you have held your shares in the fund. Currently, the maximum tax rate on
long-term capital gains is 15%.
A Funds participation in loans of securities may affect the amount, timing and character of
distributions to shareholders. If a Fund participates in a securities lending transaction, to the
extent that a Fund makes a distribution of income received by the Fund in lieu of dividends (a
substitute payment) with respect to securities on loan pursuant to such a securities lending
transaction, such income will not constitute qualified dividend income and thus will not be
eligible for taxation at the rates applicable to long-term capital gain. Such income will also not
be qualifying dividends eligible for the dividends received deduction for corporate investors. The
Funds expect to use such substitute payments, if any, to satisfy a Funds expenses, and therefore
expect that their receipt of substitute payments, if any, will not adversely affect the percentage
of distributions qualifying as qualified dividend income. Withholding taxes accrued on dividends
during the period that any security was not directly held by a Fund will not qualify as a foreign
tax paid by a Fund and therefore cannot be passed through to shareholders.
81
Absent further legislation, the maximum 15% tax rate on qualified dividend income and long-term
capital gains will cease to apply to taxable years beginning after December 31, 2010.
Shareholders who have not held Fund shares for a full year should be aware that a Fund may
designate and distribute, as ordinary income or capital gain, a percentage of income that is not
equal to the actual amount of such income earned during the period of investment in a Fund.
Each Fund will inform you of the amount of your ordinary income dividends, qualified dividend
income, and capital gain distributions shortly after the close of each calendar year.
If a Funds distributions exceed its taxable income and capital gains realized during a taxable
year, all or a portion of the distributions made in the same taxable year may be recharacterized as
a return of capital to shareholders. A return of capital distribution will generally not be
taxable, but will reduce each shareholders cost basis in a Fund and result in higher reported
capital gain or lower reported capital loss when those shares on which distribution was received
are sold.
If a shareholder that is a tax-exempt investor (e.g., a pension plan, individual retirement
account, 401(k), similar tax-advantaged plan, charitable organization, etc.) incurs debt to finance
the acquisition of its shares, a portion of the income received by that shareholder with respect to
its shares would constitute unrelated business taxable income (UBTI). A tax-exempt investor is
generally subject to federal income tax to the extent that its UBTI for a taxable year exceeds its
annual $1,000 exclusion. If a charitable remainder trust incurs any UBTI in a taxable year, all of
its net income for the taxable year is subject to federal income tax.
Sale, Redemption or Exchange of Fund Shares
Sales, redemptions and exchanges of Fund shares are generally taxable transactions for federal,
state and local income tax purposes.
Any gain or loss recognized on a sale or redemption of shares of a Fund by a shareholder who holds
his or her shares as a capital asset will generally be treated as long-term capital gain or loss if
the shares have been held for more than one year, and short-term if for a year or less. If shares
held for six months or less are sold or redeemed for a loss, two special rules apply. First, if
shares on which a net capital gain distribution has been received are subsequently sold or
redeemed, and such shares have been held for six months or less, any loss recognized will be
treated as long-term capital loss to the extent of the long-term capital gain distributions.
Second, any loss recognized by a shareholder upon the sale or redemption of shares of a tax-exempt
fund held for six months or less will be disallowed to the extent of any exempt interest dividends
received by the shareholder with respect to such shares. All or a portion of any loss that you
realize upon the redemption of your fund shares will be disallowed to the extent that you buy other
shares in a Fund (through reinvestment of dividends or otherwise) within 30 days before or after
your share redemption. Any loss disallowed under these rules will be added to your tax basis in the
new shares you buy.
In certain cases, a Fund will be required to withhold, at the applicable withholding rates, an
amount from any distributions and redemptions to shareholders, and to remit such amount to the
Internal Revenue Service (IRS) if the shareholder: (1) has failed to provide a correct taxpayer
identification number, (2) is subject to backup withholding by the IRS, or (3) has failed to
provide the Fund with certain certifications that are required by the IRS, or (4) has failed to
certify that he or she is a U.S. person (including a U.S. resident alien).
82
Tax-Exempt Funds
If, at the close of each quarter of its taxable year, at least 50% of the value of a Funds total
assets consists of obligations the interest on which is excludable from gross income, such Fund may
pay exempt interest dividends, as defined in Section 852(b)(5) of the Code, to its shareholders.
As noted in their prospectuses, the Investment Grade Tax-Exempt Bond Fund, and the State Tax-Exempt
Bond Funds intend to pay exempt-interest dividends. Exempt-interest dividends are excludable from a
shareholders gross income for regular federal income tax purposes, but may nevertheless be subject
to the alternative minimum tax (the Alternative Minimum Tax) imposed by Section 55 of the Code.
The Alternative Minimum Tax is imposed at a maximum rate of 28% in the case of non-corporate
taxpayers and at the rate of 20% in the case of corporate taxpayers, to the extent it exceeds the
taxpayers regular tax liability. The Alternative Minimum Tax may be imposed in two circumstances.
First, exempt-interest dividends derived from certain private activity bonds issued after August
7, 1986, will generally be an item of tax preference and therefore potentially subject to the
Alternative Minimum Tax for both corporate and non-corporate taxpayers. Second, in the case of
exempt-interest dividends received by corporate shareholders, all exempt-interest dividends,
regardless of when the bonds from which they are derived were issued or whether they are derived
from private activity bonds, will be included in the corporations adjusted current earnings, as
defined in Section 56(g) of the Code, in calculating the corporations alternative minimum taxable
income for purposes of determining the Alternative Minimum Tax.
Distributions of exempt-interest dividends may result in additional federal income tax consequences
to shareholders in tax-exempt funds. For example, interest on indebtedness incurred by shareholders
to purchase or carry shares of a tax-exempt fund will not be deductible for federal income tax
purposes to the extent that the Fund distributes exempt interest dividends during the taxable year.
The deduction otherwise allowable to property and casualty insurance companies for losses
incurred will be reduced by an amount equal to a portion of exempt-interest dividends received or
accrued during any taxable year. Certain foreign corporations engaged in a trade or business in
the U. S. will be subject to a branch profits tax on their dividend equivalent amount for the
taxable year, which will include exempt-interest dividends. Certain Subchapter S corporations may
also be subject to taxes on their passive investment income, which could include exempt-interest
dividends. Up to 85% of the Social Security benefits or railroad retirement benefits received by an
individual during any taxable year will be included in the gross income of such individual if the
individuals modified adjusted gross income (which includes exempt-interest dividends) plus
one-half of the Social Security benefits or railroad retirement benefits received by such
individual during that taxable year exceeds the base amount described in Section 86 of the Code.
A tax-exempt fund may not be an appropriate investment for persons (including corporations and
other business entities) who are substantial users (or persons related to such users) of
facilities financed by industrial development or private activity bonds. A substantial user is
defined generally to include certain persons who regularly use in a trade or business a facility
financed from the proceeds of industrial development bonds or private activity bonds. Such entities
or persons should consult their tax advisor before purchasing shares of a tax-exempt fund.
Issuers of bonds purchased by a tax-exempt fund (or the beneficiary of such bonds) may have made
certain representations or covenants in connection with the issuance of such bonds to satisfy
certain requirements of the Code that must be satisfied subsequent to the issuance of such bonds.
Investors should be aware that exempt-interest dividends derived from such bonds may become subject
to federal income taxation retroactively to the date of issuance of the bonds to which such
dividends are attributable thereof if such representations are determined to have been inaccurate
or if the issuer of such bonds (or the beneficiary of such bonds) fails to comply with such
covenants.
The Funds will make annual reports to shareholders of the federal income tax status of all
distributions.
83
In certain cases, a Fund will be required to withhold, at the applicable withholding rates, an
amount from any distributions and redemptions to shareholders, and to remit such amount to the
Internal Revenue Service (IRS) if the shareholder: (1) has failed to provide a correct taxpayer
identification number, (2) is subject to backup withholding by the IRS, or (3) has failed to
provide the Fund with certain certifications that are required by the IRS, or (4) has failed to
certify that he or she is a U.S. person (including a U.S. resident alien).
State Taxes
A Fund is not liable for any income or franchise tax in Massachusetts if it qualifies as a RIC for
federal income tax purposes. Distributions by the Funds to investors and the ownership of shares
may be subject to state and local taxes.
Shareholders are urged to consult their tax advisors regarding state and local taxes affecting an
investment in shares of a Fund.
Many states grant tax-free status to dividends paid to you from interest earned on direct
obligations of the U.S. Government, subject in some states to minimum investment requirements that
must be met by a Fund. Investments in Government National Mortgage Association and Fannie Mae
securities, bankers acceptances, commercial paper and repurchase agreements collaterized by U.S.
government securities do not generally qualify for tax-free treatment. The rules on exclusion of
this income are different for corporations.
Foreign Taxes
Dividends and interests received by a Fund may be subject to income, withholding or other taxes
imposed by foreign countries and U.S. possessions that would reduce the yield on the Funds stock
or securities. Tax conventions between certain countries and the United States may reduce or
eliminate these taxes. Foreign countries generally do not impose taxes on capital gains with
respect to investments by foreign investors.
If the International Equity, International Equity Index and International Equity 130/30 Funds meet
the Distribution Requirement, and if more than 50% of the value of each such Funds total assets at
the close of their respective taxable years consist of stocks or securities of foreign
corporations, each Fund will be eligible to, and will, file an election with the Internal Revenue
Service that may enable shareholders, in effect, to receive either the benefit of a foreign tax
credit, or a tax deduction, with respect to any foreign and U.S. possessions income taxes paid by
the Funds, subject to certain limitations. Pursuant to the election, each Fund will treat those
taxes as dividends paid to its shareholders. Each such shareholder will be required to include a
proportionate share of those taxes in gross income as income received from a foreign source and
must treat the amount so included as if the shareholder had paid the foreign tax directly. The
shareholder may then either deduct the taxes deemed paid by him or her in computing his or her
taxable income or, alternatively, use the foregoing information in calculating any foreign tax
credit the shareholder may be entitled to use against such shareholders federal income tax. If
either of the two above-mentioned Funds make the election, such Fund will report annually to its
shareholders the respective amounts per share of the Funds income from sources within, and taxes
paid to, foreign countries and U.S. possessions.
The International Equity, International Equity Index and International Equity 130/30 Funds
transactions in foreign currencies and forward foreign currency contracts will be subject to
special provisions of the Code that, among other things, may affect the character of gains and
losses realized by the Funds (i.e., may affect whether gains or losses are ordinary or capital),
accelerate recognition of income to the Funds and defer losses. These rules could therefore affect
the character, amount and timing of distributions to shareholders. These provisions also may
require the Funds to mark-to-market certain types of positions in their portfolios (i.e., treat
them as if they were closed out) which may cause the Funds to recognize income without receiving
cash with which to make distributions in amounts necessary to satisfy the 90% and 98% distribution
requirements for avoiding income and
84
excise taxes. Each Fund intends to monitor its transactions, intends to make the appropriate tax
elections, and intends to make the appropriate entries in its books and records when it acquires
any foreign currency or forward foreign currency contract in order to mitigate the effect of these
rules so as to prevent disqualification of the Fund as a RIC and minimize the imposition of income
and excise taxes.
Excess Inclusion Income of Certain Tax-Exempt Shareholders from an Investment in the Real Estate
130/30 Fund in REITs and REMIC Residual Interests.
Certain tax-exempt shareholders in the Real Estate 130/30 Fund, including qualified pension plans,
individual retirement accounts, salary deferral arrangements (401(k)s) and other tax-exempt
entities, generally are exempt from federal income taxation except with respect to their unrelated
business taxable income (UBTI). Under current law, the Fund serves to block UBTI from being
realized by its tax-exempt shareholders. Notwithstanding the foregoing, a tax exempt shareholder
could realize UBTI by virtue of its investment in the Fund if: (i) the Fund invests in a residual
interest in a real estate mortgage investment conduit (REMIC) or in REITs that hold a REMIC
residual interest (income that is attributable to these residual interests is referred to in the
Code as an excess inclusion income) or (ii) shares in the Fund constitute debt-financed property
in the hands of the tax exempt shareholder within the meaning of Code Section 514(b). In addition,
if a REIT, that issues debt securities with more than one maturity, owns a taxable mortgage pool
within the meaning of Code Section 7701(i) as a portion of the REITs assets, or as a REIT
subsidiary, then a portion of the REITs income may be treated as if it were an excess inclusion
from a REMIC. This income generally is required to be allocated by the Fund to you in proportion
to the dividends paid to you with the same tax consequences as if you received the excess inclusion
income directly. If you are a tax-exempt shareholder, this excess inclusion income may have a tax
consequence to you as discussed below.
Under guidance recently issued by the IRS, the Fund will be taxed at the highest corporate income
tax rate on its excess inclusion income that is allocable to the percentage of its shares held in
record name by a disqualified organization. Disqualified organizations generally include certain
cooperatives, governmental entities and tax-exempt organizations that are exempt from tax on their
unrelated business taxable income. To the extent that Fund shares owned by a disqualified
organization are held in record name by a broker-dealer or other nominee, the broker-dealer or
other nominee would be liable for the corporate level tax on the portion of the Funds excess
inclusion income allocable to Fund shares held by the broker-dealer or other nominee on behalf of
the disqualified organization. The Fund expects that disqualified organizations will own their
shares and will not themselves be pass-through entities. Because this tax is imposed at the Fund
level, all shareholders, including shareholders that are not disqualified organizations, will bear
a portion of the tax cost associated with the Funds receipt of excess inclusion income. However,
to the extent permissible under the Investment Company Act of 1940, as amended, regulated
investment companies such as the Fund are permitted under Treasury Regulations to specially
allocate this tax expense to the disqualified organizations to which it is attributable, without a
concern that such an allocation will constitute a preferential dividend.
In addition, with respect to Fund shareholders who are not nominees, for Fund taxable years
beginning on or after January 1, 2007, the Fund must report excess inclusion income to shareholders
in two cases:
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If the excess inclusion income received by the Fund from all sources exceeds 1% of the
Funds gross income, it must inform the non-nominee shareholder of the amount and
character of excess inclusion income allocated to them; and |
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If the Fund receives excess inclusion income from a REIT whose excess inclusion
income in its most recent tax year ending not later than nine months before the first
day of the Funds taxable year exceeded 3% of the REITs total dividends, the Fund must
inform its non-nominee shareholders of the amount and character of the excess inclusion
income allocated to them from such REIT. |
85
Any excess inclusion income realized by the Fund and allocated to shareholders under these rules
cannot be offset by net operating losses of the shareholders. If the shareholder is a tax-exempt
entity and not a disqualified organization, then this income is fully taxable as unrelated
business taxable income under the Code. Charitable reminder trusts do not incur UBTI by receiving
excess inclusion income from the Fund. If the shareholder is a non-U.S. person, such shareholder
would be subject to U.S. federal income tax withholding at a rate of 30% on this income without
reduction or exemption pursuant to any otherwise applicable income tax treaty. If the shareholder
is a REIT, a regulated investment company, common trust fund or other pass-through entity, such
shareholders allocable share of the Funds excess inclusion income would be considered excess
inclusion income of such entity and such entity would be subject to tax at the highest corporate
tax rate on any excess inclusion income allocated to their owners that are disqualified
organizations. Accordingly, investors should be aware that a portion of the Funds income may be
considered excess inclusion income.
Compliance with these requirements will require the Fund to obtain significant cooperation from any
REITs in which it invests. There is no guarantee that the Fund will receive the information that it
needs to implement these requirements and report any excess inclusion income to you on a timely
basis. The Fund will use its best efforts to meet these requirements, and through the Investment
Company Institute, will seek additional guidance from the IRS and the cooperation of REITs in
providing excess inclusion income information on a timely basis.
Tax-exempt shareholders should talk to their tax advisors about the implications of these rules on
their separate tax situations.
Non-U.S. Investors: Non-U.S. investors may be subject to U.S. withholding and estate tax, and are
subject to special U.S. tax certification requirements. Non-U.S. investors should consult their
tax advisors about the applicability of U.S. tax withholding and the use of appropriate forms to
certify their foreign status and to claim any applicable treaty benefits to which they are
entitled.
Investments in U.S. Real Property.
The Real Estate 130/30 Fund may invest in equity securities of corporations that invest in U.S.
real property, including REITs. The sale of a U.S. real property interest by the Fund, or by a REIT
or U.S. real property holding corporation in which the Fund invests, may trigger special tax
consequences to the Funds non-U.S. shareholders.
The Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) makes non-U.S. persons subject to
U.S. tax on disposition of a U.S. real property interest as if he or she were a U.S. person. Such
gain is sometimes referred to as FIRPTA gain. The Code provides a look-through rule for
distributions of FIRPTA gain by a RIC that is classified as a qualified investment entity. A
qualified investment entity includes a RIC if, in general, more than 50% of the RICs assets
consists of interests in REITs and U.S. real property holding corporations.
If the Fund is classified as a qualified investment entity and you are a non-U.S. shareholder that
owns more than 5% of a class of Fund shares at any time during the one-year period ending on the
date of the distribution, then Fund distributions to you are treated as gain recognized by you from
the disposition of a U.S. real property interest (USRPI) to the extent that the distribution is
attributable to gain from a sale or disposition of a USRPI by the Fund. This will cause any such
distribution to be subject to U.S. withholding tax at a rate of 35%, and require that you file a
nonresident U.S. income tax return.
In general, a USRPI includes stock in a U.S. real property holding corporation (USRPHC). A USRPHC
is a U.S. corporation more than 50% of the assets of which are interests in U.S. real estate.
However, if stock of a class of a USRPHC is publicly traded, stock of such class is treated as a
USRPI only if the Fund owns more than 5% of such class of stock. Stock of a U.S. REIT that is a
USRPHC is a USRPI if the Fund owns more than 5% of the class of REIT shares, except that if U.S
shareholders control the U.S. REIT, then shares of the REIT are not USRPIs even if the Fund owns
more than 5%.
86
This treatment applies only if you own more than 5% of a class of Fund shares at any time during
the one-year period ending on the date of the distribution. These look-through rules and the
exemption from withholding for Fund shareholders owning 5% or less of a class of Fund shares sunset
on December 31, 2007, except as provided in the next paragraph.
Even if you are a non-U.S. shareholder and do not own more than 5% of a class of Fund shares at any
time during the one-year period ending on the date of the distribution, Fund distributions to you
that are attributable to gain from disposition of a USRPI by the Fund will be taxable as ordinary
dividends (rather than as a capital gain or short-term capital gain dividend) subject withholding
at 30% or lower treaty rate) if the Fund is classified as a qualified investment entity as
described above. This rule sunsets on December 31, 2007, except that distributions you receive of
short- or long-term capital gains that are attributable to the sale or disposition of a U.S. real
property interest by a REIT in which the Fund invests will continue to be taxable as FIRPTA gain,
subject to 35% withholding and a requirement that you file a U.S. nonresident income tax return, so
long as the Fund remains a qualified investment entity.
FIRPTA Wash Sale Rule. If a non-U.S. shareholder of the Fund, during the 30-day period preceding
a Fund distribution that would have been treated as a distribution from the disposition of a U.S.
real property interest, acquires an identical stock interest during the 61-day period beginning the
first day of such 30-day period preceding the distribution, and does not in fact receive the
distribution in a manner that subjects the non-U.S. shareholder to tax under FIRPTA, then the
non-U.S. shareholder is required to pay U.S. tax on an amount equal to the amount of the
distribution that was not taxed under FIRPTA as a result of the disposition. These Rules also apply
to substitute dividend payments and other similar arrangements; the portion of the substitute
dividend or similar payment treated as FIRPTA gain equals the portion of the RIC distribution such
payment is in lieu of that otherwise would have been treated as FIRPTA gain.
Gain on Sale of Fund Shares As FIRPTA Gain. In addition, a sale or redemption of Fund shares will
be FIRPTA gain only if (i) such non-U.S. shareholder owns more than 5% of a class of shares in the
Fund, (ii) more than 50% of the Funds assets consist of (A) more than 5% interests in publicly
traded companies that are U.S. real property holding companies, (B) interests in non-publicly
traded companies that are U.S. real property holding companies, and (C) interests in U.S. REITs
that are not controlled by U.S. shareholders where the REIT shares are either not publicly traded
or are publicly traded and the Fund owns more than 5%, and (iii) non-U.S. shareholders own 50% or
more of the value of the Fund shares (requirement (iii) sunsets and does not apply after December
31, 2007).
In the unlikely event a sale of Fund shares results in FIRPTA gain, the gain will be taxed as
income effectively connected with a U.S. trade or business. As a result, the non-U.S.
shareholder will be required to pay U.S. income tax on such gain and file a nonresident U.S. income
tax return.
Limitations on Withholding On FIRPTA Gain For Non-U.S. Investors. While the Fund, if classified as
a qualified investment entity, will make every effort to identify and pass-through any FIRPTA gain
that it receives on Fund investments, and to withhold on distributions of this income paid directly
to its non-U.S. shareholders, intermediaries who have assumed tax reporting responsibilities on
managed or omnibus accounts may not have the capacity to identify non-U.S. shareholders who are
paid distributions containing FIRPTA gain and to properly withhold federal income taxes on these
distributions. Shareholders of these accounts should talk to their investment representatives about
any additional tax due on FIRPTA gain.
FUND TRANSACTIONS
Brokerage Transactions. The Trust has no obligation to deal with any dealer or group of dealers in
the execution of transactions in portfolio securities. Subject to policies established by the
Board, the Adviser is responsible for
87
placing the orders to execute transactions for a Fund (excluding the Aggressive Growth Stock Fund,
Emerging Markets Growth Stock Fund, International Equity 130/30 Fund, Real Estate 130/30 Fund, U.S.
Equity 130/30 Fund, High Income Fund, Intermediate Bond Fund, Investment Grade Bond Fund, Limited
Duration Fund, Limited-Term Federal Mortgage Securities Fund, Seix Floating Rate High Income Fund,
Seix High Yield Fund, Strategic Income Fund, Total Return Bond Fund and U.S. Government Securities
Fund). In placing orders, it is the policy of the Trust to seek to obtain the best net results
taking into account such factors as price (including the applicable dealer spread), the size, type
and difficulty of the transaction involved, the firms general execution and operational
facilities, and the firms risk in positioning the securities involved. Where possible, the Adviser
will deal directly with the dealers who make a market in the securities involved except in those
circumstances where better prices and execution are available elsewhere. Such dealers usually are
acting as principal for their own account. On occasion, securities may be purchased directly from
the issuer. While the Adviser generally seeks reasonably competitive spreads or commissions, the
Trust will not necessarily be paying the lowest spread or commission available due to reasons
described herein.
With respect to the Aggressive Growth Stock Fund, Emerging Markets Growth Stock Fund, International
Equity 130/30 Fund, Real Estate 130/30 Fund, U.S. Equity 130/30 Fund, High Income Fund,
Intermediate Bond Fund, Investment Grade Bond Fund, Limited Duration Fund, Limited-Term Federal
Mortgage Securities Fund, Seix Floating Rate High Income Fund, Seix High Yield Fund, Strategic
Income Fund, Total Return Bond Fund and U.S. Government Securities Fund, subject to policies
established by the Board and oversight of the Adviser, the Subadviser is responsible for placing
the orders to execute transactions for each Fund. In placing orders, it is the policy of the Trust
to seek to obtain the best net results taking into account such factors as price (including the
applicable dealer spread), the size, type and difficulty of the transaction involved, the firms
general execution and operational facilities, and the firms risk in positioning the securities
involved. Where possible, the Subadviser will deal directly with the dealers who make a market in
the securities involved except in those circumstances where better prices and execution are
available elsewhere. Such dealers usually are acting as principal for their own account. On
occasion, securities may be purchased directly from the issuer. While the Subadviser generally
seeks reasonably competitive spreads or commissions, the Trust will not necessarily be paying the
lowest spread or commission available due to reasons described herein.
The money market securities in which the Funds invest are traded primarily in the over-the-counter
market. Bonds and debentures are usually traded over-the-counter, but may be traded on an exchange.
Money market and debt securities are generally traded on a net basis and do not normally involve
either brokerage commissions or transfer taxes. Certain Funds may also enter into financial futures
and option contracts, which normally involve brokerage commissions. The cost of executing portfolio
securities transactions of the Trust will primarily consist of dealer spreads and underwriting
commissions.
For the fiscal years ended March 31, 2008, March 31, 2007 and March 31, 2006, the Funds paid the
following aggregate brokerage commissions on portfolio transactions:
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Aggregate Dollar Amount of |
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Brokerage Commissions Paid ($) |
Fund* |
|
2008 |
|
2007 |
|
2006 |
Aggressive Growth Stock Fund |
|
|
|
|
|
|
361,568 |
|
|
|
262,663 |
|
Emerging Growth Stock Fund |
|
|
|
|
|
|
290,487 |
|
|
|
138,359 |
|
Georgia Tax-Exempt Bond Fund |
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|
|
0 |
|
|
|
0 |
|
High Grade Municipal Bond Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
High Income Fund |
|
|
|
|
|
|
974 |
|
|
|
0 |
|
Institutional Cash Management
Money Market Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
88
|
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|
Aggregate Dollar Amount of |
|
|
Brokerage Commissions Paid ($) |
Fund* |
|
2008 |
|
2007 |
|
2006 |
Institutional Municipal Cash
Reserve Money Market Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Institutional U.S. Government
Securities Money Market Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Institutional U.S. Treasury
Securities Money Market Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Intermediate Bond Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
International Equity 130/30 Fund |
|
|
|
|
|
|
*** |
|
|
|
*** |
|
International Equity Fund |
|
|
|
|
|
|
2,407,435 |
|
|
|
1,922,438 |
|
International Equity Index Fund |
|
|
|
|
|
|
263,296 |
|
|
|
411,897 |
|
Investment Grade Bond Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Investment Grade Tax-Exempt Bond
Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Large Cap Core Equity Fund |
|
|
|
|
|
|
2,136,101 |
|
|
|
1,955,667 |
|
Large Cap Growth Stock Fund |
|
|
|
|
|
|
2,774,153 |
|
|
|
3,547,454 |
|
Large Cap Quantitative Equity Fund |
|
|
|
|
|
|
1,481,605 |
|
|
|
938,790 |
|
Large Cap Value Equity Fund |
|
|
|
|
|
|
1,861,845 |
|
|
|
2,208,629 |
|
Life Vision Aggressive Growth Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Life Vision Conservative Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Life Vision Growth and Income Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Life Vision Moderate Growth Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Life Vision Target Date 2015 Fund |
|
|
|
|
|
|
2 |
|
|
|
1 |
|
Life Vision Target Date 2025 Fund |
|
|
|
|
|
|
1 |
|
|
|
0 |
|
Life Vision Target Date 2035 Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Limited Duration Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Limited-Term Federal Mortgage
Securities Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Maryland Municipal Bond Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Mid-Cap Core Equity Fund |
|
|
|
|
|
|
1,860,875 |
|
|
|
1,005,580 |
|
Mid-Cap Value Equity Fund |
|
|
|
|
|
|
1,306,920 |
|
|
|
955,369 |
|
North Carolina Tax-Exempt Bond
Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Prime Quality Money Market Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Real Estate 130/30 Fund |
|
|
|
|
|
|
*** |
|
|
|
*** |
|
Seix Floating Rate High Income
Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Seix High Yield Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Select Large Cap Growth Stock Fund |
|
|
|
|
|
|
264,128 |
|
|
|
273,108 |
|
Short-Term Bond Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Short-Term U.S. Treasury
Securities Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Dollar Amount of |
|
|
Brokerage Commissions Paid ($) |
Fund* |
|
2008 |
|
2007 |
|
2006 |
Small Cap Growth Stock Fund |
|
|
|
|
|
|
6,744,551 |
|
|
|
4,949,471 |
|
Small Cap Quantitative Equity Fund |
|
|
|
|
|
|
225,965 |
|
|
|
*** |
|
Small Cap Value Equity Fund |
|
|
|
|
|
|
1,325,784 |
|
|
|
1,280,455 |
|
Strategic Income Fund |
|
|
|
|
|
|
865 |
|
|
|
0 |
|
Tax-Exempt Money Market Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Total Return Bond Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
U.S. Equity 130/30 Fund |
|
|
|
|
|
|
*** |
|
|
|
*** |
|
U.S. Government Securities Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
U.S. Government Securities Money
Market Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
U.S. Government Securities
Ultra-Short Bond Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
U.S. Treasury Money Market Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Ultra-Short Bond Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Virginia Intermediate Municipal
Bond Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Virginia Tax-Free Money Market
Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
*** |
|
Not in operation during the period. |
Brokerage Selection. The Trust does not expect to use one particular broker or dealer, and when one
or more brokers is believed capable of providing the best combination of price and execution, the
Funds Adviser or Subadviser may select a broker based upon brokerage or research services provided
to the Adviser or Subadviser. The Adviser or Subadviser may pay a higher commission than otherwise
obtainable from other brokers in return for such services only if a good faith determination is
made that the commission is reasonable in relation to the services provided.
Section 28(e) of the 1934 Act permits the Adviser or Subadviser, under certain circumstances, to
cause each Fund to pay a broker or dealer a commission for effecting a transaction in excess of the
amount of commission another broker or dealer would have charged for effecting the transaction in
recognition of the value of brokerage and research services provided by the broker or dealer. In
addition to agency transactions, the Adviser or Subadviser may receive brokerage and research
services in connection with certain riskless principal transactions, in accordance with applicable
SEC guidance. Brokerage and research services include: (1) furnishing advice as to the value of
securities, the advisability of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities; (2) furnishing analyses and
reports concerning issuers, industries, securities, economic factors and trends, portfolio
strategy, and the performance of accounts; and (3) effecting securities transactions and performing
functions incidental thereto (such as clearance, settlement, and custody). In the case of research
services, the Adviser or Subadviser believes that access to independent investment research is
beneficial to their investment decision-making processes and, therefore, to each Fund.
To the extent research services may be a factor in selecting brokers, such services may be in
written form or through direct contact with individuals and may include information as to
particular companies and securities as well as market, economic, or institutional areas and
information which assists in the valuation and pricing of investments. Examples of
research-oriented services for which the Adviser or Subadviser might utilize Fund commissions
include research reports and other information on the economy, industries, sectors, groups of
securities, individual companies, statistical information, political developments, technical market
action, pricing and appraisal services, credit analysis, risk measurement analysis, performance and
other analysis. The Adviser or Subadviser may use research services furnished by brokers in
servicing all client accounts and not all services
90
may necessarily be used in connection with the account that paid commissions to the broker
providing such services. Information so received by the Adviser or Subadviser will be in addition
to and not in lieu of the services required to be performed by the Funds Adviser or Subadviser
under the Advisory or Subadvisory Agreement. Any advisory or other fees paid to the Adviser or
Subadviser are not reduced as a result of the receipt of research services.
In some cases the Adviser or Subadviser may receive a service from a broker that has both a
research and a non-research use. When this occurs, the Adviser or Subadviser makes a good faith
allocation, under all the circumstances, between the research and non-research uses of the service.
The percentage of the service that is used for research purposes may be paid for with client
commissions, while the Adviser or Subadviser will use its own funds to pay for the percentage of
the service that is used for non-research purposes. In making this good faith allocation, the
Adviser or Subadviser faces a potential conflict of interest, but the Adviser or Subadviser
believes that its allocation procedures are reasonably designed to ensure that it appropriately
allocates the anticipated use of such services to their research and non-research uses.
From time to time, the Funds may purchase new issues of securities for clients in a fixed price
offering. In these situations, the seller may be a member of the selling group that will, in
addition to selling securities, provide the Adviser or Subadviser with research services. The
Financial Industry Regulatory Authority has adopted rules expressly permitting these types of
arrangements under certain circumstances. Generally, the seller will provide research credits in
these situations at a rate that is higher than that which is available for typical secondary market
transactions. These arrangements may not fall within the safe harbor of Section 28(e).
For the fiscal years ended March 31, 2008, March 31, 2007 and March 31, 2006, the Funds paid the
following commissions on brokerage transactions directed to brokers pursuant to an agreement or
understanding whereby the broker provides research or other brokerage services to the Adviser or
Subadviser:
91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Dollar Amount of |
|
Total Dollar Amount of Transactions |
|
|
Brokerage Commissions for |
|
Involving Brokerage Commissions |
|
|
Research Services ($) |
|
For Research Services ($) |
Fund |
|
2008 |
|
2007 |
|
2006 |
|
2008 |
|
2007 |
|
2006 |
Aggressive Growth
Stock Fund |
|
|
|
|
|
|
361,569 |
|
|
|
262,663 |
|
|
|
|
|
|
|
353,258,575 |
|
|
|
236,630,476 |
|
Emerging Growth
Stock Fund |
|
|
|
|
|
|
290,487 |
|
|
|
138,359 |
|
|
|
|
|
|
|
220,652,583 |
|
|
|
82,586,277 |
|
Large Cap Core
Equity Fund |
|
|
|
|
|
|
1,299,060 |
|
|
|
1,288,719 |
|
|
|
|
|
|
|
1,229,350,354 |
|
|
|
993,286,576 |
|
Large Cap Growth
Stock Fund |
|
|
|
|
|
|
1,527,735 |
|
|
|
2,215,647 |
|
|
|
|
|
|
|
1,298,118,313 |
|
|
|
1,611,418,182 |
|
Large Cap
Quantitative Equity
Fund |
|
|
|
|
|
|
385,614.00 |
|
|
|
123,161 |
|
|
|
|
|
|
|
796,110,564 |
|
|
|
227,557,353 |
|
Large Cap Value
Equity Fund |
|
|
|
|
|
|
1,112,865 |
|
|
|
1,483,120 |
|
|
|
|
|
|
|
1,131,873,728 |
|
|
|
1,149,219,210 |
|
Mid-Cap Core Equity |
|
|
|
|
|
|
626,555 |
|
|
|
383,253 |
|
|
|
|
|
|
|
530,632,658 |
|
|
|
294,162,760 |
|
Mid-Cap Value
Equity Fund |
|
|
|
|
|
|
738,294 |
|
|
|
592,762 |
|
|
|
|
|
|
|
638,853,274 |
|
|
|
408,346,450 |
|
Select Large Cap
Growth Stock Fund |
|
|
|
|
|
|
163,381 |
|
|
|
173,111 |
|
|
|
|
|
|
|
183,915,606 |
|
|
|
178,523,532 |
|
Small Cap Growth
Stock Fund |
|
|
|
|
|
|
1,731,702 |
|
|
|
881,381 |
|
|
|
|
|
|
|
1,849,825,284 |
|
|
|
371,086,423 |
|
Small Cap Value
Equity Fund |
|
|
|
|
|
|
579,397 |
|
|
|
635,885 |
|
|
|
|
|
|
|
577,512,739 |
|
|
|
422,382,889 |
|
Brokerage with Fund Affiliates. A Fund may execute brokerage or other agency transactions through
registered broker-dealer affiliates of the Fund, the Adviser, the Subadviser or the Distributor for
a commission in conformity with the 1940 Act, the 1934 Act and rules promulgated by the SEC. Under
the 1940 Act and the 1934 Act, affiliated broker-dealers are permitted to receive and retain
compensation for effecting portfolio transactions for the Fund on an exchange if a written contract
is in effect between the affiliate and the Fund expressly permitting the affiliate to receive and
retain such compensation. These rules further require that commissions paid to the affiliate by the
Fund for exchange transactions not exceed usual and customary brokerage commissions. The rules
define usual and customary commissions to include amounts which are reasonable and fair compared
to the commission, fee or other remuneration received or to be received by other brokers in
connection with comparable transactions involving similar securities being purchased or sold on a
securities exchange during a comparable period of time. The Trustees, including those who are not
interested persons of the Fund, as defined in the 1940 Act, have adopted procedures for
evaluating the reasonableness of commissions paid to affiliates and review these procedures
periodically.
For the fiscal years ended March 31, 2008, March 31, 2007 and March 31, 2006 the Funds paid the
following aggregate brokerage commissions on portfolio transactions effected by affiliated brokers.
All amounts shown reflect fees paid in connection with Fund repurchase agreement transactions.
92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Total |
|
|
|
|
Percentage of Total |
|
Brokerage Transactions |
|
|
Aggregate Dollar Amount of |
|
Brokerage Commissions |
|
Effected Through |
|
|
Brokerage Commissions Paid |
|
Paid to Affiliated Brokers |
|
Affiliated |
|
|
to Affiliated Brokers ($) |
|
(%)** |
|
Brokers (%) |
Fund |
|
2008 |
|
2007 |
|
2006 |
|
2008 |
|
2007 |
|
2006 |
|
2008 |
|
2007 |
|
2006 |
Aggressive Growth Stock Fund |
|
|
|
|
|
|
767 |
|
|
|
2,158 |
|
|
|
|
|
|
|
0.21 |
|
|
|
0.81 |
|
|
|
|
|
|
|
13.73 |
|
|
|
25.6 |
|
Emerging Growth Stock Fund |
|
|
|
|
|
|
96 |
|
|
|
354 |
|
|
|
|
|
|
|
0.03 |
|
|
|
0.26 |
|
|
|
|
|
|
|
3.17 |
|
|
|
19.02 |
|
Georgia Tax-Exempt Bond Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
High Grade Municipal Bond Fund |
|
|
|
|
|
|
383 |
|
|
|
499 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
High Income Fund |
|
|
|
|
|
|
1,477 |
|
|
|
3,013 |
|
|
|
|
|
|
|
60.26 |
|
|
|
100 |
|
|
|
|
|
|
|
13.81 |
|
|
|
100 |
|
Institutional Cash Management Money Market Fund |
|
|
|
|
|
|
70,405 |
|
|
|
165,723 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
Institutional Municipal Cash Reserve Money Market Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Institutional U.S. Government Securities Money Market
Fund |
|
|
|
|
|
|
176,105 |
|
|
|
173,557 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
Institutional U.S. Treasury Securities Money Market Fund |
|
|
|
|
|
|
1,085,144 |
|
|
|
1,111,413 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
Intermediate Bond Fund |
|
|
|
|
|
|
382 |
|
|
|
905 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
International Equity Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
International Equity Index Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
International Equity 130/30 Fund |
|
|
|
|
|
|
* |
|
|
|
* |
|
|
|
|
|
|
|
* |
|
|
|
* |
|
|
|
|
|
|
|
* |
|
|
|
* |
|
Investment Grade Bond Fund |
|
|
|
|
|
|
1,652 |
|
|
|
6,548 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
Investment Grade Tax-Exempt Bond Fund |
|
|
|
|
|
|
1,033 |
|
|
|
2,875 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
Large Cap Core Equity Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Large Cap Growth Stock Fund |
|
|
|
|
|
|
3,305 |
|
|
|
8,341 |
|
|
|
|
|
|
|
0.12 |
|
|
|
0.23 |
|
|
|
|
|
|
|
17.29 |
|
|
|
16.54 |
|
93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Total |
|
|
|
|
Percentage of Total |
|
Brokerage Transactions |
|
|
Aggregate Dollar Amount of |
|
Brokerage Commissions |
|
Effected Through |
|
|
Brokerage Commissions Paid |
|
Paid to Affiliated Brokers |
|
Affiliated |
|
|
to Affiliated Brokers ($) |
|
(%)** |
|
Brokers (%) |
Fund |
|
2008 |
|
2007 |
|
2006 |
|
2008 |
|
2007 |
|
2006 |
|
2008 |
|
2007 |
|
2006 |
Large Cap Quantitative Equity Fund |
|
|
|
|
|
|
326 |
|
|
|
1,511 |
|
|
|
|
|
|
|
0.02 |
|
|
|
0.16 |
|
|
|
|
|
|
|
100 |
|
|
|
9.45 |
|
Large Cap Value Equity Fund |
|
|
|
|
|
|
1,494 |
|
|
|
11,062 |
|
|
|
|
|
|
|
0.08 |
|
|
|
0.5 |
|
|
|
|
|
|
|
8.01 |
|
|
|
15.59 |
|
Life Vision Aggressive Growth Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Life Vision Conservative Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Life Vision Growth and Income Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Life Vision Moderate Growth Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Life Vision Target Date 2015 Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Life Vision Target Date 2025 Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Life Vision Target Date 2035 Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Limited Duration Fund |
|
|
|
|
|
|
692 |
|
|
|
1,653 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
Limited-Term Federal Mortgage Securities Fund |
|
|
|
|
|
|
2,935 |
|
|
|
7,500 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
Maryland Municipal Bond Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Mid-Cap Core Equity Fund |
|
|
|
|
|
|
4,070 |
|
|
|
6,163 |
|
|
|
|
|
|
|
0.22 |
|
|
|
0.61 |
|
|
|
|
|
|
|
33.98 |
|
|
|
17.76 |
|
Mid-Cap Value Equity Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
North Carolina Tax-Exempt Bond Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Prime Quality
Money Market Fund |
|
|
|
|
|
|
47,468 |
|
|
|
62,086 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
Real Estate 130/30 Fund |
|
|
|
|
|
|
* |
|
|
|
* |
|
|
|
|
|
|
|
* |
|
|
|
* |
|
|
|
|
|
|
|
* |
|
|
|
* |
|
Seix Floating Rate High Income Fund |
|
|
|
|
|
|
17,453 |
|
|
|
0 |
|
|
|
|
|
|
|
100 |
|
|
|
0 |
|
|
|
|
|
|
|
100 |
|
|
|
0 |
|
Seix Global Strategy Fund** |
|
|
* |
|
|
|
* |
|
|
|
* |
|
|
|
* |
|
|
|
* |
|
|
|
* |
|
|
|
* |
|
|
|
* |
|
|
|
* |
|
Seix High Yield Fund |
|
|
|
|
|
|
12,990 |
|
|
|
21,140 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Total |
|
|
|
|
Percentage of Total |
|
Brokerage Transactions |
|
|
Aggregate Dollar Amount of |
|
Brokerage Commissions |
|
Effected Through |
|
|
Brokerage Commissions Paid |
|
Paid to Affiliated Brokers |
|
Affiliated |
|
|
to Affiliated Brokers ($) |
|
(%)** |
|
Brokers (%) |
Fund |
|
2008 |
|
2007 |
|
2006 |
|
2008 |
|
2007 |
|
2006 |
|
2008 |
|
2007 |
|
2006 |
Select Large Cap Growth Stock Fund |
|
|
|
|
|
|
158 |
|
|
|
1,251 |
|
|
|
|
|
|
|
0.06 |
|
|
|
0.46 |
|
|
|
|
|
|
|
2.88 |
|
|
|
8.7 |
|
Short-Term Bond Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Short-Term U.S. Treasury Securities Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Small Cap Growth Stock Fund |
|
|
|
|
|
|
8,657 |
|
|
|
20,875 |
|
|
|
|
|
|
|
0.13 |
|
|
|
0.42 |
|
|
|
|
|
|
|
20.25 |
|
|
|
17.62 |
|
Small Cap Quantitative Equity Fund |
|
|
|
|
|
|
0 |
|
|
|
++ |
|
|
|
|
|
|
|
0 |
|
|
|
++ |
|
|
|
|
|
|
|
0 |
|
|
|
++ |
|
Small Cap Value Equity Fund |
|
|
|
|
|
|
697 |
|
|
|
5,502 |
|
|
|
|
|
|
|
0.05 |
|
|
|
0.43 |
|
|
|
|
|
|
|
7.65 |
|
|
|
16.5 |
|
Strategic Income Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Tax-Exempt Money Market Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Total Return Bond Fund |
|
|
|
|
|
|
5,574 |
|
|
|
12,291 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
U.S. Equity 130/30 Fund |
|
|
|
|
|
|
* |
|
|
|
* |
|
|
|
|
|
|
|
* |
|
|
|
* |
|
|
|
|
|
|
|
* |
|
|
|
* |
|
U.S. Government Securities Fund |
|
|
|
|
|
|
3,553 |
|
|
|
9,787 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
U.S. Government Securities Money Market Fund |
|
|
|
|
|
|
155,145 |
|
|
|
114,370 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
U.S. Government Securities Ultra-Short Bond Fund |
|
|
|
|
|
|
0 |
|
|
|
3,240 |
|
|
|
|
|
|
|
0 |
|
|
|
100 |
|
|
|
|
|
|
|
0 |
|
|
|
100 |
|
U.S. Treasury Securities Money Market Fund |
|
|
|
|
|
|
529,365 |
|
|
|
597,657 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
Ultra-Short Bond Fund |
|
|
|
|
|
|
0 |
|
|
|
3,971 |
|
|
|
|
|
|
|
0 |
|
|
|
100 |
|
|
|
|
|
|
|
0 |
|
|
|
100 |
|
Virginia Intermediate Municipal Bond Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Virginia Tax-Free Money Market Fund |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
* |
|
Not in operation during the period. |
|
** |
|
The Fund commenced operations August 1, 2008. |
95
PORTFOLIO TURNOVER RATE
Portfolio turnover rate is defined under SEC rules as the value of the securities purchased or
securities sold, excluding all securities whose maturities at the time of acquisition were one-year
or less, divided by the average monthly value of such securities owned during the year. Based on
this definition, instruments with remaining maturities of less than one-year are excluded from the
calculation of the portfolio turnover rate. Instruments excluded from the calculation of portfolio
turnover generally would include the futures contracts and option contracts in which the Funds
invest since such contracts generally have remaining maturities of less than one-year. The Funds
may at times hold investments in other short-term instruments such as money market instruments and
repurchase agreements, which are excluded for purposes of computing portfolio turnover. Each Funds
portfolio turnover rate for the fiscal years ended March 31, 2007 and 2008 is shown in the table
below. Variations in turnover rate may be due to market conditions, fluctuating volume of
shareholder purchases and redemptions or changes in the Advisers investment outlook.
|
|
|
|
|
|
|
|
|
|
|
Turnover Rate (%) |
Fund |
|
2008 |
|
2007 |
Aggressive Growth Stock Fund |
|
|
|
|
|
|
49 |
|
Emerging Growth Stock Fund |
|
|
|
|
|
|
103 |
|
Georgia Tax-Exempt Bond Fund |
|
|
|
|
|
|
61 |
|
High Grade Municipal Bond Fund |
|
|
|
|
|
|
128 |
|
High Income Fund |
|
|
|
|
|
|
379 |
|
Intermediate Bond Fund |
|
|
|
|
|
|
225 |
|
International Equity Fund |
|
|
|
|
|
|
81 |
|
International Equity Index Fund |
|
|
|
|
|
|
8 |
|
International Equity 130/30 Fund |
|
|
|
|
|
|
* |
|
Investment Grade Bond Fund |
|
|
|
|
|
|
240 |
|
Investment Grade Tax-Exempt Bond Fund |
|
|
|
|
|
|
214 |
|
Large Cap Core Equity Fund |
|
|
|
|
|
|
58 |
|
Large Cap Growth Stock Fund |
|
|
|
|
|
|
79 |
|
Large Cap Quantitative Equity Fund |
|
|
|
|
|
|
450 |
|
Large Cap Value Equity Fund |
|
|
|
|
|
|
95 |
|
Life Vision Aggressive Growth Fund |
|
|
|
|
|
|
52 |
|
Life Vision Conservative Fund |
|
|
|
|
|
|
43 |
|
Life Vision Growth and Income Fund |
|
|
|
|
|
|
45 |
|
Life Vision Moderate Growth Fund |
|
|
|
|
|
|
49 |
|
Life Vision Target Date 2015 Fund |
|
|
|
|
|
|
67 |
|
Life Vision Target Date 2025 Fund |
|
|
|
|
|
|
48 |
|
Life Vision Target Date 2035 Fund |
|
|
|
|
|
|
50 |
|
Limited Duration Fund |
|
|
|
|
|
|
185 |
|
96
|
|
|
|
|
|
|
|
|
|
|
Turnover Rate (%) |
Fund |
|
2008 |
|
2007 |
Limited-Term Federal Mortgage Securities Fund |
|
|
|
|
|
|
90 |
|
Maryland Municipal Bond Fund |
|
|
|
|
|
|
57 |
|
Mid-Cap Core Equity Fund |
|
|
|
|
|
|
189 |
|
Mid-Cap Value Equity Fund |
|
|
|
|
|
|
196 |
|
North Carolina Tax-Exempt Bond Fund |
|
|
|
|
|
|
84 |
|
Real Estate 130/30 Fund |
|
|
|
|
|
|
* |
|
Seix Floating Rate High Income Fund |
|
|
|
|
|
|
148 |
|
Seix High Yield Fund |
|
|
|
|
|
|
130 |
|
Select Large Cap Growth Stock Fund |
|
|
|
|
|
|
160 |
|
Short-Term Bond Fund |
|
|
|
|
|
|
104 |
|
Short-Term U.S. Treasury Securities Fund |
|
|
|
|
|
|
87 |
|
Small Cap Growth Stock Fund |
|
|
|
|
|
|
139 |
|
Small Cap Value Equity Fund |
|
|
|
|
|
|
62 |
|
Strategic Income Fund |
|
|
|
|
|
|
397 |
|
Total Return Bond Fund |
|
|
|
|
|
|
310 |
|
U.S. Equity 130/30 Fund |
|
|
|
|
|
|
* |
|
U.S. Government Securities Fund |
|
|
|
|
|
|
131 |
|
U.S. Government Securities Ultra-Short Bond |
|
|
|
|
|
|
141 |
|
Ultra-Short Bond Fund |
|
|
|
|
|
|
96 |
|
Virginia Intermediate Municipal Bond Fund |
|
|
|
|
|
|
54 |
|
|
|
|
* |
|
Not in operation during the period. |
PORTFOLIO HOLDINGS
The Board of Trustees has approved a policy and procedures that govern the timing and circumstances
regarding the disclosure of Fund portfolio holdings information to shareholders and third parties.
These policies and procedures are designed to ensure that disclosure of information regarding the
Funds portfolio securities is in the best interests of Fund shareholders, and include procedures
to address conflicts between the interests of the Funds shareholders, on the one hand, and those
of the Funds investment adviser, principal underwriter or any affiliated person of the Funds, its
investment adviser, or its principal underwriter, on the other. Pursuant to such procedures, the
Board has authorized the Advisers Chief Compliance Officer (the CCO) to authorize the release of
the Funds portfolio holdings, as necessary, in conformity with the foregoing principles. The
Funds CCO reports quarterly to the Board regarding the implementation of such policies and
procedures.
Pursuant to applicable law, each Fund is required to disclose its complete portfolio holdings
quarterly, within 60 days of the end of each fiscal quarter (currently, each March 31, June 30,
September 30, and December 31). Each Fund discloses a complete schedule of investments in each
Semi-Annual Report and Annual Report to Fund shareholders or, following the first and third fiscal
quarters, in quarterly holdings reports filed with the SEC on Form N-Q. Semi-Annual and Annual
Reports are distributed to Fund shareholders. Quarterly holdings reports
97
filed with the SEC on Form N-Q are not distributed to Fund shareholders, but are available, free of
charge, on the EDGAR database on the SECs website at www.sec.gov and may be reviewed and copied at
the SECs public reference room. Information on the operation and terms of usage of the SEC public
reference room is available at http://www.sec.gov/info/edgar/prrrules.htm or by calling
1-800-SEC-0330. The Funds Annual Reports and Semi-Annual Reports are available, free of
charge, on the Trusts website at www.ridgeworthfunds.com.
The Trusts website will provide complete portfolio holdings for each series of the Trust, except
the Aggressive Growth Stock Fund and the Emerging Growth Stock Fund, on the 15th day of
each month (or on the next business day should the 15th be other than a business day) as
of the end of the most recent month. Complete portfolio holdings for the Aggressive Growth Stock
Fund and the Emerging Growth Stock Fund will be provided on the 15th day of each
calendar quarter (or on the next business day should the 15th be other than a business
day) as of the end of the most recent calendar quarter. Information will remain available until
updated.
Portfolio holdings for previous month-ends are available for each series of the Trust except the
Aggressive Growth Stock Fund and the Emerging Growth Stock Fund, for which Portfolio holdings are
available for previous calendar quarter-ends. To request this historical information without
charge, call 1-888-784-3863, or write to the Trust at RidgeWorth Funds, c/o BISYS Fund Services,
Limited Partnership, 3435 Stelzer Road, Columbus, Ohio 43219.
In addition to information provided to shareholders and the general public, from time to time
rating and ranking organizations, such as S&P and Morningstar, Inc., may request complete portfolio
holdings information in connection with rating the Funds. Similarly, institutional investors,
financial planners, pension plan sponsors and/or their consultants may request a complete list of
portfolio holdings in order to assess the risks of a Funds portfolio along with related
performance attribution statistics. The Trust believes that these third parties have legitimate
objectives in requesting such portfolio holdings information. The Trust may also disclose the
portfolio holdings to broker-dealers and/or pricing services in order to allow the Funds to
accurately price and potentially sell portfolio securities. The Trusts policies and procedures
provide that the Advisers CCO may authorize disclosure of portfolio holdings information to such
parties at differing times and/or with different lag times to such third parties provided that the
recipient is, either by contractual agreement or otherwise by law, (i) required to maintain the
confidentiality of the information and (ii) prohibited from using the information to facilitate or
assist in any securities transactions or investment program.
The Trust requires any third party receiving non-public holdings information to enter into a
Confidentiality Agreement with the Adviser. The Confidentiality Agreement provides, among other
things, that non-public portfolio holdings information will be kept secret and confidential and
that such information will be used solely for the purpose of analysis and evaluation of the Funds.
Specifically, the Confidentiality Agreement prohibits anyone in possession of non-public portfolio
holdings information from purchasing or selling securities based on such information, or from
disclosing such information to other persons, except for those who are actually engaged in, and
need to know, such information to perform the analysis or evaluation of the Funds.
Currently, the Trust has arrangements to provide additional disclosure of portfolio holdings
information on a monthly basis with no lag time to the following third parties: ABN-AMRO, Advest,
Inc., AG Edwards & Sons, Inc., Banc of America Securities, LLC, BB&T Capital Markets, Bear Stearns
& Co, Inc., BMO Nesbit Burns, Buckingham Research Group, Inc., Cantor Fitzgerald & Co., Credit
Suisse First Boston, LLC, Davenport & Company, LLC, Empirical Research Partners, Ferris Baker
Watts, Inc., Freidman, Billings, Ramsey & Co., Inc., FTN Financial, Janney Montgomery Scott, LLC,
JP Morgan Securities, Inc., Lehman Brothers, Inc., McDonald Investments, Inc., Merrill Lynch Pierce
Fenner & Smith, Inc., FTN Midwest Research, Moodys Investors Service, Morgan Keegan & Co., Inc.,
Oppenheimer & Company, Piper Jaffray & Co., Raymond James Financial, Inc., RBC Dain Rauscher, Inc,
Robert W. Baird & Co., Smith Barney, Starboard Capital Markets, LLC, Sterne, Agee & Leach, Inc.,
UBS Financial Services, Inc., and Wachovia Bank, N.A., Zions First National Bank, N.A.
98
Currently, the Trust has arrangements to provide additional disclosure of complete portfolio
holdings information on a quarterly basis with no lag to the following third parties: Aon
Consulting, Inc., Callan Associates, Inc., Colonial Consulting, Inc., CRA Business Strategies
Group, Gabriel Roder, Smith & Co., New England Pension Consultants, Prime Buchholz & Associates,
Inc., Towers Perrin HR Services, Watson Wyatt Investment Consulting, Inc., Wilshire Associates
Incorporated.
Currently, the Trust has arrangements to provide additional disclosure of complete portfolio
holdings information on a weekly basis with a lag time of 7 days to S&P.
In addition, the Trusts service providers, such as the custodian, administrator and transfer
agent, may receive portfolio holdings information in connection with their services to the Funds.
Financial printers, proxy voting service providers and pricing information vendors may receive
portfolio holdings information, as necessary, in connection with their services to the Funds.
No compensation or other consideration is paid to or received by any party in connection with the
disclosure of portfolio holdings information, including the Funds, the Adviser and its affiliates
or recipient of the Funds portfolio holdings information.
DESCRIPTION OF SHARES
The Declaration of Trust authorizes the issuance of an unlimited number of shares of the Funds each
of which represents an equal proportionate interest in that Fund with each other share. Shares are
entitled upon liquidation to a pro rata share in the net assets of the Funds.
Shareholders have no preemptive rights. The Declaration of Trust provides that the Trustees of the
Trust may create additional series of shares. All consideration received by the Trust for shares of
any additional series and all assets in which such consideration is invested would belong to that
series and would be subject to the liabilities related thereto. Share certificates representing
shares will not be issued.
VOTING RIGHTS
Each share held entitles the shareholder of record to one vote for each dollar invested. In other
words, each shareholder of record is entitled to one vote for each full share held on the record
date for any shareholder meeting. Each Fund will vote separately on matters relating solely to it.
As a Massachusetts business trust, the Trust is not required, and does not intend, to hold annual
meetings of shareholders. Shareholder approval will be sought, however, for certain changes in the
operation of the Trust and for the election of Trustees under certain circumstances. Under the
Declaration of Trust, the Trustees have the power to liquidate one or more Funds without
shareholder approval. While the Trustees have no present intention of exercising this power, they
may do so if a Fund fails to reach or maintain a viable size or for some other extraordinary
reason.
In addition, a Trustee may be removed by the remaining Trustees or by shareholders at a special
meeting called upon written request of shareholders owning at least 10% of the outstanding shares
of the Trust. In the event that such a meeting is requested, the Trust will provide appropriate
assistance and information to the shareholders requesting the meeting.
SHAREHOLDER LIABILITY
The Trust is an entity of the type commonly known as a Massachusetts business trust. Under
Massachusetts law, shareholders of such a trust could, under certain circumstances, be held
personally liable as partners for the
99
obligations of the trust. Even if, however, the Trust were held to be a partnership, the
possibility of the shareholders incurring financial loss for that reason appears remote because
the Trusts Declaration of Trust contains an express disclaimer of shareholder liability for
obligations of the Trust and requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by or on behalf of the Trust or the Trustees, and
because the Declaration of Trust provides for indemnification out of the Trust property for any
investor held personally liable for the obligations of the Trust.
LIMITATION OF TRUSTEES LIABILITY
The Declaration of Trust provides that a Trustee shall be liable only for his own willful defaults
and, if reasonable care has been exercised in the selection of officers, agents, employees or
investment advisers, shall not be liable for any neglect or wrongdoing of any such person. The
Declaration of Trust also provides that the Trust will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with actual or threatened litigation in which they
may be involved because of their offices with the Trust unless it is determined in the manner
provided in the Declaration of Trust that they have not acted in good faith in the reasonable
belief that their actions were in the best interests of the Trust. However, nothing in the
Declaration of Trust shall protect or indemnify a Trustee against any liability for his willful
misfeasance, bad faith, gross negligence or reckless disregard of his duties. Nothing contained in
this section attempts to disclaim a Trustees individual liability in any manner inconsistent with
the federal securities laws.
CODES OF ETHICS
The Board of the Trust has adopted a Code of Ethics pursuant to Rule 17j-1 under the 1940 Act. In
addition, the Adviser, the Subadvisers and the Distributor have adopted Codes of Ethics pursuant to
Rule 17j-1. These Codes of Ethics apply to the personal investing activities of trustees, officers
and certain employees (access persons). Rule 17j-1 and the Codes of Ethics are designed to
prevent unlawful practices in connection with the purchase or sale of securities by access persons.
The Code of Ethics adopted by each of these entities governs the manner and extent to which
certain persons associated with that entity may invest in securities for their own accounts,
including securities that may be purchased or held by the Trust. Under each Code of Ethics, access
persons are permitted to engage in personal securities transactions, but are required to report
their personal securities transactions for monitoring purposes. In addition, certain access
persons of the Adviser, and the Subadvisers are generally prohibited from acquiring beneficial
ownership of securities offered in connection with initial public offerings. Certain access
persons of the Adviser and Subadvisers are required to obtain approval before investing in limited
offerings. Copies of these Codes of Ethics are on file with the SEC and are available to the
public.
PROXY VOTING
The Board has delegated the responsibility for decisions regarding proxy voting for securities held
by the Funds to the Adviser. The Adviser will vote such proxies in accordance with its proxy
policies and procedures, summaries of which are included in Appendix B to this SAI.
Information regarding how the Funds voted proxies during the most recent twelve-month period ended
June 30 has been filed with the SEC on Form N-PX. The Funds proxy voting record, along with the
Funds full proxy voting policies and procedures, is available on the Funds website at
www.ridgeworthfunds.com, , without charge upon request by calling 1-888-784-3863, or by writing to
the Funds at RidgeWorth Funds, c/o Citi Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, Ohio
43219. The Funds proxy voting record is also available on the SECs website at www.sec.gov.
100
5% AND 25% SHAREHOLDERS
As of July [ ], 2008, the following persons were the only persons who were record owners (or to
the knowledge of the Trust, beneficial owners) of 5% or more of the shares of the respective Funds.
Persons who owned of record or beneficially more than 25% of a Funds outstanding shares may be
deemed to control the Fund within the meaning of the 1940 Act. The nature of ownership for each
position listed is Record unless otherwise indicated. The Trust believes that most of the shares
of the Funds were held for the record owners fiduciary, agency or custodial customers.
[Insert 5% table here]
101
FINANCIAL STATEMENTS
The financial statements for the Trusts fiscal year ended March 31, 2008, including notes thereto
and the reports of [To be included by amendment] thereon, are incorporated into this Statement of
Additional Information by reference from the 2007 Annual Report to Shareholders. Copies of the 2008
Annual Report will be provided without charge to each person receiving this Statement of Additional
Information.
102
A
Nationally Recognized Statistical Rating Organization (or
NRSRO) is a credit rating agency
which issues credit ratings that the U.S. Securities and
Exchange Commission (the SEC) permits
other financial firms to use for certain regulatory purposes.
The nine organizations currently designated as NRSROs are:
Moodys Investor Service (Moodys)
Standard & Poors (S&P)
Fitch Ratings (Fitch)
A. M. Best Company (Best)
Dominion Bond Rating Service, Ltd (DBRS)
Japan Credit Rating Agency, Ltd
R&I, Inc. (R&I)
Egan-Jones Rating Company
LACE Financial
DESCRIPTION OF RATINGS
The following descriptions are summaries of published ratings.
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Description of Commercial Paper Ratings and Short-Term Debt Ratings |
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A-1 |
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This is the highest category by Standard & Poors Ratings Group (S&P) and indicates
that the degree of safety regarding timely payment is strong. Those issues
determined to possess extremely strong safety characteristics are denoted with a
plus sign (+) designation. |
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A-2 |
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Capacity for timely payment on issues with this designation is satisfactory and the
obligation is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than obligations in higher rating categories. |
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PRIME-1 |
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Issues rated Prime-1 (or supporting institutions) by Moodys Investor Services, Inc.
(Moodys) have a superior ability for repayment of senior short-term debt
obligations. Prime-1 repayment ability will often be evidenced by many of the
following characteristics: |
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Leading market positions in well-established industries. |
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High rates of return on funds employed. |
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Conservative capitalization structure with moderate reliance on debt
and ample asset protection. |
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Broad margins in earnings coverage of fixed financial charges and high
internal cash generation. |
A-1
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Well-established access to a range of financial markets and assured
sources of alternate liquidity. |
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F1 |
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(Highest Credit Quality) is the highest commercial rating assigned by Fitch. Paper rated F1 is
regarded as having the strongest capacity for timely payment of financial commitments. |
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F2 |
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(Good Credit Quality) is the second highest commercial paper rating assigned by Fitch which
reflects a satisfactory capacity for timely payment of financial commitments, but the margin of
safety is not as great as in the case of the higher ratings. |
Bests Short-Term Issuer Credit Ratings assess the ability of a rated entity to meet senior
financial commitments on obligations maturing in generally less than one year.
Investment Grade
AMB-1+ (Strongest)
AMB-1 (Outstanding)
AMB-2 (Satisfactory)
AMB-3 (Adequate)
Non-Investment Grade
AMB-4 (Speculative)
d (In Default)
R-1 (high) Short-term debt rated R-1 (high) by DBRS is of the highest credit quality, and
indicates an entity possessing unquestioned ability to repay current liabilities as they fall due.
Entities rated in this category normally maintain strong liquidity positions, conservative debt
levels, and profitability that is both stable and above average. Companies achieving an R-1 (high)
rating are normally leaders in structurally sound industry segments with proven track records,
sustainable positive future results, and no substantial qualifying negative factors. Given the
extremely tough definition DBRS has established for an R-1 (high), few entities are strong enough
to achieve this rating.
R-1 (middle) Short-term debt rated R-1 by DBRS (middle) is of superior credit quality and, in most
cases, ratings in this category differ from R-1 (high) credits by only a small degree. Given the
extremely tough definition DBRS has established for the R-1 (high) category, entities rated R-1
(middle) are also considered strong credits, and typically exemplify above average strength in key
areas of consideration for the timely repayment of short-term liabilities.
R-1 (low) Short-term debt rated R-1 by DBRS (low) is of satisfactory credit quality. The overall
strength and outlook for key liquidity, debt, and profitability ratios is not normally as
favourable as with higher rating categories, but these considerations are still respectable. Any
qualifying negative factors that exist
A-2
are considered manageable, and the entity is normally of sufficient size to have some influence in
its industry.
R-2 (high) Short-term debt rated R-2 by DBRS (high) is considered to be at the upper end of
adequate credit quality. The ability to repay obligations as they mature remains acceptable,
although the overall strength and outlook for key liquidity, debt and profitability ratios is not
as strong as credits rated in the R-1 (low) category. Relative to the latter category, other
shortcomings often include areas such as stability, financial flexibility, and the relative size
and market position of the entity within its industry.
R-2 (middle) Short-term debt rated R-2 by DBRS (middle) is considered to be of adequate credit
quality. Relative to the R-2 (high) category, entities rated R-2 (middle) typically have some
combination of higher volatility, weaker debt or liquidity positions, lower future cash flow
capabilities, or are negatively impacted by a weaker industry. Ratings in this category would be
more vulnerable to adverse changes in financial and economic conditions.
R-2 (low) Short-term debt rated R-2 by DBRS (low) is considered to be at the lower end of adequate
credit quality, typically having some combination of challenges that are not acceptable for an R-2
(middle) credit. However, R-2 (low) ratings still display a level of credit strength that allows
for a higher rating than the R-3 category, with this distinction often reflecting the issuers
liquidity profile.
R-3 Short-term debt rated R-3 by DBRS is considered to be at the lowest end of adequate credit
quality, one step up from being speculative. While not yet defined as speculative, the R-3 category
signifies that although repayment is still expected, the certainty of repayment could be impacted
by a variety of possible adverse developments, many of which would be outside of the issuers
control. Entities in this area often have limited access to capital markets and may also have
limitations in securing alternative sources of liquidity, particularly during periods of weak
economic conditions.
R-4 Short-term debt rated R-4 by DBRS is speculative. R-4 credits tend to have weak liquidity and
debt ratios, and the future trend of these ratios is also unclear. Due to its speculative nature,
companies with R-4 ratings would normally have very limited access to alternative sources of
liquidity. Earnings and cash flow would typically be very unstable, and the level of overall
profitability of the entity is also likely to be low. The industry environment may be weak, and
strong negative qualifying factors are also likely to be present.
R-5 Short-term debt rated R-5 by DBRS is highly speculative. There is a reasonably high level of
uncertainty as to the ability of the entity to repay the obligations on a continuing basis in the
future, especially in periods of economic recession or industry adversity. In some cases, short
term debt rated R-5 may have challenges that if not corrected, could lead to default.
D A security rated D by DBRS implies the issuer has either not met a scheduled payment or the
issuer has made it clear that it will be missing such a payment in the near future. In some cases,
DBRS may not assign a D rating under a bankruptcy announcement scenario, as allowances for grace
periods may exist in the underlying legal documentation. Once assigned, the D rating will continue
as long as the missed payment continues to be in arrears, and until such time as the rating is
suspended, discontinued, or reinstated by DBRS.
R-1, R-2, R-3, R-4, R-5 and D are certification marks of DBRS Limited
A-3
Description of Municipal Note Ratings
Moodys highest rating for state and municipal and other short-term notes is MIG-1 and VMIG-l.
Short-term municipal securities rated MIG-1 or VMIG-1 are of the best quality. They have strong
protection from established cash flows, superior liquidity support, or demonstrated broad-based
access to the market for refinancing or both. Short-term municipal securities rated MIG-2 or
VMIG-2 are of high quality. Margins of protection are ample although not so large as in the
MIG-I/VMIG-2 group.
An S&P note rating reflects the liquidity concerns and market access risks unique to notes. Notes
due in three years or less will likely receive a note rating. Notes maturing beyond three years
will most likely receive a long-term debt rating. The following criteria will be used in making
that assessment:
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Amortization Schedule the larger the final maturity relative to other
maturities, the more likely it will be treated as a note, and |
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Source of Payment the more dependent the issue is on the market for
its refinancing, the more likely it will be treated as a note. |
S&P note rating symbols are as follows:
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SP-1 |
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Strong capacity to pay principal and interest. Those issues
determined to possess a very strong capacity to pay a debt service is
given a plus (+) designation. |
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SP-2 |
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Satisfactory capacity to pay principal and interest with some
vulnerability to adverse financial and economic changes over the term
of the votes. |
Description of Corporate Bond Ratings
Moodys
Bonds which are rated Aaa by Moodys are judged to be of the best quality. They carry the smallest
degree of investment risk and are generally referred to as gilt edge. Interest payments are
protected by a large, or an exceptionally stable, margin and principal is secure. While the
various protective elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues. Bonds rated Aa by Moodys are
judged by Moodys to be of high quality by all standards. Together with bonds rated Aaa, they
comprise what are generally known as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than the Aaa securities. Bonds which are rated A possess
many favorable investment attributes and are to be considered as upper-medium grade obligations.
Factors giving security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Bonds which are rated Baa are considered as medium-grade obligations (i.e., they are neither highly
protected nor poorly secured). Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be characteristically unreliable over
any great length of time. Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well. Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well-assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during both good and bad
times over the future. Uncertainty of position characterizes bonds in this class. Bonds which are
rated B generally lack characteristics of the desirable investment. Assurance of
A-4
interest and principal payments or of maintenance of other terms of the contract over any long
period of time may be small.
Moodys bond ratings, where specified, are applied to financial contracts, senior bank obligations
and insurance company senior policyholder and claims obligations with an original maturity in
excess of one-year. Obligations relying upon support mechanisms such as letters-of-credit and
bonds of indemnity are excluded unless explicitly rated.
Obligations of a branch of a bank are considered to be domiciled in the country in which the branch
is located. Unless noted as an exception, Moodys rating on a banks ability to repay senior
obligations extends only to branches located in countries which carry a Moodys sovereign rating.
Such branch obligations are rated at the lower of the banks rating or Moodys sovereign rating for
the bank deposits for the country in which the branch is located.
When the currency in which an obligation is denominated is not the same as the currency of the
country in which the obligation is domiciled, Moodys ratings do not incorporate an opinion as to
whether payment of the obligation will be affected by the actions of the government controlling the
currency of denomination. In addition, risk associated with bilateral conflicts between an
investors home country and either the issuers home country or the country where an issuer branch
is located are not incorporated into Moodys ratings.
Moodys makes no representation that rated bank obligations or insurance company obligations are
exempt from registration under the 1933 Act or issued in conformity with any other applicable law
or regulation. Nor does Moodys represent that any specific bank or insurance company obligation
is legally enforceable or is a valid senior obligation of a rated issuer.
Moodys ratings are opinions, not recommendations to buy or sell, and their accuracy is not
guaranteed. A rating should be weighed solely as one factor in an investment decision and you
should make your own study and evaluation of any issuer whose securities or debt obligations you
consider buying or selling.
S&P
Bonds rated AAA have the highest rating S&P assigns to a debt obligation. Such a rating indicates
an extremely strong capacity to pay principal and interest. Bonds rated AA also qualify as
high-quality debt obligations. Capacity to pay principal and interest is very strong, and in the
majority of instances they differ from AAA issues only in small degree. Debt rated A has a strong
capacity to pay interest and repay principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than debt in higher rated
categories.
Debt rated BBB is regarded as having an adequate capacity to pay interest and repay principal.
Whereas it normally exhibits adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher rated categories. Debt rated BB and B is
regarded as having predominantly speculative characteristics with respect to capacity to pay
interest and repay principal. BB indicates the least degree of speculation and C the highest
degree of speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk exposures to adverse
conditions. Debt rated BB has less near-term vulnerability to default than other speculative grade
debt. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or
economic conditions that could lead to inadequate capacity to meet timely interest and principal
payments. The BB rating category is also used for debt subordinated to senior debt that is assigned
an actual or implied BBB- rating. Debt rate B has greater vulnerability to default but presently
has the capacity to meet interest
A-5
payments and principal repayments. Adverse business, financial, or economic conditions would
likely impair capacity or willingness to pay interest and repay principal. The B rating category
also is used for debt subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.
Fitch
Bonds rated AAA by Fitch are judged by Fitch to be strictly high grade, broadly marketable,
suitable for investment by trustees and fiduciary institutions liable to but slight market
fluctuation other than through changes in the money rate. The prime feature of an AAA bond is a
showing of earnings several times or many times interest requirements, with such stability of
applicable earnings that safety is beyond reasonable question whatever changes occur in conditions.
Bonds rated AA by Fitch are judged by Fitch to be of safety virtually beyond question and are
readily salable, whose merits are not unlike those of the AAA class, but whose margin of safety is
less strikingly broad. The issue may be the obligation of a small company, strongly secured but
influenced as to rating by the lesser financial power of the enterprise and more local type market.
Bonds rated A are considered to be investment grade and of high credit quality. The obligors
ability to pay interest and repay principal is considered to be strong, but may be more vulnerable
to adverse changes in economic conditions and circumstances than bonds with higher ratings.
Bonds rated BBB are considered to be investment grade and of satisfactory credit quality. The
obligors ability to pay interest and repay principal is considered to be adequate. Adverse
changes in economic conditions and circumstances, however, are more likely to have adverse impact
on these bonds, and therefore impair timely payment. The likelihood that the ratings of these
bonds will fall below investment grade is higher than for bonds with higher ratings. Bonds rated
BB are considered speculative. The obligors ability to pay interest and repay principal may be
affected over time by adverse economic changes. However, business and financial alternatives can
be identified which could assist the obligor in satisfying its debt service requirements. Bonds
rated B are considered highly speculative. While bonds in this class are currently meeting debt
service requirements, the probability of continued timely payment of principal and interest
reflects the obligors limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.
Best
Financial Strength and Issuer Credit Ratings
Bests Financial Strength Ratings (FSR) represent the companys assessment of an insurers ability
to meet its obligations to policyholders. The rating process involves quantitative and qualitative
reviews of a companys balance sheet, operating performance and business profile, including
comparisons to peers and industry standards and assessments of an insurers operating plans,
philosophy and management. The ratings formulae are proprietary.
The ratings scale includes six secure ratings:
A++, A+ (Superior)
A, A- (Excellent)
B++, B+ (Good)
The scale also includes ten ratings for companies deemed vulnerable:
B, B- (Fair)
C++, C+ (Marginal)
C, C- (Weak)
A-6
D (Poor)
E (Under Regulatory Supervision)
F (In Liquidation)
S (Rating Suspended)
Best also assigns five Not Rated Categories (NR) to insurers that the company may, nonetheless,
follow and report on in other respects:
NR-1: Insufficient Data
NR-2: Insufficient Size and/or Operating Experience
NR-3: Rating Procedure Inapplicable
NR-4: Company Request
NR-5: Not Formally Followed
Long-Term Credit Ratings
Long-Term Credit Ratings assess the ability of an insurance company, holding company or other legal
entity to meet its senior obligations. Ratings from aaa to ccc sometimes are enhanced with a
"+ (plus) or - (minus) to indicate whether the issuer is near the top or bottom of a category,
and may be designated as Under Review (u) when recent positive, negative or developing events
dictate the rating may be subject to change in the near-term.
Insurance Company Issuer Credit Ratings
Investment Grade
aaa (Exceptional)
aa (Very Strong)
a (Strong)
bbb (Adequate)
Non-Investment Grade
bb (Fair)
b (Marginal)
ccc, cc (Weak)
c (Poor)
d (In Default)
Non-Insurance Company Issuer Credit Ratings
Investment Grade
A-7
aaa (Exceptional)
aa (Very Strong)
a (Strong)
bbb (Adequate)
Non-Investment Grade
bb (Speculative)
b (Very Speculative)
ccc, cc, c (Extremely Speculative)
d (In Default)
Rating Scale: Bond and Long-Term Debt
DBRS
The DBRS long-term debt rating scale is meant to give an indication of the risk that a borrower
will not fulfill its full obligations in a timely manner, with respect to both interest and
principal commitments. Every DBRS rating is based on quantitative and qualitative considerations
relevant to the borrowing entity. Each rating category is denoted by the subcategories high and
low. The absence of either a high or low designation indicates the rating is in the middle
of the category. The AAA and D categories do not utilize high, middle, and low as
differential grades.
AAA Long-term debt rated AAA is of the highest credit quality, with exceptionally strong protection
for the timely repayment of principal and interest. Earnings are considered stable, the structure
of the industry in which the entity operates is strong, and the outlook for future profitability is
favourable. There are few qualifying factors present that would detract from the performance of the
entity. The strength of liquidity and coverage ratios is unquestioned and the entity has
established a credible track record of superior performance. Given the extremely high standard that
DBRS has set for this category, few entities are able to achieve a AAA rating.
AA Long-term debt rated AA is of superior credit quality, and protection of interest and principal
is considered high. In many cases they differ from long-term debt rated AAA only to a small degree.
Given the extremely restrictive definition DBRS has for the AAA category, entities rated AA are
also considered to be strong credits, typically exemplifying above-average strength in key areas of
consideration and unlikely to be significantly affected by reasonably foreseeable events.
A Long-term debt rated A is of satisfactory credit quality. Protection of interest and principal
is still substantial, but the degree of strength is less than that of AA rated entities. While A
is a respectable rating, entities in this category are considered to be more susceptible to adverse
economic conditions and have greater cyclical tendencies than higher-rated securities.
BBB Long-term debt rated BBB is of adequate credit quality. Protection of interest and principal is
considered acceptable, but the entity is fairly susceptible to adverse changes in financial and
economic conditions, or there may be other adverse conditions present which reduce the strength of
the entity and its rated securities.
A-8
BB Long-term debt rated BB is defined to be speculative and non-investment grade, where the degree
of protection afforded interest and principal is uncertain, particularly during periods of economic
recession. Entities in the BB range typically have limited access to capital markets and additional
liquidity support. In many cases, deficiencies in critical mass, diversification, and competitive
strength are additional negative considerations.
B Long-term debt rated B is considered highly speculative and there is a reasonably high level of
uncertainty as to the ability of the entity to pay interest and principal on a continuing basis in
the future, especially in periods of economic recession or industry adversity.
CCC CC C Long-term debt rated in any of these categories is very highly speculative and is in
danger of default of interest and principal. The degree of adverse elements present is more severe
than long-term debt rated B. Long-term debt rated below B often have features which, if not
remedied, may lead to default. In practice, there is little difference between these three
categories, with CC and C normally used for lower ranking debt of companies for which the senior
debt is rated in the CCC to B range.
D A security rated D implies the issuer has either not met a scheduled payment of interest or
principal or that the issuer has made it clear that it will miss such a payment in the near future.
In some cases, DBRS may not assign a D rating under a bankruptcy announcement scenario, as
allowances for grace periods may exist in the underlying legal documentation. Once assigned, the D
rating will continue as long as the missed payment continues to be in arrears, and until such time
as the rating is suspended, discontinued, or reinstated by DBRS.
Long-Term Rating Scales Comparison
Investment Grade
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Moodys
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Aaa
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Aa1
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Aa2
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Aa3
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A1
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A2
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A3
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Baa1
|
|
Baa2
|
|
Baa3 |
S&P
|
|
AAA
|
|
AA+
|
|
AA
|
|
AA-
|
|
A+
|
|
A
|
|
A-
|
|
BBB+
|
|
BBB
|
|
BBB- |
Comp
|
|
AAA
|
|
AA+
|
|
AA
|
|
AA-
|
|
A+
|
|
A
|
|
A-
|
|
BBB+
|
|
BBB
|
|
BBB- |
Fitch
|
|
AAA
|
|
AA+
|
|
AA
|
|
AA-
|
|
A+
|
|
A
|
|
A-
|
|
BBB+
|
|
BBB
|
|
BBB- |
DBRS
|
|
AAA
|
|
AAH
|
|
AA
|
|
AAL
|
|
AH
|
|
A
|
|
AL
|
|
BBBH
|
|
BBB
|
|
BBBL |
R&I
|
|
AAA
|
|
AA+
|
|
AA
|
|
AA-
|
|
A+
|
|
A
|
|
A-
|
|
BBB+
|
|
BBB
|
|
BBB- |
JCR
|
|
AAA
|
|
AA+
|
|
AA
|
|
AA-
|
|
A+
|
|
A
|
|
A-
|
|
BBB+
|
|
BBB
|
|
BBB- |
MI
|
|
AAA
|
|
n/a
|
|
AA
|
|
n/a
|
|
n/a
|
|
A
|
|
n/a
|
|
n/a
|
|
BBB
|
|
n/a |
Non-Investment Grade
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Moodys
|
|
Ba1
|
|
Ba2
|
|
Ba3
|
|
B1
|
|
B2
|
|
B3
|
|
Caa1
|
|
Caa2
|
|
Caa3
|
|
Ca
|
|
C
|
|
n/a |
S&P
|
|
BB+
|
|
BB
|
|
BB-
|
|
B+
|
|
B
|
|
B-
|
|
CCC+
|
|
CCC
|
|
CCC-
|
|
CC
|
|
C
|
|
D |
Comp
|
|
BB+
|
|
BB
|
|
BB-
|
|
B+
|
|
B
|
|
B-
|
|
CCC+
|
|
CCC
|
|
CCC-
|
|
CC
|
|
C
|
|
DDD |
Fitch
|
|
BB+
|
|
BB
|
|
BB-
|
|
B+
|
|
B
|
|
B-
|
|
CCC+
|
|
CCC
|
|
CCC-
|
|
CC
|
|
C
|
|
D |
A-9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DBRS
|
|
BBH
|
|
BB
|
|
BBL
|
|
BH
|
|
B
|
|
BL
|
|
CCCH
|
|
CCC
|
|
CCCL
|
|
CC
|
|
C
|
|
D |
R&I
|
|
BB+
|
|
BB
|
|
BB-
|
|
B+
|
|
B
|
|
B-
|
|
CCC+
|
|
CCC
|
|
CCC-
|
|
CC+
|
|
CC
|
|
CC- |
JCR
|
|
BB+
|
|
BB
|
|
BB-
|
|
B+
|
|
B
|
|
B-
|
|
n/a
|
|
CCC
|
|
n/a
|
|
CC
|
|
C
|
|
D |
MI
|
|
n/a
|
|
BB
|
|
n/a
|
|
n/a
|
|
B
|
|
n/a
|
|
n/a
|
|
CCC
|
|
n/a
|
|
CC
|
|
n/a
|
|
DDD |
Short Term Rating Scales Comparison
Investment Grade
|
|
|
|
|
|
|
Moodys
|
|
P-1
|
|
P-2
|
|
P-3 |
S&P
|
|
A-1+, A-1
|
|
A-2
|
|
A-3 |
Fitch
|
|
F-1+, F-1
|
|
F-2
|
|
F-3 |
DBRS
|
|
R-1 (high),
R-1 (mid),
R-1 (low)
|
|
R-2 (high), R-2 (mid),
R-2 (low)
|
|
R-3 (high),
R-3 (mid),
R-3 (low) ** |
R&I
|
|
a-1+, a-1 *
|
|
a-2 *
|
|
a-3 * |
JCR
|
|
J-1+, J-1
|
|
J-2
|
|
J-3 |
MI
|
|
M-1
|
|
M-2
|
|
M-3 |
Non-Investment Grade
|
|
|
|
|
|
|
|
|
Moodys
|
|
NP
|
|
n/a
|
|
n/a
|
|
n/a |
S&P
|
|
B, B-1, B-2, B-3
|
|
C
|
|
D
|
|
n/a |
Fitch
|
|
B
|
|
C
|
|
D
|
|
n/a |
DBRS
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a |
R&I
|
|
b *
|
|
c *
|
|
n/a
|
|
n/a |
JCR
|
|
NJ
|
|
n/a
|
|
n/a
|
|
n/a |
MI
|
|
M-4 *
|
|
M-5 *
|
|
M-6 *
|
|
M-D * |
|
|
|
* |
|
Not Classified Investment Grade or Non-Investment Grade |
|
** |
|
Classified as Non-Investment Grade |
A-10
RIDGEWORTH CAPITAL MANAGEMENT, INC. PROXY DISCLOSURE TO THE RIDGEWORTH FUNDS SHAREHOLDERS
Dear Shareholders:
Securities and Exchange Commission rules under the Investment Advisers Act of 1940 and the
Investment Company Act of 1940 address an investment advisers fiduciary obligation to its clients
when the adviser has authority to vote their proxies. Under our current contractual agreement,
RidgeWorth Capital Management, Inc. (RidgeWorth), is authorized to vote proxies on behalf of the
RidgeWorth Funds.
The rules require an investment company to adopt policies and procedures reasonably designed to
ensure that the fund: 1) votes proxies in the best interests of clients; 2) discloses information
about those policies and procedures and how to obtain copies; 3) discloses how clients may obtain
information about proxy votes cast; and 4) maintains appropriate records relating to actual proxy
voting.
The RidgeWorth Funds board has delegated voting authority to RidgeWorth and accordingly has
adopted RidgeWorths proxy voting policies.
RidgeWorths existing Proxy Voting Committee (Committee) is structured to seek to ensure
compliance with all of the requirements. After an extensive review, the Committee determined that
the use of a professional proxy voting administration servicing agency would be the most efficient
and effective course of action to accommodate certain portions of the regulations. The Committee
conducted comprehensive due diligence of the most established and capable proxy voting servicing
agencies in the industry and chose to hire the Institutional Shareholder Services division (ISS)
of Risk Metrics Group as RidgeWorths agent to assist us with meeting the administrative, clerical,
functional, and recordkeeping aspects of our fiduciary obligations.
Several of the determining factors in choosing ISS as an agent to provide such services included
its excellent research tools and advanced, state of the art technical capabilities and large scale
system support required to accommodate an advisor of our size.
The Committee recognizes that each proxy vote must be evaluated on its own merits. Factors such as
a companys organizational structure, executive and operational management, structure of the board
of directors, corporate culture and governance process, and the impact of economic, environmental
and social implications remain key elements in all voting decisions. Management believes that it
is in the best interest of shareholders to abstain from voting shares of securities held in the
RidgeWorth International Equity 130/30 Fund in countries that participate in share blocking.
B-1
To address material conflicts of interest, as defined by SEC regulations, involving RidgeWorth
relationships, the Committee will engage the services of an independent fiduciary voting service to
vote on any proxies for securities for which the Committee determines a material conflict of
interest exists so as to provide shareholders with the most beneficial and objective proxy voting
possible.
Material conflicts might occur, for example, (1) in the case of securities of a company where a
director or officer may serve as an independent director on RidgeWorths, SunTrust Banks, Inc.
(SunTrust) or a related SunTrust affiliates board of directors or (2) where an issuer has
substantial banking or other financial relationships with RidgeWorth and/or SunTrust, or a SunTrust
affiliate.
If the Committee engages an independent fiduciary voting service to perform the voting analysis,
ISS, as our agent for administrative, clerical and recordkeeping proxy services, will then vote the
shares according to the directions of the independent fiduciary. RidgeWorth will have no power to
participate in, alter or change the decision or final vote for any proxy matters entrusted to the
properly appointed independent fiduciary.
Please be assured that although RidgeWorth has engaged ISS to assist with physical proxy voting
matters, we retain the primary obligation of proxy voting and will review all issues and actively
monitor all information prior to determining each vote placed on behalf of shareholders. RidgeWorth
will continue to utilize available resources in order to make well-informed, qualified proxy vote
decisions.
Further information, such as copies of RidgeWorths Proxy Policies and Procedures and voting
records of the RidgeWorth Funds, may be obtained without charge by contacting the RidgeWorth Funds
by telephone at 1-800-874-4770, Option 5 or by visiting www.ridgeworthfunds.com. The policies and
procedures are also available in the RidgeWorth Funds Statement of Additional Information. Actual
voting records will also be filed and available on the SECs website.
Again, please know that, as with all matters relating to the RidgeWorth Funds, we at RidgeWorth
take our fiduciary proxy voting obligations very seriously, and will continue to do our utmost to
protect the interests of each and every shareholder.
Regards,
RidgeWorth Capital Management, Inc.
B-2
RidgeWorth Capital Management, Inc. Proxy Policy
RidgeWorth Capital Management, Inc. (RidgeWorth) has a Proxy Committee (Committee) that is
responsible for establishing policies and a procedure designed to ensure the firm ethically and
effectively discharges its fiduciary obligation to vote all applicable proxies on behalf of all
discretionary client accounts and funds. Annually (or more often as needed), the Committee will
review, reaffirm and/or amend guidelines, strategies and proxy policies for all domestic and
international client accounts, funds and product lines.
After an extensive review of established service providers including size, experience and technical
capabilities, RidgeWorth contracted with the Institutional Shareholder Services (ISS) of Risk
Metrics Group as its agent to provide certain administrative, clerical, functional recordkeeping
and support services related to the firms proxy voting processes/procedures, which include, but
are not limited to:
|
1. |
|
The collection and coordination of proxy material from each custodian for each
RidgeWorth clients account, including RidgeWorths managed fund clients. |
|
|
2. |
|
The facilitation of the mechanical act of proxy voting, reconciliation, and
disclosure for each RidgeWorth clients accounts, including RidgeWorths fund clients, in
accordance with RidgeWorths proxy policies and the Committees direction. |
|
|
3. |
|
Required record keeping and voting record retention of all RidgeWorth proxy voting on
behalf RidgeWorths clients, including RidgeWorths fund clients. |
As reflected in RidgeWorths proxy policies, the Committee will affirmatively vote proxies for
proposals that it interprets are deemed to be in the best economic interest of its clients as
shareholders and beneficiaries to those actions.
The Committee will retain the ability to consider client specific preferences and/or develop and
apply criteria unique to its client base and product lines, where appropriate. As needed, this
information will be communicated to ISS as RidgeWorths agent to ensure that the relative shares
proxies will be voted accordingly. The Committee has reviewed ISS capabilities as agent for the
administerial services above and is confident in its abilities to effectively provide these
services. The Committee will monitor such capability on an ongoing basis.
An Independent, Objective Approach to Proxy Issues
In the absence of express contractual provisions to the contrary, the Committee will vote proxies
for all RidgeWorth discretionary investment management clients and RidgeWorth managed funds, such
as the RidgeWorth Funds.
As indicated above, the Committee utilizes the services of ISS, an independent third party agent,
to assist with facilitating the administrative, clerical, functional and recordkeeping proxy duties
and to assist in managing certain aspects of our proxy obligations. Accordingly, RidgeWorth
maintains its own proxy policies for U.S. domestic and global proxy voting issues, as well as
guidelines applicable to Taft Hartley plans and relationships. ERISA accounts will be voted in
accordance with the U.S. domestic proxy policy as ERISA specific guidelines and requirements are
incorporated into this policy.
RidgeWorth provides and maintains the following standard proxy voting policies:
B-3
|
|
|
RidgeWorth U.S. Domestic Proxy Policy (applied to both ERISA and Non-ERISA related
accounts) |
|
|
|
|
RidgeWorth Taft Hartley Proxy Policy |
|
|
|
|
RidgeWorth Global/International Proxy Policy |
These policies are available as described below. Both brief and extended summaries are available
for the RidgeWorth Taft Hartley Proxy Policy and the RidgeWorth Global/International Proxy Policy.
The Committees process includes a review and evaluation of relevant, information related to the
issuers proxy, applying the firms proxy voting policy in a prudent and appropriate manner
ensuring votes are cast in the best interest of our clients.
Under the RidgeWorth Global/International Proxy Policy the Committee generally votes in a manner
similar to that recommended by ISS for an accounts international holdings including, to the extent
permitted by law, ERISA accounts international holdings.* In this regard the Committee has
reviewed and will monitor ISS capabilities and conflict policies with respect to international
securities proxy vote recommendations.
Exceptions to Policy
The RidgeWorth Proxy Policies and guidelines as outlined herein generally will not be applied where
RidgeWorth has further delegated discretionary investment management and the authority to vote
shares to a properly appointed subadvisor, such as may be the case in some managed separate
accounts, wrap programs, and funds.
In those situations proxy votes cast by the subadvisor will be governed by the subadvisors proxy
voting policies and procedures.
Conflicts of Interest
Due to its diversified client base, numerous product lines, independent board of directors, and
affiliation with SunTrust Banks, Inc., and its subsidiaries, the Committee may determine a
potential conflict exists in connection with a proxy vote based on the SEC guidelines. In such
instances, the Committee will review the potential conflict to determine if it is material.
Examples of material conflicts of interest which may arise could include those where the shares to
be voted involve:
|
1. |
|
Common stock of SunTrust Banks, Inc., The Coca-Cola Company, Inc., and/or other public
corporate issuers with which either RidgeWorth or SunTrust Banks, Inc. or its affiliates,
may have a similar on-going non-investment management associated relationship. |
|
|
2. |
|
An issuer with a director, officer or employee who presently serves as an independent
director on the board of RidgeWorth or SunTrust Banks, Inc. or any of its affiliates. |
|
|
3. |
|
An issuer having substantial and numerous banking, investment or other financial
relationships with RidgeWorth, SunTrust Banks, Inc. or its affiliates. |
|
|
4. |
|
A director or senior officer of RidgeWorth or SunTrust Banks, Inc. serving on the board
of a publicly held company. |
B-4
|
5. |
|
A direct common stock ownership position of five percent (5%) or greater held
individually by RidgeWorth or in conjunction with SunTrust Banks, Inc. and/or its
affiliates |
Although RidgeWorth utilizes a pre-determined proxy voting policy, occasions may arise in which a
conflict of interest could be deemed to be material. In this case, the Committee will determine
the most fair and reasonable procedure to be followed in order to properly address all conflict
concerns. The Committee may employ one or more of the options listed below:
|
1. |
|
Retain an independent fiduciary to vote the shares. |
|
|
2. |
|
Send the proxy material to the client (in the case of mutual funds, the funds
shareholders) so he or she may vote the proxies. |
Although RidgeWorth does its best to alleviate or diffuse known conflicts, there is no guarantee
that all situations have been or will be mitigated through proxy policy incorporation.
Securities Lending Program
RidgeWorth also manages assets for several clients (including mutual funds, such as the RidgeWorth
Funds) who engage in security lending programs. A typical security lending program such as the
RidgeWorth Securities Lending Program is where the clients or funds lend equities and/or
fixed-income assets from their accounts or portfolio to various approved-broker-dealers against
cash collateral (102% of loan value) and earn incremental income by: 1.) extracting intrinsic value
from each loan; and, 2.) generating investment income through reinvestment activities involving
cash collateral. Consistent with SEC guidelines, the Committee will generally refrain from voting
securities loaned out under this type of lending arrangement when the costs and lost revenue to the
client or fund combined with the administrative effects of recalling the securities outweigh the
benefit of voting the proxy. In addition, the Committee must make a good-faith determination that
the individual proxy ballot decisions would not materially impact the portfolio managers desire to
retain the position in the portfolio. and that the entire position of loaned shares votes would
not significantly affect the overall voting outcome. The Committee will rely on the portfolio
managers input to make such decisions. Furthermore, absent compelling economic and/or security
related research or news, the Committee will generally not consider recalling shares unless total
beneficial ownership under management is greater than 4.55%
Under the current RIdgeWorth Securities Lending Program, RidgeWorth is required to notify the
Custodian to recall securities on loan 10 business days prior to the record date or as soon as
reasonably possible thereafter if RidgeWorth wishes to vote proxy on the securities so as to ensure
that they are in Custodians possession by the voting deadline.
Additional Information
RidgeWorth clients:
Extended summaries of RidgeWorth Capital Management, Inc.s U.S. Domestic Proxy Policy (includes
ERISA related accounts,) Taft Hartley Proxy Policy, and Global/International Proxy Policy and
voting records are available to clients upon request. (Complete copies are quite voluminous but are
also available.) For this information, or to obtain information about specific voting issues,
please contact RidgeWorth Capital Management, Inc, Attn: Proxy Voting Committee Administrator, 50
Hurt Plaza, 14th Floor, Atlanta, Georgia, 30303, by telephone at 404.827.6177, or via
e-mail at: PMP.operations@ridgeworth.com.
B-5
RidgeWorth Funds and RidgeWorth Variable Trust shareholders:
Shareholders of the RidgeWorth Funds or the RidgeWorth Variable Trust may access this information
by contacting the RidgeWorth by telephone at 1-888-784-3863 or by visiting www.ridgeworthfunds.com.
|
|
|
* |
|
With the exception of the RidgeWorth International Equity 130/30 Fund. Management believes that
it is in the best interest of shareholders to abstain from voting shares in countries that
participate in share blocking. |
B-6
2008 RidgeWorth Capital Management, Inc. International Proxy Voting Guidelines
The following is a concise summary of general policies for voting global proxies. In addition,
RidgeWorth has country- and market-specific policies, which are not captured below.
Financial Results/Director and Auditor Reports
Vote FOR approval of financial statements and director and auditor reports, unless:
|
|
|
there are concerns about the accounts presented or audit procedures used; or |
|
|
|
the company is not responsive to shareholder questions about specific items that should
be publicly disclosed. |
Appointment of Auditors and Auditor Compensation
Vote FOR the reelection of auditors and proposals authorizing the board to fix auditor fees,
unless:
|
|
|
there are serious concerns about the accounts presented or the audit procedures used; |
|
|
|
the auditors are being changed without explanation; or |
|
|
|
non audit-related fees are substantial or are routinely in excess of standard annual
audit fees. |
Vote AGAINST the appointment of external auditors if they have previously served the company in an
executive capacity or can otherwise be considered affiliated with the company.
Appointment of Internal Statutory Auditors
Vote FOR the appointment or reelection of statutory auditors, unless:
|
|
|
there are serious concerns about the statutory reports presented or the audit procedures
used; |
|
|
|
questions exist concerning any of the statutory auditors being appointed; or |
|
|
|
the auditors have previously served the company in an executive capacity or can
otherwise be considered affiliated with the company. |
Allocation of Income
Vote FOR approval of the allocation of income, unless:
|
|
|
the dividend payout ratio has been consistently below 30 percent without adequate
explanation; or |
|
|
|
the payout is excessive given the companys financial position. |
Stock (Scrip) Dividend Alternative
Vote FOR most stock (scrip) dividend proposals.
Vote AGAINST proposals that do not allow for a cash option unless management demonstrates that the
cash option is harmful to shareholder value.
Amendments to Articles of Association
Vote amendments to the articles of association on a CASE-BY-CASE basis.
Change in Company Fiscal Term
Vote FOR resolutions to change a companys fiscal term unless a companys motivation for the change
is to postpone its AGM.
Lower Disclosure Threshold for Stock Ownership
Vote AGAINST resolutions to lower the stock ownership disclosure threshold below five percent
unless specific reasons exist to implement a lower threshold.
B-7
Amend Quorum Requirements
Vote proposals to amend quorum requirements for shareholder meetings on a CASE-BY-CASE basis.
Transact Other Business
Vote AGAINST other business when it appears as a voting item.
Director Elections
Vote FOR management nominees in the election of directors, unless:
|
|
|
Adequate disclosure has not been provided in a timely manner; |
|
|
|
There are clear concerns over questionable finances or restatements; |
|
|
|
There have been questionable transactions with conflicts of interest; |
|
|
|
There are any records of abuses against minority shareholder interests; and |
|
|
|
The board fails to meet minimum corporate governance standards. |
Vote FOR individual nominees unless there are specific concerns about the individual, such as
criminal wrongdoing or breach of fiduciary responsibilities.
Vote AGAINST shareholder nominees unless they demonstrate a clear ability to contribute positively
to board deliberations.
Vote AGAINST individual directors if they cannot provide an explanation for repeated absences at
board meetings (in countries where this information is disclosed).
Vote AGAINST labor representatives if the sit on either the audit or compensation committee, as
they are not required to be on those committees.
Director Compensation
Vote FOR proposals to award cash fees to non-executive directors unless the amounts are excessive
relative to other companies in the country or industry.
Vote non-executive director compensation proposals that include both cash and share-based
components on a CASE-BY-CASE basis.
Vote proposals that bundle compensation for both non-executive and executive directors into a
single resolution on a CASE-BY-CASE basis.
Vote AGAINST proposals to introduce retirement benefits for non-executive directors.
Discharge of Board and Management
Vote FOR discharge of the board and management, unless:
|
|
|
there are serious questions about actions of the board or management for the year in
question; or |
|
|
|
legal action is being taken against the board by other shareholders. |
Vote AGAINST proposals to remove approval of discharge of board and management from the agenda.
Director, Officer, and Auditor Indemnification and Liability Provisions
Vote proposals seeking indemnification and liability protection for directors and officers on a
CASE-BY-CASE basis.
Vote AGAINST proposals to indemnify auditors.
B-8
Board Structure
Vote FOR proposals to fix board size.
Vote AGAINST mandatory retirement ages for directors.
Vote AGAINST proposals to alter board structure or size in the context of a fight for control of
the company or the board.
Share Issuance Requests
General Issuances:
Vote FOR issuance requests with preemptive rights to a maximum of 100 percent over currently issued
capital.
Vote FOR issuance requests without preemptive rights to a maximum of 20 percent of currently issued
capital.
Specific Issuances:
Vote on a CASE-BY-CASE basis on all requests, with or without preemptive rights.
Increases in Authorized Capital
Vote FOR nonspecific proposals to increase authorized capital up to 100 percent over the current
authorization unless the increase would leave the company with less than 30 percent of its new
authorization outstanding.
Vote FOR specific proposals to increase authorized capital to any amount, unless:
|
|
|
the specific purpose of the increase (such as a share-based acquisition or merger) does
not meet RidgeWorths guidelines for the purpose being proposed; or |
|
|
|
|
the increase would leave the company with less than 30 percent of its new authorization
outstanding after adjusting for all proposed issuances. |
Vote AGAINST proposals to adopt unlimited capital authorizations.
Reduction of Capital
Vote FOR proposals to reduce capital for routine accounting purposes unless the terms are
unfavorable to shareholders.
Vote proposals to reduce capital in connection with corporate restructuring on a CASE-BYCASE basis.
Capital Structures
Vote FOR resolutions that seek to maintain or convert to a one share, one vote capital structure.
Vote AGAINST requests for the creation or continuation of dual class capital structures or the
creation of new or additional supervoting shares.
Preferred Stock
Vote FOR the creation of a new class of preferred stock or for issuances of preferred stock up to
50 percent of issued capital unless the terms of the preferred stock would adversely affect the
rights of existing shareholders.
Vote FOR the creation/issuance of convertible preferred stock as long as the maximum number of
common shares that could be issued upon conversion meets RidgeWorths guidelines on equity issuance
requests.
B-9
Vote AGAINST the creation of a new class of preference shares that would carry superior voting
rights to the common shares.
Vote AGAINST the creation of blank check preferred stock unless the board clearly states that the
authorization will not be used to thwart a takeover bid.
Vote proposals to increase blank check preferred authorizations on a CASE-BY-CASE basis.
Debt Issuance Requests
Vote nonconvertible debt issuance requests on a CASE-BY-CASE basis, with or without preemptive
rights.
Vote FOR the creation/issuance of convertible debt instruments as long as the maximum number of
common shares that could be issued upon conversion meets RidgeWorths guidelines on equity issuance
requests.
Vote FOR proposals to restructure existing debt arrangements unless the terms of the restructuring
would adversely affect the rights of shareholders.
Pledging of Assets for Debt
Vote proposals to approve the pledging of assets for debt on a CASE-BY-CASE basis.
Increase in Borrowing Powers
Vote proposals to approve increases in a companys borrowing powers on a CASE-BY-CASE basis.
Share Repurchase Plans
Vote FOR share repurchase plans, unless:
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clear evidence of past abuse of the authority is available; or |
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the plan contains no safeguards against selective buybacks. |
Reissuance of Shares Repurchased
Vote FOR requests to reissue any repurchased shares unless there is clear evidence of abuse of this
authority in the past.
Capitalization of Reserves for Bonus Issues/Increase In Par Value
Vote FOR requests to capitalize reserves for bonus issues of shares or to increase par value.
Reorganizations/Restructurings
Vote reorganizations and restructurings on a CASE-BY-CASE basis.
Mergers and Acquisitions
Vote mergers and acquisitions on a CASE-BY-CASE basis.
For every M&A analysis, ISS reviews publicly available information as of the date of the report
and evaluates the merits and drawbacks of the proposed transaction, balancing various and sometimes
countervailing factors including:
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Valuation Is the value to be received by the target shareholders (or paid by the
acquirer) reasonable? While the fairness opinion may provide an initial starting point for
assessing valuation reasonableness, ISS places emphasis on the offer premium, market
reaction, and strategic rationale. |
B-10
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Market reaction How has the market responded to the proposed deal? A negative market
reaction will cause ISS to scrutinize a deal more closely. |
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Strategic rationale Does the deal make sense strategically? From where is the value
derived? Cost and revenue synergies should not be overly aggressive or optimistic, but
reasonably achievable. Management should also have a favorable track record of successful
integration of historical acquisitions. |
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Conflicts of interest Are insiders benefiting from the transaction disproportionately
and inappropriately as compared to non-insider shareholders? ISS will consider whether any
special interests may have influenced these directors and officers to support or recommend
the merger. |
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Governance Will the combined company have a better or worse governance profile than
the current governance profiles of the respective parties to the transaction? If the
governance profile is to change for the worse, the burden is on the company to prove that
other issues (such as valuation) outweigh any deterioration in governance. |
Vote AGAINST if the companies do not provide sufficient information upon request to make an
informed voting decision.
Mandatory Takeover Bid Waivers
Vote proposals to waive mandatory takeover bid requirements on a CASE-BY-CASE basis.
Reincorporation Proposals
Vote reincorporation proposals on a CASE-BY-CASE basis.
Expansion of Business Activities
Vote FOR resolutions to expand business activities unless the new business takes the company into
risky areas.
Related-Party Transactions
Vote related-party transactions on a CASE-BY-CASE basis.
Compensation Plans
Vote compensation plans on a CASE-BY-CASE basis.
Antitakeover
Mechanisms
Vote AGAINST all antitakeover proposals unless they are structured in such a way that they give
shareholders the ultimate decision on any proposal or offer.
Shareholder Proposals
Vote all shareholder proposals on a CASE-BY-CASE basis.
Vote FOR proposals that would improve the companys corporate governance or business profile at a
reasonable cost.
Vote AGAINST proposals that limit the companys business activities or capabilities or result in
significant costs being incurred with little or no benefit.
B-11
Proxy Voting Policies Updated 03/31/2008
RIDGEWORTH Capital Management, Inc.
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Ballot Item / Proposal |
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[F=For, A=Against, |
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W=Withhold, C=Case by |
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Number |
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Chapter |
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Section |
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Case, ABS=Abstain] |
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Vote |
1. 0.
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Operational Items
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Adjourn Meeting
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To provide management with
the authority to adjourn an
annual or special meeting.
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F |
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1.1.
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Operational Items
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Amend Quorum Requirements
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To reduce quorum requirements
for shareholder meetings
below a majority of the
shares outstanding
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A |
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1.2.
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Operational Items
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Amend Minor Bylaws
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To make housekeeping changes
(updates or corrections) to
bylaw or charter
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F |
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1.3.
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Operational Items
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Change Company Name
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To change the corporate name
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F |
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1.4.
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Operational Items
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Date, Time, or Location of
Annual Meeting
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Management proposals to
change the date/time/location
of the annual meeting
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F |
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1.5.
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Operational Items
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Date, Time, or Location of
Annual Meeting
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Shareholder proposals To
change the date/time/location
of the annual meeting
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A |
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1.6.
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Operational Items
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Auditors
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To ratify auditors (except as described below)
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F |
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1.6.a
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Operational Items
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Auditors
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To ratify auditors if
non-audit fees (tax and
other) exceed audit and audit
related fees combined. In
circumstances where Other
fees include fees related to
initial public offerings,
bankruptcy emergence, and
spin-offs, and the company
makes public disclosure of
the amount and nature of
those fees which ISS
determines to be an exception
to the standard non-audit
fee category, then such fees
may be excluded from the
non-audit fees considered in
determining the ratio of
non-audit to
audit/audit-related fees for
purposes of determining
whether non-audit fees are
excessive.
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A |
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1.7.
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Operational Items
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Auditors
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Shareholder proposals asking
companies to prohibit their
auditors from engaging in
non-audit services
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A |
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1.8.
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Operational Items
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Auditors
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Shareholder proposals to
require audit firm rotation
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A |
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1.9.
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Operational Items
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Transact Other Business
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To approve other business
when it appears as voting
item
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A |
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2. 0.
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Board of Directors
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Voting on Director Nominees
in Uncontested Elections
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Director nominees who are not
described below
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F |
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B-12
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Ballot Item / Proposal |
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[F=For, A=Against, |
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W=Withhold, C=Case by |
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Chapter |
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Section |
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Case, ABS=Abstain] |
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Vote |
2.1.
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Board of Directors
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Voting on Director Nominees
in Uncontested Elections
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Director nominees who have
Implemented or renewed a
dead-hand or modified
dead-hand poison pill unless
a shareholder vote will occur
within twelve months of its
adoption or in the case of an
newly public company, does
not commit to put the pill to
a shareholder vote within 12
months following the IPO
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W |
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2.2.
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Board of Directors
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Voting on Director Nominees
in Uncontested Elections
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Director nominees who have
ignored a shareholder
proposal that is approved by
a majority of the votes cast
for two consecutive years
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W |
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2.3.
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Board of Directors
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Voting on Director Nominees
in Uncontested Elections
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Director nominees who have
failed to act on takeover
offers where the majority of
the shareholders tendered
their shares
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W |
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2.4.
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Board of Directors
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Voting on Director Nominees
in Uncontested Elections
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Director nominees who enacted
egregious corporate
governance policies or failed
to replace management as
appropriate
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W |
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2.5.
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Board of Directors
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Age Limits
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To limit the tenure of
outside directors either
through term limits or
mandatory retirement ages.
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A |
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2.6.
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Board of Directors
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Board Size
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To fix the board size or
designate a range for the
board size
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F |
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2.7.
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Board of Directors
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Board Size
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To give management the
ability to alter the size of
the board outside of a
specified range without
shareholder approval
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A |
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2.8.
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Board of Directors
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Classification/Declassification
of the
Board
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Management and shareholder
proposals to classify the
board
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C |
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2.9.
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Board of Directors
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Classification/Declassification
of the
Board
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Management and shareholder
proposals to repeal
classified boards and to
elect all directors annually.
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F |
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2.10.
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Board of Directors
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Cumulative Voting
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To eliminate cumulative
voting.
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F |
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2.11.
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Board of Directors
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Cumulative Voting
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To restore or permit
cumulative voting.
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A |
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2.12.
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Board of Directors
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Director and Officer
Indemnification and
Liability Protection
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Proposals on director and
officer indemnification and
liability protection not
particularly described below.
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C |
B-13
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Ballot Item / Proposal |
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[F=For, A=Against, |
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W=Withhold, C=Case by |
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Number |
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Chapter |
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Section |
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Case, ABS=Abstain] |
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Vote |
2.13.
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Board of Directors
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Director and Officer
Indemnification and
Liability Protection
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To eliminate entirely
directors and officers
liability for monetary
damages for violating the
duty of care.
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A |
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2.14.
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Board of Directors
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Director and Officer
Indemnification and
Liability Protection
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To expand coverage beyond
just legal expenses to acts,
such as negligence, that are
more serious violations of
fiduciary obligation than
mere carelessness
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A |
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2.15.
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Board of Directors
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Director and Officer
Indemnification and
Liability Protection
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To expand coverage in cases
when a directors or
officers legal defense was
unsuccessful if: (1) the
director was found to have
acted in good faith and in a
manner that he reasonably
believed was in the best
interests of the company, and
(2) only if the directors
legal expenses would be
covered.
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F |
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2.16.
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Board of Directors
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Establish/ Amend Nominee
Qualifications
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To establish or amend
director qualifications
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A |
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2.17.
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Board of Directors
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Establish/ Amend Nominee
Qualifications
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Shareholder proposals
requiring two candidates per
board seat
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A |
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2.18.
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Board of Directors
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Filling Vacancies/ Removal
of Directors
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To provide that directors may
be removed only for cause.
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A |
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2.19.
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Board of Directors
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Filling Vacancies/ Removal
of Directors
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To restore shareholder
ability to remove directors
with or without cause.
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F |
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2.20.
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Board of Directors
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Filling Vacancies/ Removal
of Directors
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To provide that only
continuing directors may
elect replacements to fill
board vacancies.
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A |
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2.21.
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Board of Directors
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Filling Vacancies/ Removal
of Directors
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To permit shareholders to
elect directors to fill board
vacancies.
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F |
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2.22.
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Board of Directors
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Independent Chairman
(Separate Chairman/CEO)
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To recommend that the
positions of chairman and CEO
be combined.
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C |
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2.23.
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|
Board of Directors
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Independent Chairman
(Separate Chairman/CEO
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|
To recommend that the
positions of chairman and CEO
be separate and distinct
positions held by 2 different
individuals.
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A |
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B-14
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Ballot Item / Proposal |
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[F=For, A=Against, |
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W=Withhold, C=Case by |
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Number |
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Chapter |
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Section |
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Case, ABS=Abstain] |
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Vote |
2.24.
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Board of Directors
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Majority of Independent
Directors/ Establishment of
Committees
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Shareholder proposals to
require that a majority or
more of directors be
independent
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F |
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2.25.
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|
Board of Directors
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Majority of Independent
Directors/ Establishment of
Committees
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Shareholder proposals asking
that board audit,
compensation, and/or
nominating committees be
composed exclusively of
independent directors
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F |
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2.26.
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Board of Directors
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Open Access
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Shareholder proposals asking
for open access
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A |
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2.27.
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Board of Directors
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Stock Ownership Requirements
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|
Shareholder proposals that
mandate a minimum amount of
stock that directors must own
in order to qualify as a
director or to remain on the
board
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A |
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2.28.
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|
Board of Directors
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|
Stock Ownership Requirements
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|
Shareholder proposals asking
that the company adopt a
holding or retention period
for its executives (for
holding stock after the
vesting or exercise of equity
awards)
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A |
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2.29.
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Board of Directors
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|
Term Limits
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|
Shareholder or management
proposals to limit the tenure
of outside directors
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A |
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2.30.
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|
Board of Directors
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|
Majority Voting Standard
|
|
Shareholder proposals
requesting a majority voting
standard on election of
directors
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F |
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3. 0.
|
|
Proxy Contests
|
|
Voting for Director
Nominees in Contested
Elections
|
|
Votes in a contested election
of directors
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|
C |
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3.1.a
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Proxy Contests
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|
Reimbursing Proxy
Solicitation Expenses
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|
To reimburse proxy
solicitation expenses if
dissident wins
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|
F |
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3.1.b
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|
Proxy Contests
|
|
Reimbursing Proxy
Solicitation Expenses
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|
To reimburse proxy
solicitation expenses (unless
described above)
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A |
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3.2.
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|
Proxy Contests
|
|
Confidential Voting
|
|
Shareholder proposals
requesting that corporations
adopt confidential voting,
use independent vote
tabulators and use
independent inspectors of
election
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A |
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3.3.
|
|
Proxy Contests
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|
Confidential Voting
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|
Management proposals to adopt
confidential voting.
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|
A |
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4. 0.
|
|
Antitakeover
Defenses and Voting
Related Issues
|
|
Advance Notice Requirements
for Shareholder
Proposals/Nominations
|
|
Advance notice proposals
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|
F |
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B-15
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Ballot Item / Proposal |
|
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[F=For, A=Against, |
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|
W=Withhold, C=Case by |
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Number |
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Chapter |
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Section |
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Case, ABS=Abstain] |
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Vote |
4.1.
|
|
Antitakeover
Defenses and Voting
Related Issues
|
|
Amend Bylaws without
Shareholder Consent
|
|
Proposals giving the board
exclusive authority to amend
the bylaws
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|
F |
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4.2.
|
|
Antitakeover
Defenses and Voting
Related Issues
|
|
Amend Bylaws without
Shareholder Consent
|
|
Proposals giving the board
the ability to amend the
bylaws in addition to
shareholders
|
|
F |
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4.3.
|
|
Antitakeover
Defenses and Voting
Related Issues
|
|
Poison Pills
|
|
Shareholder proposals that
ask a company to submit its
poison pill for shareholder
ratification
|
|
F |
|
4.4.
|
|
Antitakeover
Defenses and Voting
Related Issues
|
|
Poison Pills
|
|
Shareholder proposals asking
that any future pill be put
to a shareholder vote
|
|
F |
|
4.5.a
|
|
Antitakeover
Defenses and Voting
Related Issues
|
|
Poison Pills
|
|
Management proposals to
ratify a poison pill if a
Company is trading below book
value and plan contains a
reasonable qualifying off
clause (i.e. is chewable)
|
|
F |
|
4.5.b
|
|
Antitakeover
Defenses and Voting
Related Issues
|
|
Poison Pills
|
|
Management proposals to
ratify a poison pill (except
as described above)
|
|
A |
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4.6.
|
|
Antitakeover
Defenses and Voting
Related Issues
|
|
Shareholder Ability to Act
by Written Consent
|
|
To restrict or prohibit
shareholder ability to take
action by written consent
|
|
A |
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4.7.
|
|
Antitakeover
Defenses and Voting
Related Issues
|
|
Shareholder Ability to Act
by Written Consent
|
|
To allow or make easier
shareholder action by written
consent
|
|
F |
|
4.8.
|
|
Antitakeover
Defenses and Voting
Related Issues
|
|
Shareholder Ability to Call
Special Meetings
|
|
To restrict or prohibit
shareholder ability to call
special meetings.
|
|
A |
|
4.9.
|
|
Antitakeover
Defenses and Voting
Related Issues
|
|
Shareholder Ability to Call
Special Meetings
|
|
To remove restrictions on the
right of shareholders to act
independently of management.
|
|
F |
|
4.10.
|
|
Antitakeover
Defenses and Voting
Related Issues
|
|
Supermajority Vote
Requirements
|
|
To require a supermajority
shareholder vote pertaining
to issues other than election
of directors.
|
|
A |
|
4.11.
|
|
Antitakeover
Defenses and Voting
Related Issues
|
|
Supermajority Vote
Requirements
|
|
To lower supermajority vote
requirements pertaining to
issues other than election of
directors.
|
|
F |
B-16
|
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|
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Ballot Item / Proposal |
|
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[F=For, A=Against, |
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W=Withhold, C=Case by |
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Number |
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Chapter |
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Section |
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Case, ABS=Abstain] |
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Vote |
5.0.
|
|
Mergers and
Corporate
Restructurings
|
|
Appraisal Rights
|
|
To restore, or provide
shareholders with, rights of
appraisal.
|
|
A |
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5.1.
|
|
Mergers and
Corporate
Restructurings
|
|
Asset Purchases
|
|
On asset purchase proposals
|
|
C |
|
5.2.
|
|
Mergers and
Corporate
Restructurings
|
|
Asset Sales
|
|
Asset sales
|
|
C |
|
5.3.
|
|
Mergers and
Corporate
Restructurings
|
|
Bundled Proposals
|
|
Bundled or conditioned
proxy proposals
|
|
C |
|
5.4.
|
|
Mergers and
Corporate
Restructurings
|
|
Conversion of Securities
|
|
Proposals regarding
conversion of securities,
absent penalties or likely
bankruptcy.
|
|
C |
|
5.5.
|
|
Mergers and
Corporate
Restructurings
|
|
Conversion of Securities
|
|
Proposals regarding
conversion of securities, if
it is expected that the
company will be subject to
onerous penalties or will be
forced to file for bankruptcy
if the transaction is not
approved.
|
|
F |
|
5.6.
|
|
Mergers and
Corporate
Restructurings
|
|
Corporate Reorganization
|
|
Proposals to increase common
and/or preferred shares and
to issue shares as part of a
debt restructuring plan,
absent likely bankruptcy.
|
|
C |
|
5.7.
|
|
Mergers and
Corporate
Restructurings
|
|
Corporate Reorganization
|
|
Proposals to increase common
and/or preferred shares and
to issue shares as part of a
debt restructuring plan where
bankruptcy is likely if the
transaction is not approved
|
|
F |
|
5.8.
|
|
Mergers and
Corporate
Restructurings
|
|
Formation of Holding Company
|
|
To form a holding company
|
|
C |
|
5.9.
|
|
Mergers and
Corporate
Restructurings
|
|
Going Private Transactions
(LBOs and Minority Squeeze
outs)
|
|
To make the company private
rather than public
|
|
C |
|
5.10.
|
|
Mergers and
Corporate
Restructurings
|
|
Joint Ventures
|
|
To form joint ventures
|
|
C |
|
5.11.
|
|
Mergers and
Corporate
Restructurings
|
|
Liquidations
|
|
To liquidate when bankruptcy
is not likely
|
|
C |
|
5.12.
|
|
Mergers and
Corporate
Restructurings
|
|
Liquidations
|
|
To liquidate when bankruptcy
is likely
|
|
F |
B-17
|
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|
|
Ballot Item / Proposal |
|
|
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|
|
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|
|
[F=For, A=Against, |
|
|
|
|
|
|
|
|
W=Withhold, C=Case by |
|
|
Number |
|
Chapter |
|
Section |
|
Case, ABS=Abstain] |
|
Vote |
5.13.
|
|
Mergers and
Corporate
Restructurings
|
|
Mergers and Acquisitions/Issuance
of Shares to
Facilitate Merger or
Acquisition
|
|
To merge with or acquire
another company
|
|
C |
|
5.14.
|
|
Mergers and
Corporate
Restructurings
|
|
Private Placements/Warrants/Convertible
Debentures
|
|
To issue a private placement
security when bankruptcy is
not likely
|
|
C |
|
5.15.
|
|
Mergers and
Corporate
Restructurings
|
|
Private Placements/Warrants/Convertible
Debentures
|
|
To issue a private placement
security when bankruptcy is
likely
|
|
F |
|
5.16.
|
|
Mergers and
Corporate
Restructurings
|
|
Spin-offs
|
|
To spin off a unit or line of
business
|
|
C |
|
5.17.
|
|
Mergers and
Corporate
Restructurings
|
|
Value Maximization Proposals
|
|
To maximize shareholder value
by hiring a financial advisor
to explore strategic
alternatives, selling the
company or liquidating the
company and distributing the
proceeds to shareholders.
|
|
C |
|
6. 0.
|
|
State of
Incorporation
|
|
Control Share Acquisition
Provisions
|
|
To opt out of control share
acquisition statutes
|
|
F |
|
6.1.
|
|
State of
Incorporation
|
|
Control Share Acquisition
Provisions
|
|
To amend the charter to
include control share
acquisition provisions.
|
|
A |
|
6.2.
|
|
State of
Incorporation
|
|
Control Share Acquisition
Provisions
|
|
To restore voting rights to
the control shares.
|
|
F |
|
6.3.
|
|
State of
Incorporation
|
|
Control Share Cash out
Provisions
|
|
To opt out of control share
cash out statutes.
|
|
F |
|
6.4.
|
|
State of
Incorporation
|
|
Disgorgement Provisions
|
|
To opt out of state
disgorgement provisions.
|
|
F |
|
6.5.
|
|
State of
Incorporation
|
|
Fair Price Provisions
|
|
To adopt fair price provisions
|
|
C |
|
6.6.
|
|
State of
Incorporation
|
|
Fair Price Provisions
|
|
To adopt fair price
provisions with shareholder
vote requirements greater
than a majority of
disinterested shares.
|
|
A |
|
6.7.
|
|
State of
Incorporation
|
|
Freeze Out
|
|
proposals to opt out of state
freeze out provisions
|
|
F |
B-18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ballot Item / Proposal |
|
|
|
|
|
|
|
|
[F=For, A=Against, |
|
|
|
|
|
|
|
|
W=Withhold, C=Case by |
|
|
Number |
|
Chapter |
|
Section |
|
Case, ABS=Abstain] |
|
Vote |
6.8.
|
|
State of
Incorporation
|
|
Greenmail
|
|
To adopt anti greenmail
charter of bylaw amendments
or otherwise restrict a
companys ability to make
greenmail payments.
|
|
F |
|
6.9.
|
|
State of
Incorporation
|
|
Greenmail
|
|
To adopt anti greenmail
proposals when they are
bundled with other charter or
bylaw amendments.
|
|
F |
|
6.10.
|
|
State of
Incorporation
|
|
Reincorporation Proposals
|
|
To change a companys state
of incorporation
|
|
C |
|
6.11.
|
|
State of
Incorporation
|
|
Stakeholder Provisions
|
|
To consider non-shareholder
constituencies or other
non-financial effects when
evaluating a merger or
business combination.
|
|
A |
|
6.12.
|
|
State of
Incorporation
|
|
State Anti takeover Statutes
|
|
To opt in or out of state
takeover statutes (including
control share acquisition
statutes, control share
cash-out statutes, freeze out
provisions, fair price
provisions, stakeholder laws,
poison pill endorsements,
severance pay and labor
contract provisions, anti
greenmail provisions, and
disgorgement provisions).
|
|
C |
|
7. 0.
|
|
Capital Structure
|
|
Adjustments to Par Value of
Common Stock
|
|
Management proposals to
reduce or eliminate the par
value of common stock.
|
|
F |
|
7.1.
|
|
Capital Structure
|
|
Common Stock Authorization
|
|
To increase the number of
shares of common stock
authorized for issuance
|
|
C |
|
7.2.
|
|
Capital Structure
|
|
Common Stock Authorization
|
|
To increase the number of
authorized shares of the
class of stock that has
superior voting rights.
|
|
C |
|
7.3.
|
|
Capital Structure
|
|
Common Stock Authorization
|
|
To approve increases beyond
the allowable increase when a
companys shares are in
danger of being de-listed or
if a companys ability to
continue to operate as a
going concern is uncertain
|
|
F |
|
7.4.
|
|
Capital Structure
|
|
Dual-class Stock
|
|
Proposals to create a new
class of common stock with
superior voting rights
|
|
A |
|
7.5.
|
|
Capital Structure
|
|
Dual-class Stock
|
|
To create a new class of
nonvoting or sub-voting
common stock if:
It is intended for
financing purposes with
minimal or no dilution to
current shareholders
It is not designed
to preserve the voting power
of an insider or significant
shareholder
|
|
F |
|
7.6.
|
|
Capital Structure
|
|
Issue Stock for Use with
Rights Plan
|
|
To increase authorized common
stock for the explicit
purpose of implementing a
shareholder rights plan
(poison pill).
|
|
A |
|
B-19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ballot Item / Proposal |
|
|
|
|
|
|
|
|
[F=For, A=Against, |
|
|
|
|
|
|
|
|
W=Withhold, C=Case by |
|
|
Number |
|
Chapter |
|
Section |
|
Case, ABS=Abstain] |
|
Vote |
7.7.
|
|
Capital Structure
|
|
Preemptive Rights
|
|
Shareholder proposals that
seek preemptive rights
|
|
C |
|
7.8.
|
|
Capital Structure
|
|
Preferred Stock
|
|
To authorizing the creation
of new classes of preferred
stock with unspecified
voting, conversion, dividend
distribution, and other
rights (blank check
preferred stock).
|
|
A |
|
7.9.
|
|
Capital Structure
|
|
Preferred Stock
|
|
To create declawed blank
check preferred stock (stock
that cannot be used as a
takeover defense).
|
|
F |
|
7.10.
|
|
Capital Structure
|
|
Preferred Stock
|
|
To authorize preferred stock
in cases where the company
specifies the voting,
dividend, conversion, and
other rights of such stock
and the terms of the
preferred stock appear
reasonable
|
|
F |
|
7.11.
|
|
Capital Structure
|
|
Preferred Stock
|
|
To increase the number of
blank check preferred stock
authorized for issuance when
no shares have been issued or
reserved for a specific
purpose.
|
|
A |
|
7.12.
|
|
Capital Structure
|
|
Preferred Stock
|
|
To increase the number of
blank check preferred shares
|
|
A |
|
7.13.
|
|
Capital Structure
|
|
Recapitalization
|
|
Recapitalizations
(reclassifications of
securities)
|
|
C |
|
7.14.
|
|
Capital Structure
|
|
Reverse Stock Splits
|
|
Management proposals to
implement a reverse stock
split when the number of
authorized shares will be
proportionately reduced
|
|
F |
|
7.15.
|
|
Capital Structure
|
|
Reverse Stock Splits
|
|
Management proposals to
implement a reverse stock
split to avoid delisting.
|
|
F |
|
7.16.
|
|
Capital Structure
|
|
Reverse Stock Splits
|
|
To implement a reverse stock
splits that do not
proportionately reduce the
number of shares authorized
or considered going dark
transactions.
|
|
C |
|
7.17.
|
|
Capital Structure
|
|
Share Repurchase Programs
|
|
Management proposals to
institute open-market share
repurchase plans in which all
shareholders may participate
on equal terms
|
|
F |
|
7.17.a
|
|
Capital Structure
|
|
Share Repurchase Programs
|
|
Management proposals to
institute open-market share
repurchase plans in which
derivatives may be utilized
|
|
C |
|
7.18.
|
|
Capital Structure
|
|
Stock Distributions: Splits
and Dividends
|
|
Management proposals to
increase the common share
authorization for a stock
split or share dividend,
provided that the increase in
authorized shares would not
result in an excessive number
of shares available for
issuance
|
|
F |
|
7.19.
|
|
Capital Structure
|
|
Tracking Stock
|
|
To authorize the creation of
tracking stock
|
|
C |
|
8.0.
|
|
Executive and
Director
Compensation
|
|
Executive Compensation
|
|
To approve executive
compensation plans or plan
amendments.
|
|
C |
B-20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ballot Item / Proposal |
|
|
|
|
|
|
|
|
[F=For, A=Against, |
|
|
|
|
|
|
|
|
W=Withhold, C=Case by |
|
|
Number |
|
Chapter |
|
Section |
|
Case, ABS=Abstain] |
|
Vote |
8.1.
|
|
Executive and
Director
Compensation
|
|
Executive Compensation
|
|
To approve compensation plans
that expressly permit the
re-pricing of underwater
stock options without
shareholder approval.
|
|
A |
|
8.2.
|
|
Executive and
Director
Compensation
|
|
Executive Compensation
|
|
Plans in which the CEO
participates if there is a
disconnect between the CEOs
pay and company performance
|
|
A |
|
8.3.
|
|
Executive and
Director
Compensation
|
|
Director Compensation
|
|
Plans for directors
|
|
C |
|
8.4.a
|
|
Executive and
Director
Compensation
|
|
Stock Plans in Lieu of Cash
|
|
Plans which provide
participants with the option
of taking all or a portion of
their cash compensation in
the form of stock if
conversion price is greater
than 90% of fair market
value.
|
|
F |
|
8.4.b
|
|
Executive and
Director
Compensation
|
|
Stock Plans in Lieu of Cash
|
|
Plans which provide
participants with the option
of taking all or a portion of
their cash compensation in
the form of stock (unless as
described above)
|
|
A |
|
8.5.
|
|
Executive and
Director
Compensation
|
|
Stock Plans in Lieu of Cash
|
|
Plans which provide a
dollar-for-dollar cash for
stock exchange
|
|
F |
|
8.6.
|
|
Executive and
Director
Compensation
|
|
Stock Plans in Lieu of Cash
|
|
Plans which do not provide a
dollar-for-dollar cash for
stock exchange
|
|
A |
|
8.7.
|
|
Executive and
Director
Compensation
|
|
Director Retirement Plans
|
|
Retirement plans for
non-employee directors.
|
|
A |
|
8.8.
|
|
Executive and
Director
Compensation
|
|
Director Retirement Plans
|
|
Shareholder proposals to
eliminate retirement plans
for non-employee directors
|
|
F |
|
8.9.
|
|
Executive and
Director
Compensation
|
|
Management Proposals
Seeking Approval to
Re-price Options
|
|
On management proposals
seeking approval to re-price
options
|
|
A |
|
8.10.
|
|
Executive and
Director
Compensation
|
|
Voting on Compensation
|
|
Shareholder proposals to
submit executive compensation
to a vote.
|
|
A |
|
8.11.
|
|
Executive and
Director
Compensation
|
|
Employee Stock Purchase
Plans
|
|
Employee stock purchase plans
not described below
|
|
C |
|
8.12.
|
|
Executive and
Director
Compensation
|
|
Employee Stock Purchase
Plans
|
|
Employee stock purchase plans
where all of the following
apply
Purchase price is
at least 85 percent of fair
market value
Offering period is
27 months or less |
|
F |
B-21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ballot Item / Proposal |
|
|
|
|
|
|
|
|
[F=For, A=Against, |
|
|
|
|
|
|
|
|
W=Withhold, C=Case by |
|
|
Number |
|
Chapter |
|
Section |
|
Case, ABS=Abstain] |
|
Vote |
8.13.
|
|
Executive and
Director
Compensation
|
|
Employee Stock Purchase
Plans
|
|
Employee stock purchase plans
where any of the following
apply
Purchase price is
less than 85 percent of fair
market value, or
Offering period is
greater than 27 months
|
|
A |
|
8.14.
|
|
Executive and
Director
Compensation
|
|
Incentive Bonus Plans and
Tax Deductibility Proposals
|
|
Simply amend
shareholder-approved
compensation plans to include
administrative features or
place a cap on the annual
grants any one participant
may receive to comply with
the provisions of Section
162(m).
|
|
F |
|
8.15.
|
|
Executive and
Director
Compensation
|
|
Incentive Bonus Plans and
Tax Deductibility Proposals
|
|
To add performance goals to
existing compensation plans
to comply with the provisions
of Section 162(m)
|
|
F |
|
8.16.
|
|
Executive and
Director
Compensation
|
|
Incentive Bonus Plans and
Tax Deductibility Proposals
|
|
Plans to increase shares
reserved and to qualify for
favorable tax treatment under
the provisions of Section
162(m)
|
|
F |
|
8.17.
|
|
Executive and
Director
Compensation
|
|
Incentive Bonus Plans and
Tax Deductibility Proposals
|
|
Cash or cash and stock bonus
plans that are submitted to
shareholders for the purpose
of exempting compensation
from taxes under the
provisions of Section 162(m)
if no increase in shares is
requested.
|
|
F |
|
8.18.
|
|
Executive and
Director
Compensation
|
|
Employee Stock Ownership
Plans (ESOPs)
|
|
To implement an ESOP or
increase authorized shares
for existing ESOPs, unless
the number of shares
allocated to the ESOP is
excessive (more than five
percent of outstanding
shares.)
|
|
F |
|
8.19.
|
|
Executive and
Director
Compensation
|
|
401(k) Employee Benefit
Plans
|
|
To implement a 401(k) savings
plan for employees.
|
|
F |
|
8.20.
|
|
Executive and
Director
Compensation
|
|
Shareholder Proposals
Regarding Executive and
Director Pay
|
|
Shareholder proposals seeking
additional disclosure of
executive and director pay
information,
|
|
A |
|
8.21.
|
|
Executive and
Director
Compensation
|
|
Shareholder Proposals
Regarding Executive and
Director Pay
|
|
Shareholder proposals seeking
to set absolute levels on
compensation or otherwise
dictate the amount or form of
compensation.
|
|
A |
|
8.22.
|
|
Executive and
Director
Compensation
|
|
Shareholder Proposals
Regarding Executive and
Director Pay
|
|
Shareholder proposals
requiring director fees be
paid in stock only
|
|
A |
|
B-22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ballot Item / Proposal |
|
|
|
|
|
|
|
|
[F=For, A=Against, |
|
|
|
|
|
|
|
|
W=Withhold, C=Case by |
|
|
Number |
|
Chapter |
|
Section |
|
Case, ABS=Abstain] |
|
Vote |
8.23.
|
|
Executive and
Director
Compensation
|
|
Shareholder Proposals
Regarding Executive and
Director Pay
|
|
Shareholder proposals to put
option re-pricings to a
shareholder vote
|
|
F |
|
8.24.
|
|
Executive and
Director
Compensation
|
|
Shareholder Proposals
Regarding Executive and
Director Pay
|
|
For all other shareholder
proposals regarding executive
and director pay
|
|
C |
|
8. 25
|
|
Executive and
Director
Compensation
|
|
Performance-Based Stock
Options
|
|
Shareholder proposals
advocating the use of
performance-based stock
options (indexed,
premium-priced, and
performance-vested options).
|
|
C |
|
8.26.
|
|
Executive and
Director
Compensation
|
|
Golden Parachutes and
Executive Severance
Agreements
|
|
Shareholder proposals to
require golden parachutes or
executive severance
agreements to be submitted
for shareholder ratification
|
|
A |
|
8.27.
|
|
Executive and
Director
Compensation
|
|
Golden Parachutes and
Executive Severance
Agreements
|
|
Proposals to ratify or cancel
golden parachutes.
|
|
C |
|
8.28.
|
|
Executive and
Director
Compensation
|
|
Pension Plan Income
Accounting
|
|
Shareholder proposals to
exclude pension plan income
in the calculation of
earnings used in determining
executive
bonuses/compensation
|
|
F |
|
8.29.
|
|
Executive and
Director
Compensation
|
|
Supplemental Executive
Retirement Plans (SERPs)
|
|
Shareholder proposals
requesting to put
extraordinary benefits
contained in SERP agreements
to a shareholder vote
|
|
A |
|
8.31.
|
|
Executive and
Director
Compensation
|
|
Equity Based Compensation
Plans
|
|
Management proposals for
equity plans
|
|
C |
|
8.32
|
|
Executive and
Director
Compensation
|
|
Transferable Stock Options
|
|
Management and shareholder
proposals for new on-going
Transferable Stock option
plans if the total cost of
the companys equity plans is
less than the companys
allowable cap.
|
|
F |
|
9. 0.
|
|
Social and
Environmental
Issues
|
|
CONSUMER ISSUES AND PUBLIC
SAFETY: Animal Rights
|
|
To phase out the use of
animals in product testing
|
|
A |
|
9.1.
|
|
Social and
Environmental
Issues
|
|
CONSUMER ISSUES AND PUBLIC
SAFETY: Animal Rights
|
|
Report on animal welfare
|
|
A |
|
B-23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ballot Item / Proposal |
|
|
|
|
|
|
|
|
[F=For, A=Against, |
|
|
|
|
|
|
|
|
W=Withhold, C=Case by |
|
|
Number |
|
Chapter |
|
Section |
|
Case, ABS=Abstain] |
|
Vote |
9.2.
|
|
Social and
Environmental
Issues
|
|
CONSUMER ISSUES AND PUBLIC
SAFETY: Animal Rights
|
|
Adopt animal welfare policy
|
|
A |
|
9.3.
|
|
Social and
Environmental
Issues
|
|
CONSUMER ISSUES AND PUBLIC
SAFETY:
Drug Pricing
|
|
To implement price restraints
on pharmaceutical products
|
|
A |
|
9.4.
|
|
Social and
Environmental
Issues
|
|
CONSUMER ISSUES AND PUBLIC
SAFETY:
Drug Reimportation
|
|
Proposals requesting that
companies report on the
financial and legal
impact of their policies
regarding prescription drug
reimportation or proposals
requesting that companies
adopt specific policies to
encourage or constrain
prescription drug
reimportation
|
|
A |
|
9.5.
|
|
Social and
Environmental
Issues
|
|
CONSUMER ISSUES AND PUBLIC
SAFETY:
Genetically Modified Foods
|
|
To voluntarily label
genetically engineered (GE) ingredients in their
products or alternatively
to provide interim
labeling and eventually
eliminate GE ingredients
due to the costs and
feasibility of labeling
and/or phasing out the use
of GE ingredients.
|
|
A |
|
9.6.
|
|
Social and
Environmental
Issues
|
|
Genetically Modified Foods
|
|
A report on the
feasibility of labeling
products containing GE
ingredients
|
|
A |
|
9.7.
|
|
Social and
Environmental
Issues
|
|
Genetically Modified Foods
|
|
A report on the financial,
legal, and environmental
impact of continued use of
GE ingredients/seeds
|
|
A |
|
9.8.
|
|
Social and
Environmental
Issues
|
|
Genetically Modified Foods
|
|
Report on the health and
environmental effects of
genetically modified
organisms (GMOs)
|
|
A |
|
9.9.
|
|
Social and
Environmental
Issues
|
|
Genetically Modified Foods
|
|
To completely phase out GE
ingredients from the
companys products or
proposals asking for
reports outlining the
steps necessary to
eliminate GE ingredients
from the companys
products. Such resolutions
presuppose that there are
proven health risks to GE
ingredients
|
|
A |
|
9.10.
|
|
Social and
Environmental
Issues
|
|
CONSUMER ISSUES AND
PUBLIC SAFETY:
Handguns
|
|
Reports on a companys
policies aimed at
curtailing gun violence in
the United States
|
|
A |
|
B-24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ballot Item / Proposal |
|
|
|
|
|
|
|
|
[F=For, A=Against, |
|
|
|
|
|
|
|
|
W=Withhold, C=Case by |
|
|
Number |
|
Chapter |
|
Section |
|
Case, ABS=Abstain] |
|
Vote |
9.11.
|
|
Social and
Environmental
Issues
|
|
CONSUMER ISSUES AND
PUBLIC SAFETY:
HIV/AIDS
|
|
Reports outlining the
impact of the health
pandemic (HIV/AIDS,
malaria and tuberculosis)
on the companys
Sub-Saharan operations
|
|
A |
|
9.12.
|
|
Social and
Environmental
Issues
|
|
HIV/AIDS
|
|
To establish, implement,
and report on a standard
of response to the
HIV/AIDS, tuberculosis and
malaria health pandemic in
Africa and other
developing countries
|
|
A |
|
9.13.
|
|
Social and
Environmental
Issues
|
|
CONSUMER ISSUES AND
PUBLIC SAFETY:
Predatory Lending
|
|
Reports on the companys
procedures for preventing
predatory lending,
including the
establishment of a board
committee for oversight,
|
|
A |
|
9.14.
|
|
Social and
Environmental
Issues
|
|
CONSUMER ISSUES AND
PUBLIC SAFETY: Tobacco
|
|
Proposals seeking stronger
product warnings
|
|
A |
|
9.15.
|
|
Social and
Environmental
Issues
|
|
Tobacco
|
|
Proposals asking that the
companys operating
facilities be smoke-free
|
|
A |
|
9.16.
|
|
Social and
Environmental
Issues
|
|
Tobacco
|
|
Proposals dealing with
product placement in
stores or advertising to
youth.
|
|
A |
|
9.17.
|
|
Social and
Environmental
Issues
|
|
Tobacco
|
|
Proposals asking the
company to cease
production of
tobacco-related products
or cease selling products
to tobacco companies.
|
|
A |
|
9.18.
|
|
Social and
Environmental
Issues
|
|
Tobacco
|
|
Proposals to spin-off
tobacco-related
businesses:
|
|
A |
|
9.19.
|
|
Social and
Environmental
Issues
|
|
Tobacco
|
|
Proposals prohibiting
investment in tobacco
equities.
|
|
A |
|
9.20.
|
|
Social and
Environmental
Issues
|
|
CONSUMER ISSUES AND
PUBLIC SAFETY:
Toxic Chemicals
|
|
Proposals requesting that
a company discloses its
policies related to toxic
chemicals, proposals
requesting that companies
evaluate and disclose the
potential financial and
legal risks associated
with utilizing certain
chemicals, or proposals
requiring that a company
reformulate its products
within a certain
timeframe.
|
|
A |
|
9.21.
|
|
Social and
Environmental
Issues
|
|
ENVIRONMENT AND ENERGY:
|
|
Requests for reports
outlining potential
environmental damage from
drilling in the Arctic
National Wildlife Refuge
(ANWR)
|
|
A |
|
|
|
|
|
Arctic National Wildlife
Refuge
|
|
|
|
|
|
B-25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ballot Item / Proposal |
|
|
|
|
|
|
|
|
[F=For, A=Against, |
|
|
|
|
|
|
|
|
W=Withhold, C=Case by |
|
|
Number |
|
Chapter |
|
Section |
|
Case, ABS=Abstain] |
|
Vote |
9.22.
|
|
Social and
Environmental
Issues
|
|
ENVIRONMENT AND ENERGY:
CERES Principles
|
|
Proposals to adopt the
CERES Principles
|
|
A |
|
9.23.
|
|
Social and
Environmental
Issues
|
|
ENVIRONMENT AND ENERGY:
|
|
Proposals requests reports
assessing economic risks
of environmental pollution
or climate change or
reports outlining
potential environmental
damage from operations in
protected regions,
including wildlife
refuges.
|
|
A |
|
|
|
|
|
Environmental-Economic
Risk Report
|
|
|
|
|
|
9.24.
|
|
Social and
Environmental
Issues
|
|
Environmental Reports
|
|
Proposals for reports
disclosing the companys
environmental policies.
|
|
A |
|
9.25.
|
|
Social and
Environmental
Issues
|
|
Nuclear Safety
|
|
Proposals requesting that
companies report on
risks associated with
their nuclear reactor
designs and/or the
production and interim
storage of irradiated fuel
rods
|
|
A |
|
9.26.
|
|
Social and
Environmental
Issues
|
|
ENVIRONMENT AND ENERGY:
Global Warming
|
|
Proposals to make reports
on the level of greenhouse
gas emissions from the
companys operations and
products.
|
|
A |
|
9.27.
|
|
Social and
Environmental
Issues
|
|
ENVIRONMENT AND ENERGY:
Recyling
|
|
Proposals to adopt a
comprehensive recycling
strategy
|
|
A |
|
9.28.
|
|
Social and
Environmental
Issues
|
|
ENVIRONMENT AND ENERGY:
Renewable Energy
|
|
Proposals to invest in
renewable energy sources.
|
|
A |
|
9.29.
|
|
Social and
Environmental
Issues
|
|
Renewable Energy
|
|
Requests for reports on
the feasibility of
developing renewable
energy sources
|
|
A |
|
9.30.
|
|
Social and
Environmental
Issues
|
|
ENVIRONMENT AND ENERGY:
Sustainablility Report
|
|
Proposals to make report
on its policies and
practices related to
social, environmental, and
economic sustainability
|
|
A |
|
9.31.
|
|
Social and
Environmental
Issues
|
|
ENVIRONMENT AND ENERGY:
Efficiency Report
|
|
Report on energy efficiency
|
|
A |
|
9.32.
|
|
Social and
Environmental
Issues
|
|
ENVIRONMENT AND ENERGY:
Kyoto Protocol
|
|
Proposals requesting that
companies outline their
preparations to comply
with standards established
by Kyoto Protocol
signatory markets
|
|
A |
|
9.33.
|
|
Social and
Environmental
Issues
|
|
LAND USE
|
|
Proposals that request the
disclosure of detailed
information on a companys
policies related to land
use or development
|
|
A |
B-26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ballot Item / Proposal |
|
|
|
|
|
|
|
|
[F=For, A=Against, |
|
|
|
|
|
|
|
|
W=Withhold, C=Case by |
|
|
Number |
|
Chapter |
|
Section |
|
Case, ABS=Abstain] |
|
Vote |
9.34.
|
|
Social and
Environmental
Issues
|
|
CAFOs
|
|
Proposals requesting that
companies report to
shareholders on the risks
and liabilities associated
with concentrated animal
feeding operations (CAFOs)
|
|
A |
|
9.35.
|
|
Social and
Environmental
Issues
|
|
GENERAL CORPORATE ISSUES:
Charitable/Political
Contributions
|
|
Proposals to affirm
political nonpartisanship
in the workplace
|
|
A |
|
9.36.
|
|
Social and
Environmental
Issues
|
|
Charitable/ Political
Contributions
|
|
Proposals to report or
publish in newspapers the
companys political and/or
charitable contributions
|
|
A |
|
9.37.
|
|
Social and
Environmental
Issues
|
|
Charitable/ Political
Contributions
|
|
Proposals to prohibit the
company from making
political contributions
|
|
A |
|
9.38.
|
|
Social and
Environmental
Issues
|
|
Charitable/ Political
Contributions
|
|
Proposals to restrict the
company from making
charitable contributions
|
|
A |
|
9.39.
|
|
Social and
Environmental
Issues
|
|
Charitable/ Political
Contributions
|
|
Proposals to publish a
list of company
executives, directors,
consultants, legal
counsels, lobbyists, or
investment bankers that
have prior government
service and whether such
service had a bearing on
the business of the
company
|
|
A |
|
9.40.
|
|
Social and
Environmental
Issues
|
|
GENERAL CORPORATE ISSUES:
Link Executive
Compensation to Social
Performance
|
|
Proposals to review ways
of linking executive
compensation to social
factors
|
|
A |
|
9.41.
|
|
Social and
Environmental
Issues
|
|
LABOR STANDARDS AND HUMAN
RIGHTS:
China Principles
|
|
Proposals to implement the
China Principles.
|
|
A |
|
9.42.
|
|
Social and
Environmental
Issues
|
|
LABOR STANDARDS AND HUMAN
RIGHTS:
Country-specific human
rights reports
|
|
Proposals to make reports
detailing the companys
operations in a particular
country and steps to
protect human rights
|
|
A |
|
9.43.
|
|
Social and
Environmental
Issues
|
|
LABOR STANDARDS AND HUMAN
RIGHTS:
International Code of
Conduct/Vendor Standards
|
|
Proposals to implement
certain human rights
standards at company
facilities or those of its
suppliers and to commit to
outside, independent
monitoring
|
|
A |
|
9.44. |
|
Social and
Environmental
Issues
|
|
LABOR STANDARDS AND HUMAN
RIGHTS:
MacBride Principles
|
|
Proposals to endorse or
increase activity on the
MacBride Principles.
|
|
A |
|
9.45.
|
|
Social and
Environmental
Issues
|
|
MILITARY BUSINESS:
Foreign Military
Sales/Offsets
|
|
Proposals to make reports
on foreign military sales
or offsets.
|
|
A |
B-27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ballot Item / Proposal |
|
|
|
|
|
|
|
|
[F=For, A=Against, |
|
|
|
|
|
|
|
|
W=Withhold, C=Case by |
|
|
Number |
|
Chapter |
|
Section |
|
Case, ABS=Abstain] |
|
Vote |
9.46.
|
|
Social and
Environmental
Issues
|
|
MILITARY BUSINESS:
Landmines and Cluster
Bombs
|
|
Proposals asking the
company to renounce future
involvement in
antipersonnel landmine
production
|
|
A |
|
9.47.
|
|
Social and
Environmental
Issues
|
|
MILITARY BUSINESS:
Nuclear Weapons
|
|
Proposals asking the
company to cease
production of nuclear
weapons components and
delivery systems,
including disengaging from
current and proposed
contracts
|
|
A |
|
9.48.
|
|
Social and
Environmental
Issues
|
|
MILITARY BUSINESS:
Operations in Nations
Sponsoring Terrorism
(Iran)
|
|
Proposals asking the
company to appoint a board
committee review and
report outlining the
companys financial and
reputational risks from
its operations in Iran,
|
|
A |
|
9.49.
|
|
Social and
Environmental
Issues
|
|
MILITARY BUSINESS:
Spaced-Based
Weaponization
|
|
Proposals asking the
company to make reports on
a companys involvement in
spaced-based weaponization
|
|
A |
|
9.50.
|
|
Social and
Environmental
Issues
|
|
WORKPLACE DIVERSITY:
Board Diversity
|
|
Requests for reports on
the companys efforts to
diversify the board
|
|
A |
|
9.51.
|
|
Social and
Environmental
Issues
|
|
WORKPLACE DIVERSITY:
Board Diversity
|
|
Proposals asking the
company to increase the
representation of women
and minorities on the
board
|
|
C |
|
9.52.
|
|
Social and
Environmental
Issues
|
|
WORKPLACE DIVERSITY:
Equal Employment
Opportunity (EEO)
|
|
Proposals to increase
regulatory oversight of
EEO programs
|
|
A |
|
9.53.
|
|
Social and
Environmental
Issues
|
|
WORKPLACE DIVERSITY:
Glass Ceiling
|
|
To increase regulatory
oversight of EEO programs
and Glass Ceiling
proposals
|
|
A |
|
9.54.
|
|
Social and
Environmental
Issues
|
|
WORKPLACE DIVERSITY:
Sexual Orientation
|
|
Exclude reference to
sexual orientation from
the EEO statement
|
|
A |
|
9.55.
|
|
Social and
Environmental
Issues
|
|
WORKPLACE DIVERSITY:
Sexual Orientation
|
|
Proposals to amend a
companys EEO statement in
order to prohibit
discrimination based on
sexual orientation
|
|
A |
|
9.56.
|
|
Social and
Environmental
Issues
|
|
Sexual Orientation
|
|
Proposals to extend
company benefits to or
eliminate benefits from
domestic partners
|
|
A |
|
9.57
|
|
Social and
Environmental
Issues
|
|
Outsourcing
|
|
Proposals asking for
companies to report on the
risks associated with
outsourcing or offshoring.
|
|
A |
|
9.58
|
|
Social and
Environmental
Issues
|
|
Community Impact
Assessment
|
|
Proposals asking for
reports outling the
potential community impact
of company operations in
specific regions.
|
|
A |
|
B-28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ballot Item / Proposal |
|
|
|
|
|
|
|
|
[F=For, A=Against, |
|
|
|
|
|
|
|
|
W=Withhold, C=Case by |
|
|
Number |
|
Chapter |
|
Section |
|
Case, ABS=Abstain] |
|
Vote |
9.59
|
|
Social and
Environmental
Issues
|
|
Internet Privacy and
Censorship
|
|
Proposals requesting the
disclosure and
implementation of Internet
privacy and censorship
policies and procedures.
|
|
F |
|
10. 0
|
|
Mutual Fund Proxies
|
|
Election of Directors
|
|
Director nominees who are
not described below
|
|
F |
|
10.1.
|
|
Mutual Fund Proxies
|
|
Election of Directors
|
|
Ignore a shareholder
proposal that is approved
by a majority of the votes
cast for two consecutive
years
|
|
W |
|
10.2.
|
|
Mutual Fund Proxies
|
|
Convert Closed-end Fund
to Open-end Fund
|
|
Conversion Proposals
|
|
C |
|
10.3.
|
|
Mutual Fund Proxies
|
|
Proxy Contests
|
|
Proxy Contests
|
|
C |
|
10.4.
|
|
Mutual Fund Proxies
|
|
Investment Advisory
Agreements
|
|
Investment Advisory
Agreements
|
|
F |
|
10.5.
|
|
Mutual Fund Proxies
|
|
Approve New Classes or
Series of Shares
|
|
The establishment of new
classes or series of
shares.
|
|
F |
|
10.6.
|
|
Mutual Fund Proxies
|
|
Change Fundamental
Restriction to
Nonfundamental
Restriction
|
|
Proposals to change a
funds fundamental
restriction to a non
fundamental restriction
|
|
C |
|
10.7.
|
|
Mutual Fund Proxies
|
|
Change Fundamental
Investment Objective to
Nonfundamental
|
|
Proposals to change a
funds fundamental
investment objective to a
non fundamental investment
objective
|
|
C |
|
10.8.
|
|
Mutual Fund Proxies
|
|
Name Change Proposals
|
|
Name change proposals.
|
|
F |
|
10.9.
|
|
Mutual Fund Proxies
|
|
Change in Funds Sub
classification
|
|
To change a funds
sub-classification
|
|
F |
|
10.10.
|
|
Mutual Fund Proxies
|
|
Disposition of
Assets/Termination/Liquidation
|
|
To dispose of assets,
liquidate or terminate the
fund
|
|
F |
|
10.11.
|
|
Mutual Fund Proxies
|
|
Changes to the Charter
Document
|
|
To make changes to the
charter document
|
|
C |
|
10.12.
|
|
Mutual Fund Proxies
|
|
Changes to the Charter
Document
|
|
Removal shareholder
approval requirement to
reorganize or terminate
the trust or any of its
series
|
|
F |
|
10.13.
|
|
Mutual Fund Proxies
|
|
Changes to the Charter
Document
|
|
Removal of shareholder
approval requirement for
amendments to the new
declaration of trust
|
|
F |
|
10.14.
|
|
Mutual Fund Proxies
|
|
Changes to the Charter
Document
|
|
Removal of shareholder
approval requirement to
amend the funds
management contract,
allowing the contract to
be modified by the
investment manager and the
trust management, as
permitted by the 1940 Act
|
|
F |
B-29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ballot Item / Proposal |
|
|
|
|
|
|
|
|
[F=For, A=Against, |
|
|
|
|
|
|
|
|
W=Withhold, C=Case by |
|
|
Number |
|
Chapter |
|
Section |
|
Case, ABS=Abstain] |
|
Vote |
10.15.
|
|
Mutual Fund Proxies
|
|
Changes to the Charter
Document
|
|
Allow the trustees to
impose other fees in
addition to sales charges
on investment in a fund,
such as deferred sales
charges and redemption
fees that may be imposed
upon redemption of a
funds shares
|
|
F |
|
10.16.
|
|
Mutual Fund Proxies
|
|
Changes to the Charter
Document
|
|
Removal of shareholder
approval requirement to
engage in and terminate
Sub-advisory arrangements
|
|
F |
|
10.17.
|
|
Mutual Fund Proxies
|
|
Changes to the Charter
Document
|
|
Removal of shareholder
approval requirement to
change the domicile of the
fund
|
|
F |
|
10.18.
|
|
Mutual Fund Proxies
|
|
Change the Funds Domicile
|
|
Funds Reincorporation
|
|
C |
|
10.19.
|
|
Mutual Fund Proxies
|
|
Authorize the Board to
Hire and Terminate
Subadvisors Without
Shareholder Approval
|
|
Proposals authorizing the
board to hire/terminate
sub-advisors without
shareholder approval.
|
|
F |
|
10.20.
|
|
Mutual Fund Proxies
|
|
Distribution Agreements
|
|
Distribution agreements
|
|
F |
|
10.21.
|
|
Mutual Fund Proxies
|
|
Master-Feeder Structure
|
|
Establishment of a
master-feeder structure.
|
|
F |
|
10.22.
|
|
Mutual Fund Proxies
|
|
Mergers
|
|
Mergers and Acquisitions
|
|
C |
|
10.23.
|
|
Mutual Fund Proxies
|
|
Shareholder Proposals to
Establish Director
Ownership Requirement
|
|
To mandate a specific
minimum amount of stock
that directors must own in
order to qualify as a
director or to remain on
the board
|
|
A |
|
10.24.a
|
|
Mutual Fund Proxies
|
|
Shareholder Proposals to
Reimburse Proxy
Solicitation Expenses
|
|
To reimburse proxy
solicitation expenses if
dissident wins
|
|
F |
|
10.24.b
|
|
Mutual Fund Proxies
|
|
Shareholder Proposals to
Reimburse Proxy
Solicitation Expenses
|
|
To reimburse proxy
solicitation expenses
(except as described
above)
|
|
A |
|
10.25.
|
|
Mutual Fund Proxies
|
|
Shareholder Proposals to
Terminate Investment
Advisor
|
|
To terminate the
investment advisor
|
|
C |
B-30
PART C: OTHER INFORMATION
POST-EFFECTIVE AMENDMENT NO. 75
ITEM 23. Exhibits:
(a)(1) Agreement and Declaration of Trust as originally filed with the Registrants Registration
Statement on Form N-1A, filed on February 12, 1992, is incorporated herein by reference to Exhibit
1 of Post-Effective Amendment No. 15 to the Registrants Registration Statement filed with the
Securities and Exchange Commission (the SEC) via EDGAR Accession No. 0000912057-96-015938 on July
31, 1996.
(a)(2) Amendment dated March 31, 2008 to the Declaration of Trust is incorporated herein by
reference to Exhibit (a)(2) of Post-Effective Amendment No. 74 to the Registrants Registration
Statement filed with the SEC via EDGAR Accession No. 0000950152-08-004114 on May 16, 2008.
(b) (1) Amended and Restated By-Laws, as approved by the Board of Trustees on August 15, 2000, are
incorporated herein by reference to Exhibit (b) of Post-Effective Amendment No. 37 to the
Registrants Registration Statement filed with the SEC via EDGAR Accession No. 0000935069-00-000528
on September 21, 2000.
(b)(2) Amendment dated March 31, 2008 to Amended and Restated By-laws is filed herewith.
(c) Not applicable.
(d)(1) Amended and Restated Investment Advisory Agreement between the Registrant and Trusco Capital
Management, Inc. dated November 14, 2006, is incorporated herein by reference to Exhibit (d)(1) of
Post-Effective Amendment No. 67 to the Registrants Registration Statement filed with the SEC via
EDGAR Accession No. 0000950152-07-004809 on May 30, 2007.
(d)(2) Form of Amended Schedule A to the Amended and Restated Investment Advisory Agreement dated
November 14, 2006, between the Registrant and RidgeWorth Capital Management, Inc. (formerly, Trusco
Capital Management, Inc.) is filed herewith.
(d)(3) Amendment dated April 1, 2008, to the Amended and Restated Investment Advisory Agreement
dated November 14, 2006, between the Registrant and RidgeWorth Capital Management, Inc. (formerly,
Trusco Capital Management, Inc.) is incorporated herein by reference to Exhibit (d)(3) of
Post-Effective Amendment No. 74 to the Registrants Registration Statement filed with the SEC via
EDGAR Accession No. 0000950152-08-004114 on May 16, 2008.
(d)(4) Form of Expense Limitation Agreement dated April 1, 2008 among the Registrant, RidgeWorth
Capital Management, Inc., Seix Investment Advisors LLC, Silvant Capital Management, LLC and
StableRiver Capital Management, LLC is filed herewith.
(d)(5) Investment Subadvisory Agreement dated November 19, 2004, between Trusco Capital Management,
Inc. and Zevenbergen Capital Investments, LLC is incorporated herein by reference to Exhibit (d)(4)
of Post-Effective Amendment No. 55 to the Registrants Registration Statement filed with the SEC
via EDGAR Accession No. 0000950152-05-001587 on February 28, 2005.
(d)(6) Form of Amendment dated April 1, 2008 to the Investment Subadvisory Agreement dated November
19, 2004, between RidgeWorth Capital Management, Inc. (formerly Trusco Capital Management, Inc.)
and Zevenbergen Capital Investments, LLC is filed herewith.
(d)(7) Investment Subadvisory Agreement dated December 13, 2007, between Trusco Capital Management,
Inc. (now RidgeWorth Capital Management, Inc.) and Alpha Equity Management LLC is incorporated
herein by reference to Exhibit (d)(7) of Post-Effective Amendment No. 74 to the Registrants
Registration Statement filed with the SEC via EDGAR Accession No. 0000950152-08-004114 on May 16,
2008.
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(d)(8) Amendment dated April 1, 2008 to the Investment Subadvisory Agreement between RidgeWorth
Capital Management, Inc. (formerly, Trusco Capital Management, Inc.) and Alpha Equity Management
LLC is incorporated herein by reference to Exhibit (d)(8) of Post-Effective Amendment No. 74 to the
Registrants Registration Statement filed with the SEC via EDGAR Accession No. 0000950152-08-004114
on May 16, 2008.
(d)(9) Expense Limitation Agreement dated January 9, 2008, between the Registrant, Trusco Capital
Management, Inc. (now RidgeWorth Capital Management, Inc.) and Alpha Equity Management LLC is
incorporated herein by reference to Exhibit (d)(9) of Post-Effective Amendment No. 74 to the
Registrants Registration Statement filed with the SEC via EDGAR Accession No. 0000950152-08-004114
on May 16, 2008.
(d)(10) Investment Subadvisory Agreement dated March 31, 2008, between the RidgeWorth Capital
Management, Inc. (formerly, Trusco Capital Management, Inc.) and Ceredex Value Advisors LLC is
incorporated herein by reference to Exhibit (d)(10) of Post-Effective Amendment No. 74 to the
Registrants Registration Statement filed with the SEC via EDGAR Accession No. 0000950152-08-004114
on May 16, 2008.
(d)(11) Investment Subadvisory Agreement dated March 31, 2008, between the RidgeWorth Capital
Management, Inc. (formerly, Trusco Capital Management, Inc.) and Certium Asset Management LLC is
incorporated herein by reference to Exhibit (d)(11) of Post-Effective Amendment No. 74 to the
Registrants Registration Statement filed with the SEC via EDGAR Accession No. 0000950152-08-004114
on May 16, 2008.
(d)(12) Investment Subadvisory Agreement dated March 31, 2008, between the RidgeWorth Capital
Management, Inc. (formerly, Trusco Capital Management, Inc.) and IronOak Advisors LLC is
incorporated herein by reference to Exhibit (d)(12) of Post-Effective Amendment No. 74 to the
Registrants Registration Statement filed with the SEC via EDGAR Accession No. 0000950152-08-004114
on May 16, 2008.
(d)(13) Form of Investment Subadvisory Agreement dated March 31, 2008, between the RidgeWorth
Capital Management, Inc. (formerly, Trusco Capital Management, Inc.) and Seix Investment Advisors
LLC is filed herewith.
(d)(14) Investment Subadvisory Agreement dated March 31, 2008, between the RidgeWorth Capital
Management, Inc. (formerly, Trusco Capital Management, Inc.) and Silvant Capital Management LLC is
incorporated herein by reference to Exhibit (d)(14) of Post-Effective Amendment No. 74 to the
Registrants Registration Statement filed with the SEC via EDGAR Accession No. 0000950152-08-004114
on May 16, 2008.
(d)(15) Investment Subadvisory Agreement dated March 31, 2008, between RidgeWorth Capital
Management, Inc. (formerly, Trusco Capital Management, Inc.) and StableRiver Capital Management LLC
is incorporated herein by reference to Exhibit (d)(15) of Post-Effective Amendment No. 74 to the
Registrants Registration Statement filed with the SEC via EDGAR Accession No. 0000950152-08-004114
on May 16, 2008.
(e)(1) Distribution Agreement dated September 1, 2007 between the Registrant and Foreside
Distribution Services, L.P. is incorporated herein by reference to Exhibit (e)(1) of Post-Effective
Amendment No. 74 to the Registrants Registration Statement filed with the SEC via EDGAR Accession
No. 0000950152-08-004114 on May 16, 2008.
(e)(2) Schedule A dated March 31, 2008 to the Distribution Agreement dated September 1, 2007,
between the Registrant and Foreside Distribution Services L.P. is incorporated herein by reference
to Exhibit (e)(2) of Post-Effective Amendment No. 74 to the Registrants Registration Statement
filed with the SEC via EDGAR Accession No. 0000950152-08-004114 on May 16, 2008.
(e)(3) Form of Amendment dated April 1, 2008 to the Distribution Agreement dated September 1, 2007,
between the Registrant and Foreside Distribution Services L.P. is filed herewith.
(f) Not applicable.
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(g)(1) Custodian Agreement between the Registrant and Trust Company Bank (now SunTrust Bank) dated
February 1, 1994, as originally filed with the Registrants Post-Effective Amendment No. 13, filed
on September 28, 1995, is incorporated herein by reference to Exhibit 8(b) of Post-Effective
Amendment No. 15 to the Registrants Registration Statement filed with the SEC via EDGAR Accession
No. 0000912057-96-015938 on July 31, 1996.
(g)(2) Securities Lending Amendment dated October 1, 2002 to the Custodian Agreement dated February
1, 1994 between the Registrant and SunTrust Bank is incorporated herein by reference to Exhibit
(g)(2) of Post-Effective Amendment No. 47 to the Registrants Registration Statement filed with the
SEC via EDGAR Accession No. 0000935069-03-001371 on September 30, 2003.
(g)(3) Amendment dated July 1, 2003 to the Custodian Agreement between the Registrant and SunTrust
Bank, dated as of February 1, 1994, as amended October 1, 2002, and Schedule A of such Agreement
amended as of August 16, 1995 and January 1, 1996, is incorporated herein by reference to Exhibit
(g)(3) of Post-Effective Amendment No. 48 to the Registrants Registration Statement filed with the
SEC via EDGAR Accession No. 0000935069-03-001651 on December 10, 2003.
(g)(4) Amendment dated November 25, 2003 to the Custodian Agreement dated February 1, 1994 between
the Registrant and SunTrust Bank, is incorporated herein by reference to Exhibit (g)(6) of
Post-Effective Amendment No. 50 to the Registrants Registration Statement filed with the SEC via
EDGAR Accession No. 0000950152-04-005770 on July 30, 2004.
(g)(5) Amendment dated August 19, 2005 to the Custodian Agreement dated February 1, 1994 between
the Registrant and SunTrust Bank, is incorporated herein by reference to Exhibit (g)(5) of
Post-Effective Amendment No. 60 to the Registrants Registration Statement filed with the SEC via
EDGAR Accession No. 0000950152-05-009415 on November 18, 2005.
(g)(6) Form of Amendment dated March 31, 2008 to the Custodian Agreement dated February 1, 1994
between the Registrant and SunTrust Bank is filed herewith.
(g)(7) Amended Schedule A dated March 31, 2008 to the Custodian Agreement dated February 1, 1994
between the Registrant and SunTrust Bank is incorporated herein by reference to Exhibit (g)(7) of
Post-Effective Amendment No. 74 to the Registrants Registration Statement filed with the SEC via
EDGAR Accession No. 0000950152-08-004114 on May 16, 2008.
(g)(8) Custodian Agreement dated January 29, 2003 among the Registrant, STI Classic Variable Trust
and Brown Brothers Harriman & Co., with respect to the Institutional Cash Management Fund,
International Equity Fund, International Equity Index Fund International Equity 130/30 Fund, Real
Estate 130/30 Fund, U.S. Equity 130/30 Fund, Seix Global Strategy Fund and Strategic Income Fund,
is incorporated herein by reference to Exhibit (g)(7) of Post-Effective Amendment No. 13 to the
Registration Statement of the STI Classic Variable Trust (SEC No. 033-91476) filed with the SEC
via EDGAR Accession No. 0000935069-03-00052 on April 25, 2003.
(g)(9) Form of Amendment dated March 31, 2008 to the Custodian Agreement dated January 29, 2003
among the Registrant, RidgeWorth Variable Trust (formerly STI Classic Variable Trust) and Brown
Brothers Harriman & Co. is filed herewith.
(h)(1) Master Services Agreement between the Registrant and Citi Fund Services Ohio, Inc.
(formerly, BISYS Fund Services, Ohio, Inc.) dated July 16, 2004, is incorporated herein by
reference to Exhibit (h)(1) of Post-Effective Amendment No. 51 to the Registrants Registration
Statement filed with the SEC via EDGAR Accession No. 0000950152-04-007101 on September 28, 2004.
(h)(2) Revised Schedule A to the Master Services Agreement dated July 16, 2004, between the
Registrant and Citi Fund Services Ohio, Inc. (formerly, BISYS Fund Services, Ohio, Inc.) is
incorporated herein by reference to Exhibit (h)(2) of Post-Effective Amendment No. 74 to the
Registrants Registration Statement filed with the SEC via EDGAR Accession No. 0000950152-08-004114
on May 16, 2008.
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(h)(3) Amendment dated as of August 11, 2004 to the Master Services Agreement dated July 16, 2004,
between the Registrant and Citi Fund Services Ohio, Inc. (formerly, BISYS Fund Services, Ohio,
Inc.) is incorporated herein by reference to Exhibit (h)(2) of Post-Effective Amendment No. 51 to
the Registrants Registration Statement filed with the SEC via EDGAR Accession No.
0000950152-04-007101 on September 28, 2004.
(h)(4) Amendment dated November 5, 2004 to the Master Services Agreement dated July 16, 2004,
between the Registrant and Citi Fund Services, Ohio, Inc. (formerly, BISYS Fund Services, Ohio,
Inc.) is incorporated by reference to Exhibit (h)(3) of Post-Effective Amendment No. 53 to the
Registrants Registration Statement filed with the SEC via EDGAR Accession No. 0000950152-04-009220
on December 30, 2004.
(h)(5) Amendment dated November 18, 2005 to the Master Services Agreement dated July 16, 2004,
between the Registrant and Citi Fund Services Ohio, Inc. (formerly, BISYS Fund Services, Ohio,
Inc.) is incorporated herein by reference to exhibit (h)(4) of Post Effective Amendment No. 63 to
the Registrants Registration Statement filed with the SEC via EDGAR Accession No.
0000950152-06-002527 on March 24, 2006.
(h)(6) Amendment dated July 1, 2007 to the Master Services Agreement dated July 16, 2004, between
the Registrant and Citi Fund Services, Ohio, Inc. (formerly, BISYS Fund Services, Ohio, Inc.) is
incorporated herein by reference to Exhibit (p)(4) of Post-Effective Amendment No. 72 to the
Registrants Registration Statement filed with the SEC via EDGAR Accession No. 0000950152-07-009632
on December 14, 2007.
(h)(7) Amendment dated May 15, 2007 to the Master Services Agreement dated July 16, 2004, between
the Registrant and Citi Fund Services, Ohio, Inc., (formerly, BISYS Fund Services, Ohio, Inc.) is
incorporated herein by reference to Exhibit (h)(7) of Post-Effective Amendment No. 74 to the
Registrants Registration Statement filed with the SEC via EDGAR Accession No. 0000950152-08-004114
on May 16, 2008.
(h)(8) Amendment dated August 21, 2007 to the Master Services Agreement dated July 16, 2004,
between the Registrant and Citi Fund Services, Ohio, Inc., (formerly, BISYS Fund Services, Ohio,
Inc.) is incorporated herein by reference to Exhibit (h)(8) of Post-Effective Amendment No. 74 to
the Registrants Registration Statement filed with the SEC via EDGAR Accession No.
0000950152-08-004114 on May 16, 2008.
(h)(9) Form of Amendment dated April 1, 2008 to the Master Services Agreement dated July 16, 2004,
between the Registrant and Citi Fund Services, Ohio, Inc., (formerly, BISYS Fund Services, Ohio,
Inc.) is filed herewith.
(h)(10) Form of Amendment dated May ___, 2008 to the Master Services Agreement dated July 16, 2004,
between the Registrant and Citi Fund Services, Ohio, Inc., (formerly, BISYS Fund Services, Ohio,
Inc.) is filed herewith.
(h)(11) Form of Shareholder Service Plan and Agreement relating to Corporate Trust Shares is filed
herewith
(h)(12) Securities Lending Management Agreement dated March 1, 2005, between the Registrant and
Credit Suisse First Boston is incorporated herein by reference to Exhibit (h)(10) of Post-Effective
Amendment No. 57 to the Registrants Registration Statement filed with the SEC via EDGAR Accession
No. 0000950152-05-004581 on May 18, 2005.
(h)(13) Compliance Services Agreement dated October 1, 2004, among the Registrant, STI Classic
Variable Trust (now RidgeWorth Variable Trust) and Citi Fund Services, Inc. (formerly,, BISYS Fund
Services, Ohio, Inc.) is incorporated herein by reference to Exhibit (h)(8) of Post-Effective
Amendment No. 64 to the Registrants Registration Statement filed with the SEC via EDGAR Accession
No. 0000950152-06-004792 on May 30, 2006.
(h)(14) Form of Amendment dated May 1, 2008 to the Compliance Services Agreement dated October 1,
2004, among the Registrant, RidgeWorth Variable Trust (formerly, STI Classic Variable Trust) and
Citi Fund Services, Inc. (formerly,, BISYS Fund Services, Ohio, Inc.) is filed herewith.
(i) Opinion and Consent of Counsel to be filed by amendment.
C-4
(j) Consent of independent registered public accounting firm to be filed by amendment.
(k) Not applicable.
(l) Not applicable.
(m)(1) Distribution and Service Plan relating to C Shares (formerly, L Shares and Flex Shares)
dated May 17, 2005 is incorporated herein by reference to Exhibit (m)(1) of Post-Effective
Amendment No. 59 to the Registrants Registration Statement filed with the SEC via EDGAR Accession
No. 0000950152-05-006336 on August 1, 2005.
(m)(2) Distribution and Service Plan relating to B Shares dated February 11, 2003 is incorporated
herein by reference to Exhibit (m)(3) of Post-Effective Amendment No. 47 to the Registrants
Registration Statement filed with the SEC via EDGAR Accession No. 0000935069-03-001371 on September
30, 2003.
(m)(3) Distribution and Service Plan relating to A Shares dated May 17, 2005 is incorporated
herein by reference to Exhibit (m)(6) of Post-Effective Amendment No. 58 to the Registrants
Registration Statement filed with the SEC via EDGAR Accession No. 0000950152-05-0048058 on May 27,
2005.
(m)(4) Form of Amended Schedule A to the Distribution and Service Plan relating to A Shares dated
May 1, 2008 is filed herewith.
(n)(1) Rule 18f-3 Multiple Class Plan adopted May 24, 1995, last amended May 20, 2008, is filed
herewith.
(o) Not applicable.
(p)(1) Registrants Code of Ethics is filed herewith.
(p)(2) Code of Ethics for Trusco Capital Management, Inc, (now RidgeWorth Capital Management, Inc.)
Ceredex Value Advisors LLC, Certium Asset Management LLC, IronOak Advisors LLC, Seix Investment
Advisors LLC, Silvant Capital Management LLC and StableRiver Capital Management LLC is
incorporated herein by reference to Exhibit (p)(3) of Post-Effective Amendment No. 66 to the
Registrants Registration Statement filed with the SEC via EDGAR Accession No. 0000950152-07-004809
on May 30, 2007.
(p)(3) Code of Ethics for Zevenbergen Capital Investments LLC, dated October 1, 2007 is
incorporated herein by reference to Exhibit (p)(3) of Post-Effective Amendment No. 74 to the
Registrants Registration Statement filed with the SEC via EDGAR Accession No. 0000950152-08-004114
on May 16, 2008.
(p)(4) Code of Ethics for Alpha Equity Management LLC is incorporated herein by reference to
Exhibit (p)(4) of Post-Effective Amendment No. 74 to the Registrants Registration Statement filed
with the SEC via EDGAR Accession No. 0000950152-08-004114 on May 16, 2008.
ITEM 24. Persons Controlled by or under Common Control with Registrant:
See the prospectus and Statement of Additional Information regarding the Registrants control
relationships.
ITEM 25. Indemnification:
Article VIII of the Agreement and Declaration of Trust filed as Exhibit (a) to the Registrants
Registration Statement is incorporated herein by reference. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 (the Act) may be permitted to trustees,
directors, officers and controlling persons of the Registrant by the Registrant pursuant to the
Declaration of Trust or otherwise, the Registrant is aware that in the opinion of the U.S.
Securities and Exchange Commission, such indemnification is against public policy as expressed in
the Act and, therefore, is unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the
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Registrant of expenses incurred or paid by trustees, directors, officers or controlling persons of
the Registrant in connection with the successful defense of any act, suit or proceeding) is
asserted by such trustees, directors, officers or controlling persons in connection with the shares
being registered, the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issues.
ITEM 26. Business and Other Connections of the Investment Adviser:
RidgeWorth Capital Management, Inc. (formerly Trusco Capital Management, Inc.) is the investment
adviser (the Adviser) for the Registrant. The principal address of RidgeWorth Capital Management,
Inc. is 50 Hurt Plaza, Suite 1400, Atlanta, Georgia 30303.
Other business, profession, vocation, or employment of a substantial nature in which each director
or principal officer of the adviser is or has been, at any time during the last two fiscal years,
engaged for his own account or in the capacity of director, officer, employee, partner or trustee
are as follows:
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CONNECTION WITH OTHER |
NAME |
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NAME OF OTHER COMPANY |
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COMPANY |
David Eidson
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SunTrust Banks, Inc.
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Senior Vice President |
Chairman &
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SunTrust Bank
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Executive Vice President |
Chief Executive Officer
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SunTrust Capital Markets
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Board Member |
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First Mercantile Trust
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Board Member |
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Zevenbergen Capital Investments LLC
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Board Member |
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Ashi Parikh
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CeredexValue Advisors LLC (Ceredex)
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CEO |
President & CIO
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IronOak Advisors LLC (IronOak)
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CEO |
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Silvant Capital Management LLC (Silvant)
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CEO |
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StableRiver Capital Management LLC
(StableRiver)
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Chairman |
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Certium Asset Management LLC (Certium)
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CEO |
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Christina Seix
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SunTrust Bank
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Officer |
Executive Vice President
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SunTrust International Banking
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Officer |
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Company |
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Seix Investment Advisors LLC
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Chairman |
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(Seix) |
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David C. Anderson
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SunTrust Bank
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Officer |
Director |
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Andrew S. Atkins
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Vice President |
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Richard M. Bemis
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SunTrust Bank
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Officer |
Director |
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Gordon R. Boardway
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Vice President |
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Sabrina Bowens
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Vice President |
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CONNECTION WITH OTHER |
NAME |
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NAME OF OTHER COMPANY |
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COMPANY |
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Charles H. Boyt
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Vice President |
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John C. Brennan
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Vice President |
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Matthew B. Carney
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Vice President |
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Benjamin M. Clark
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SunTrust Bank
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Officer |
Vice President |
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Shane Coldren
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SunTrust Bank
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Officer |
Managing Director
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Certium
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Officer |
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Seix
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Officer |
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StableRiver
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Officer |
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Silvant
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Officer |
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IronOak
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Officer |
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Ceredex
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Officer |
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Jim Coryell
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Director |
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David M. Craig
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Director |
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Martin J. Duffy
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SunTrust Bank
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Officer |
Vice President |
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Mary J. Durkin
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SunTrust Bank
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Officer |
Vice President |
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Todd C. Early
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SunTrust Bank
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Officer |
Vice President |
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Bob M. Farmer
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SunTrust Bank
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Officer |
Managing Director |
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Douglas J. Farmer
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Vice President |
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Laura B. Friend
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Director |
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Kirsten M. Fuller
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SunTrust Bank
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Officer |
Vice President |
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Alan M. Gayle
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Managing Director |
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Allan J. George
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SunTrust Bank
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Officer |
Vice President |
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CONNECTION WITH OTHER |
NAME |
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NAME OF OTHER COMPANY |
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COMPANY |
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Bradford Anthony Gifford
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Vice President |
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Eunice Gillespie
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SunTrust Bank
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Officer |
Director |
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Melvin E. Hamilton
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SunTrust Bank
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Officer |
Managing Director |
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Diana Hanlin
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Director |
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Jacob. T. Harper
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SunTrust Bank
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Officer |
Vice President |
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Michael Todd Hill
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SunTrust Bank
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Officer |
Director |
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Debra M. Hooper
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SunTrust Bank
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Officer |
Vice President |
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Deborah A. Hopkins
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Vice President |
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Marcus Hopkins
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RidgeWorth Capital Management, Inc.
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Associate |
Associate |
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Christopher A. Jones
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SunTrust Bank
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Officer |
Managing Director |
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Wayne G. Larochelle
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SunTrust Bank
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Officer |
Managing Director |
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Jonathan D. Larsen
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SunTrust Bank
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Officer |
Vice President |
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Matthew D. Lota
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Vice President |
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Steve Loncar
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SunTrust Bank
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Officer |
Vice President |
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Tina Y. Long
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Vice President |
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William J. Longan
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SunTrust Bank
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Officer |
Vice President |
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Scott F. Luxton
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SunTrust Bank
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Officer |
Vice President |
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Jennifer Love Mann
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SunTrust Bank
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Officer |
Vice President |
|
|
|
|
C-8
|
|
|
|
|
|
|
|
|
CONNECTION WITH OTHER |
NAME |
|
NAME OF OTHER COMPANY |
|
COMPANY |
|
|
|
|
|
Patrick K. Mason
|
|
SunTrust Bank
|
|
Officer |
Vice President |
|
|
|
|
|
|
|
|
|
Andrew S. McGhee
|
|
SunTrust Bank
|
|
Officer |
Managing Director |
|
|
|
|
|
|
|
|
|
Samuel A. McKnight, Jr.
|
|
SunTrust Bank
|
|
Officer |
Director |
|
|
|
|
|
|
|
|
|
Evan B. Melcher
|
|
SunTrust Bank
|
|
Officer |
Director |
|
|
|
|
|
|
|
|
|
Blake E. Myton
|
|
SunTrust Bank
|
|
Officer |
Vice President |
|
|
|
|
|
|
|
|
|
Timothy James Nash
|
|
SunTrust Bank
|
|
Officer |
Vice President |
|
|
|
|
|
|
|
|
|
Wesley P. Neal
|
|
SunTrust Bank
|
|
Officer |
Vice President |
|
|
|
|
|
|
|
|
|
Laura B. Newberg
|
|
|
|
|
Vice President |
|
|
|
|
|
|
|
|
|
David W. Neely
|
|
SunTrust Bank
|
|
Officer |
Director |
|
|
|
|
|
|
|
|
|
Robert H. Neinken
|
|
SunTrust Bank
|
|
Officer |
Managing Director |
|
|
|
|
|
|
|
|
|
Patrick A. Paparelli
|
|
SunTrust Banks, Inc.
|
|
Officer |
Managing Director/Secretary
|
|
SunTrust Bank
|
|
Officer |
|
|
Silvant
|
|
CCO |
|
|
Certium
|
|
CCO |
|
|
StableRiver
|
|
Officer |
|
|
Seix
|
|
Officer |
|
|
Ceredex
|
|
Officer |
|
|
IronOak
|
|
Officer |
|
|
|
|
|
Ty E. Parrish
|
|
SunTrust Bank
|
|
Officer |
Director |
|
|
|
|
|
|
|
|
|
Ronnie G. Pennell
|
|
SunTrust Bank
|
|
Officer |
Director |
|
|
|
|
C-9
|
|
|
|
|
|
|
|
|
CONNECTION WITH OTHER |
NAME |
|
NAME OF OTHER COMPANY |
|
COMPANY |
|
|
|
|
|
James M. Phebus Jr.
|
|
SunTrust Bank
|
|
Officer |
Director |
|
|
|
|
|
|
|
|
|
Gregory L. Phillips
|
|
|
|
|
Director |
|
|
|
|
|
|
|
|
|
Gary A. Plourde
|
|
SunTrust Bank
|
|
Officer |
Managing Director |
|
|
|
|
|
|
|
|
|
Sean D. Porrello
|
|
|
|
|
Director |
|
|
|
|
|
|
|
|
|
Raymond A. Prophater
|
|
SunTrust Bank
|
|
Officer |
Vice President |
|
|
|
|
|
|
|
|
|
Armond R. Reese
|
|
SunTrust Bank
|
|
Officer |
Vice President |
|
|
|
|
|
|
|
|
|
David W. Reidy
|
|
|
|
|
Vice President |
|
|
|
|
|
|
|
|
|
Dina E. Romeo
|
|
|
|
|
Vice President |
|
|
|
|
|
|
|
|
|
Josie C. Rosson
|
|
SunTrust Bank
|
|
Officer |
Managing Director
|
|
Ceredex
|
|
CCO |
|
|
IronOak
|
|
CCO |
|
|
Certium
|
|
Officer |
|
|
StableRiver
|
|
CCO |
|
|
Silvant
|
|
Officer |
|
|
|
|
|
Michael C. Sahakian
|
|
SunTrust Bank
|
|
Officer |
Director |
|
|
|
|
|
|
|
|
|
Diane F. Schmidt
|
|
|
|
|
Director |
|
|
|
|
|
|
|
|
|
Sowmdeb Sen
|
|
|
|
|
Vice President |
|
|
|
|
|
|
|
|
|
Julia R. Short
|
|
|
|
|
Managing Director |
|
|
|
|
|
|
|
|
|
Shelly R. Simpson
|
|
|
|
|
Vice President |
|
|
|
|
|
|
|
|
|
Edward P. Smith
|
|
SunTrust Bank
|
|
Officer |
Vice President |
|
|
|
|
|
|
|
|
|
George D. Smith, Jr.
|
|
SunTrust Bank
|
|
Officer |
Managing Director |
|
|
|
|
C-10
|
|
|
|
|
|
|
|
|
CONNECTION WITH OTHER |
NAME |
|
NAME OF OTHER COMPANY |
|
COMPANY |
|
|
|
|
|
Stephen Smith
|
|
|
|
|
Vice President |
|
|
|
|
|
|
|
|
|
Ellen E. Spong
|
|
SunTrust Bank
|
|
Officer |
Managing Director |
|
|
|
|
|
|
|
|
|
Jeffrey P. St. Amand
|
|
|
|
|
Director |
|
|
|
|
|
|
|
|
|
John H. Stebbins
|
|
SunTrust Banks, Inc.
|
|
Officer |
Managing Director
|
|
SunTrust Bank
|
|
Officer |
|
|
Ceredex
|
|
CFO |
|
|
IronOak
|
|
CFO |
|
|
Silvant
|
|
CFO |
|
|
Certium
|
|
CFO |
|
|
StableRiver
|
|
CFO |
|
|
Seix
|
|
Officer |
|
|
|
|
|
Kimberly Jean Strickland
|
|
|
|
|
Vice President |
|
|
|
|
|
|
|
|
|
James Stueve
|
|
|
|
|
Managing Director |
|
|
|
|
|
|
|
|
|
Jessica Lacey Thompson
|
|
Certium
|
|
Officer |
Vice President
|
|
StableRiver
|
|
Officer |
|
|
Ceredex
|
|
Officer |
|
|
IronOak
|
|
Officer |
|
|
Silvant
|
|
Officer |
|
|
|
|
|
Matthew M. Tollison
|
|
|
|
|
Vice President |
|
|
|
|
|
|
|
|
|
Michelle A. Tribble
|
|
|
|
|
Vice President |
|
|
|
|
|
|
|
|
|
William A. Turner
|
|
Certium
|
|
Officer |
Director
|
|
StableRiver
|
|
Officer |
|
|
Seix
|
|
Officer |
|
|
Ceredex
|
|
Officer |
|
|
IronOak
|
|
Officer |
|
|
Silvant
|
|
Officer |
|
|
|
|
|
David Walley
|
|
SunTrust Bank
|
|
Officer |
Director |
|
|
|
|
|
|
|
|
|
Joseph P. Walsh
|
|
SunTrust Bank
|
|
Officer |
Vice President |
|
|
|
|
C-11
|
|
|
|
|
|
|
|
|
CONNECTION WITH OTHER |
NAME |
|
NAME OF OTHER COMPANY |
|
COMPANY |
|
|
|
|
|
Joseph Ward
|
|
|
|
|
Vice President |
|
|
|
|
|
|
|
|
|
Angela V. Watterson
|
|
|
|
|
Vice President |
|
|
|
|
|
|
|
|
|
Gregory W. Webster
|
|
|
|
|
Vice President |
|
|
|
|
|
|
|
|
|
Elizabeth Wilson
|
|
SunTrust Bank
|
|
Officer |
Managing Director |
|
|
|
|
|
|
|
|
|
Leslie A. Wilson
|
|
|
|
|
Vice President |
|
|
|
|
|
|
|
|
|
William L. Wilson, Jr.
|
|
SunTrust Bank
|
|
Officer |
Managing Director |
|
|
|
|
|
|
|
|
|
Kevin D. Wright
|
|
|
|
|
Vice President |
|
|
|
|
|
|
|
|
|
Stephen M. Yarbrough
|
|
SunTrust Banks, Inc.
|
|
Officer |
Managing Director |
|
|
|
|
|
|
|
|
|
Jay A. Young
|
|
SunTrust Bank
|
|
Officer |
Vice President |
|
|
|
|
Ceredex Value Advisors LLC is the investment subadviser (Ceredex) for the Large
Cap Value Equity Fund, Mid-Cap Value Equity Fund and the Small Cap Value Equity
Fund. The principal address of Ceredex is 300 South Orange Avenue, Suite 1600, Orlando, Florida 32801.
|
|
|
|
|
|
|
|
|
CONNECTION WITH OTHER |
NAME |
|
NAME OF OTHER COMPANY |
|
COMPANY |
|
|
|
|
|
Brett Barner
|
|
RidgeWorth Capital Management, Inc.
|
|
Officer |
Managing Director |
|
|
|
|
|
|
|
|
|
Charlie Carter
|
|
Certium
|
|
Officer |
Vice President
|
|
Seix
|
|
Officer |
|
|
Silvant
|
|
Officer |
|
|
IronOak
|
|
Officer |
|
|
StableRiver
|
|
Officer |
|
|
|
|
|
Rohit Dewan
|
|
RidgeWorth Capital Management, Inc.
|
|
Officer |
Vice President |
|
|
|
|
|
|
|
|
|
Jennifer Graff
|
|
RidgeWorth Capital Management, Inc.
|
|
Officer |
Vice President |
|
|
|
|
C-12
|
|
|
|
|
|
|
|
|
CONNECTION WITH OTHER |
NAME |
|
NAME OF OTHER COMPANY |
|
COMPANY |
|
|
|
|
|
Nicole Guidry
|
|
RidgeWorth Capital Management, Inc.
|
|
Associate |
Associate |
|
|
|
|
|
|
|
|
|
Hein Hanekom
|
|
RidgeWorth Capital Management, Inc.
|
|
Associate |
Associate |
|
|
|
|
|
|
|
|
|
Ashi Parikh
|
|
RidgeWorth Capital Management, Inc.
|
|
President & CIO |
CEO
|
|
IronOak Advisors LLC
|
|
CEO |
|
|
Silvant Capital Management LLC
|
|
CEO |
|
|
Certium
|
|
CEO |
|
|
StableRiver
|
|
Chairman |
|
|
|
|
|
Mills Riddick
|
|
RidgeWorth Capital Management, Inc.
|
|
Officer |
President/CIO |
|
|
|
|
|
|
|
|
|
Josie Rosson
|
|
RidgeWorth Capital Management, Inc.
|
|
Managing Director |
CCO
|
|
SunTrust Bank
|
|
Officer |
|
|
IronOak
|
|
CCO |
|
|
Certium
|
|
Officer |
|
|
StableRiver
|
|
CCO |
|
|
Silvant
|
|
Officer |
|
|
|
|
|
Cody Smith
|
|
RidgeWorth Capital Management, Inc.
|
|
Officer |
Vice President |
|
|
|
|
|
|
|
|
|
John Stebbins
|
|
RidgeWorth Capital Management, Inc.
|
|
Managing Director |
CFO
|
|
SunTrust Banks, Inc.
|
|
Officer |
|
|
SunTrust Bank
|
|
Officer |
|
|
IronOak
|
|
CFO |
|
|
Silvant
|
|
CFO |
|
|
Certium
|
|
CFO |
|
|
StableRiver
|
|
CFO |
|
|
Seix
|
|
Officer |
|
|
|
|
|
John Wilson
|
|
RidgeWorth Capital Management, Inc.
|
|
Officer |
Vice President |
|
|
|
|
|
|
|
|
|
Don Wordell
|
|
RidgeWorth Capital Management, Inc.
|
|
Officer |
Managing Director |
|
|
|
|
IronOak Advisors LLC is the investment subadviser (IronOak) for the Large Cap Core
Equity Fund and the Mid-Cap Core Equity Fund. The principal address of IronOak is
919 East Main St., Richmond, Virginia 23219
|
|
|
|
|
|
|
|
|
CONNECTION WITH OTHER |
NAME |
|
NAME OF OTHER COMPANY |
|
COMPANY |
|
|
|
|
|
Charles Arrington
|
|
RidgeWorth Capital Management, Inc.
|
|
Officer |
Director |
|
|
|
|
|
|
|
|
|
Frank Ashby
|
|
RidgeWorth Capital Management, Inc.
|
|
Officer |
Vice President |
|
|
|
|
C-13
|
|
|
|
|
|
|
|
|
CONNECTION WITH OTHER |
NAME |
|
NAME OF OTHER COMPANY |
|
COMPANY |
|
|
|
|
|
Frances Aylor
|
|
RidgeWorth Capital Management, Inc.
|
|
Officer |
Director |
|
|
|
|
|
|
|
|
|
Matthew Laing
|
|
RidgeWorth Capital Management, Inc.
|
|
Officer |
Vice President |
|
|
|
|
|
|
|
|
|
Jim Mallory
|
|
RidgeWorth Capital Management, Inc.
|
|
Officer |
Vice President |
|
|
|
|
|
|
|
|
|
Jeffrey Markunas
|
|
Ceredex
|
|
Officer |
President/CIO
|
|
Silvant
|
|
Officer |
|
|
Certium
|
|
Officer |
|
|
|
|
|
Thomas ONeil
|
|
RidgeWorth Capital Management, Inc.
|
|
Officer |
Vice President |
|
|
|
|
|
|
|
|
|
Ashi Parikh
|
|
RidgeWorth Capital Management, Inc.
|
|
President & CIO |
CEO
|
|
Ceredex Value Advisors LLC
|
|
CEO |
|
|
Silvant Capital Management LLC
|
|
CEO |
|
|
Certium
|
|
CEO |
|
|
StableRiver
|
|
Chairman |
|
|
|
|
|
Josie Rosson
|
|
RidgeWorth Capital Management, Inc.
|
|
Managing Director |
CCO
|
|
SunTrust Bank
|
|
Officer |
|
|
Ceredex
|
|
CCO |
|
|
Certium
|
|
Officer |
|
|
StableRiver
|
|
CCO |
|
|
Silvant
|
|
Officer |
|
|
|
|
|
James Savage
|
|
RidgeWorth Capital Management, Inc.
|
|
Officer |
Director |
|
|
|
|
|
|
|
|
|
John Stebbins
|
|
RidgeWorth Capital Management, Inc.
|
|
Managing Director |
CFO
|
|
SunTrust Bank, Inc.
|
|
Officer |
|
|
SunTrust Bank
|
|
Officer |
|
|
Ceredex
|
|
CFO |
|
|
Silvant
|
|
CFO |
|
|
Certium
|
|
CFO |
|
|
StableRiver
|
|
CFO |
|
|
Seix
|
|
Officer |
|
|
|
|
|
Lyn Swallen
|
|
RidgeWorth Capital Management, Inc.
|
|
Officer |
Vice President |
|
|
|
|
|
|
|
|
|
Scott Yuschak
|
|
RidgeWorth Capital Management, Inc.
|
|
Officer |
Vice President |
|
|
|
|
C-14
Silvant Capital Management LLC is the investment subadviser (Silvant) for the
Large Cap Growth Stock Fund, Select Large Cap Growth Stock Fund and Small Cap Growth
Stock Fund. The principal address of Silvant is
50 Hurt Plaza, Atlanta, Georgia 30303.
|
|
|
|
|
|
|
|
|
CONNECTION WITH OTHER |
NAME |
|
NAME OF OTHER COMPANY |
|
COMPANY |
|
|
|
|
|
Brandi Allen
|
|
RidgeWorth Capital Management, Inc.
|
|
Officer |
Director |
|
|
|
|
|
|
|
|
|
Christin Armacost
|
|
RidgeWorth Capital Management, Inc.
|
|
Officer |
Director |
|
|
|
|
|
|
|
|
|
Sandeep Bhatia
|
|
RidgeWorth Capital Management, Inc.
|
|
Officer |
Director |
|
|
|
|
|
|
|
|
|
Brad Erwin
|
|
RidgeWorth Capital Management, Inc.
|
|
Officer |
Director |
|
|
|
|
|
|
|
|
|
Jim Foster
|
|
RidgeWorth Capital Management, Inc.
|
|
Officer |
Managing Director |
|
|
|
|
|
|
|
|
|
Christopher Guinther
|
|
RidgeWorth Capital Management, Inc.
|
|
Officer |
President/CIO |
|
|
|
|
|
|
|
|
|
Randy Loving
|
|
RidgeWorth Capital Management, Inc.
|
|
Officer |
Director |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrick Paparelli
|
|
RidgeWorth Capital Management, Inc.
|
|
Managing Director |
CCO
|
|
SunTrust Banks, Inc.
|
|
Officer |
|
|
SunTrust Bank
|
|
Officer |
|
|
Certium
|
|
CCO |
|
|
StableRiver
|
|
Officer |
|
|
Seix
|
|
Officer |
|
|
IronOak
|
|
Officer |
|
|
|
|
|
Ashi Parikh
|
|
RidgeWorth Capital Management, Inc.
|
|
President & CIO |
CEO
|
|
Ceredex
|
|
CEO |
|
|
Iron Oak
|
|
CEO |
|
|
Certium
|
|
CEO |
|
|
StableRiver
|
|
Chairman |
|
|
|
|
|
Joe Ransom
|
|
RidgeWorth Capital Management, Inc.
|
|
Officer |
Managing Director |
|
|
|
|
|
|
|
|
|
Kristin Ribic
|
|
RidgeWorth Capital Management, Inc.
|
|
Officer |
Director |
|
|
|
|
|
|
|
|
|
Michael Sansoterra
|
|
Certium
|
|
Officer |
Managing Director
|
|
Seix
|
|
Officer |
|
|
StableRiver
|
|
Officer |
|
|
Ceredex
|
|
Officer |
|
|
IronOak
|
|
Officer |
C-15
|
|
|
|
|
|
|
|
|
CONNECTION WITH OTHER |
NAME |
|
NAME OF OTHER COMPANY |
|
COMPANY |
|
|
|
|
|
Marc Schneidau
|
|
RidgeWorth Capital Management, Inc.
|
|
Officer |
Managing Director |
|
|
|
|
|
|
|
|
|
John Stebbins
|
|
RidgeWorth Capital Management, Inc.
|
|
Managing Director |
CFO
|
|
SunTrust Banks, Inc.
|
|
Officer |
|
|
SunTrust Bank
|
|
Officer |
|
|
Ceredex
|
|
CFO |
|
|
IronOak
|
|
CFO |
|
|
Certium
|
|
CFO |
|
|
Seix
|
|
Officer |
|
|
StableRiver
|
|
CFO |
Certium Asset Management LLC is the investment subadviser (Certium) for the
International Equity Fund, International Equity Index Fund, and the Large Cap
Quantitative Equity Fund. The principal address of Certium is 50 Hurt Plaza, Suite 1400, Atlanta, GA 30326.
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CONNECTION WITH OTHER |
NAME |
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NAME OF OTHER COMPANY |
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COMPANY |
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Chad Deakins
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RidgeWorth Capital Management, Inc.
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Officer |
President/CEO |
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Charles East
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RidgeWorth Capital Management, Inc.
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Officer |
Vice President |
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Risei Goto
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RidgeWorth Capital Management, Inc.
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Officer |
Vice President |
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Patrick Papparelli
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RidgeWorth Capital Management, Inc.
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Managing Director |
CCO
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SunTrust Banks, Inc.
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Officer |
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SunTrust Bank |
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Ceredex |
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IronOak |
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StableRiver |
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Seix |
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Silvant |
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Ashi Parikh
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RidgeWorth Capital Management, Inc.
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President and CIO |
CEO
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Ceredex |
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IronOak |
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Silvant |
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StableRiver |
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Greg Peters
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RidgeWorth Capital Management, Inc.
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Officer |
Vice President |
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C-16
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CONNECTION WITH OTHER |
NAME |
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NAME OF OTHER COMPANY |
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COMPANY |
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Merlin Tolstyk
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RidgeWorth Capital Management, Inc.
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Officer |
Vice President |
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John Stebbins
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RidgeWorth Capital Management, Inc.
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Managing Director |
CFO
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SunTrust Banks, Inc.
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Officer |
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SunTrust Bank |
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Ceredex |
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IronOak |
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Silvant |
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StableRiver |
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Seix |
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Seix Investment Advisors LLC is the investment subadviser (Seix) for the High Income Fund, Intermediate Bond Fund,
Investment Grade Bond Fund, Limited Duration Fund, Limited-Term Federal Mortgage Securities Bond Fund,
Seix Floating Rate High Income Fund, Seix High Yield Fund, Strategic Income Fund, Total Return Bond Fund, and the U.S. Government
Securities Fund. The principal address of Seix is 10 Mountainview Road, Suite C-200,
Upper Saddle River, NJ 07458.
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CONNECTION WITH OTHER |
NAME |
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NAME OF OTHER COMPANY |
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COMPANY |
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Jeannell Anthony
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RidgeWorth Capital Management, Inc.
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Associate |
Associate |
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John Bacso
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Vice President |
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Carlos Catoya
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Vice President |
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Stacy Culver
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Vice President |
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William Davis
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Vice President |
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Christopher DeGaetano
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Vice President |
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Deirdre Dillon
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CCO |
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Rebecca Ehrhart
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Vice President |
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James Fitzpatrick
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Managing Director |
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Vincent Flanagan
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Vice President |
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C-17
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CONNECTION WITH OTHER |
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NAME OF OTHER COMPANY |
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COMPANY |
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Elena Fyodorova
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Vice President |
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Michelle Gallo
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Vice President |
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Leo Goldstein
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Vice President |
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George Goudelias
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Managing Director |
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Paul Guevera
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RidgeWorth Capital Management, Inc.
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Associate |
Associate |
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James Keegan
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Seix Structured Products LLC
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Manager |
CIO |
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Nathaniel King
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Vice President |
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Michael Kirkpatrick
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Managing Director |
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Raymond Kramer
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Vice President |
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Kenneth Kresch
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Vice President |
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Scott Kupchinsky
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Vice President |
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Gerard Leen
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Vice President |
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Charles Leonard
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Managing Director |
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Carla Leslie
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Managing Director |
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Biron Lim
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Managing Director |
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Thomas Mansley
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Managing Director |
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Michael McEachern
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President |
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C-18
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CONNECTION WITH OTHER |
NAME |
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NAME OF OTHER COMPANY |
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COMPANY |
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Thomas Meyers
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Managing Director |
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Sharon Moran
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Vice President |
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Brian Nold
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Managing Director |
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Cynthia Panebianco
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Vice President |
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Brian Reid
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Vice President |
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Michael Reiger
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Managing Director |
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Christina Seix
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SunTrust Bank
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Officer |
Chairman
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SunTrust International Banking Company
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Officer |
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Robert Sherman |
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CEO |
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Robin Shulman
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Managing Director |
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Atul Sibal
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Vice President |
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Eric Storch
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Managing Director |
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Perry Troisi
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Managing Director |
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Ania Wacht
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Vice President |
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George Way
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CFO |
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Adrien Webb
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Managing Director |
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Ellen Welsh
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Managing Director |
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Thomas Winters
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Managing Director |
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C-19
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CONNECTION WITH OTHER |
NAME |
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NAME OF OTHER COMPANY |
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COMPANY |
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Jonathan Yozzo
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Vice President |
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Samuel Zona
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Managing Director |
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StableRiver Capital Management LLC is the investment subadviser (StableRiver) for the Georgia Tax-Exempt Bond Fund,
High Grade Municipal Bond Fund, Investment Grade Tax-Exempt Bond Fund, Maryland Municipal Bond Fund, North Carolina Tax-Exempt Bond Fund,
Short-Term Bond Fund, Short-Term U.S. Treasury Securities Fund, U.S. Government Securities Ultra-Short Bond Fund,
Ultra-Short Bond Fund, Virginia Intermediate Municipal Bond Fund, Institutional Cash Management Money Market Fund,
Institutional Municipal Cash Reserve Money Market Fund, Institutional U.S. Government Securities Money Market Fund,
Institutional U.S. Treasury Securities Money Market Fund, Prime Quality Money Market Fund, Tax-Exempt Money Market Fund, U.S. Government
Securities Money Market Fund, U.S. Treasury Securities Money Market Fund
and the Virginia Tax-Free Money Market Fund. The principal address of StableRiver is 50 Hurt Plaza, Suite 1400, Atlanta, GA 30326.
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CONNECTION WITH OTHER |
NAME |
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NAME OF OTHER COMPANY |
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COMPANY |
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Derek Altenbaugh
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RidgeWorth Capital Management, Inc.
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Associate |
Associate |
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Matthew Boden
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Director |
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George Calvert
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Director |
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Christopher Carter
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Director |
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Kimberly Cook
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RidgeWorth Capital Management, Inc.
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Associate |
Associate |
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Robert Corner
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Managing Director |
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Scott Craig
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Vice President |
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Colleen Doremus
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Vice President |
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Christopher Giglio
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Vice President |
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Matt Edelstein
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Vice President |
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Gregory Hallman
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Vice President |
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C-20
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CONNECTION WITH OTHER |
NAME |
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NAME OF OTHER COMPANY |
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COMPANY |
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Michael Honshurak
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Vice President |
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Mark Kallis
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Vice President |
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James Kofron
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Director |
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Kimberly Maichle
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Director |
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Doug Mitchell
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Vice President |
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Rick Nelson
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CEO/CIO |
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Paul Robertson, III
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SunTrust Banks, Inc.
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Officer |
President
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SunTrust Bank
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Officer |
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Josie Rosson
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SunTrust Bank
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Officer |
CCO
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Ceredex
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CCO |
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Certium
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Officer |
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IronOak
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CCO |
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Silvant
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Officer |
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Ron Schwartz |
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Managing Director |
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Michael Sebesta |
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Managing Director |
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Dusty Self |
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Director |
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Mark Smith
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RidgeWorth Capital Management, Inc.
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Associate |
Associate |
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Dean Speer |
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Director |
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John Stebbins
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RidgeWorth Capital Management, Inc.
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Managing Director |
CFO
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SunTrust Banks, Inc.
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Officer |
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SunTrust Bank |
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Ceredex |
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IronOak |
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Silvant |
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StableRiver |
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Seix |
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C-21
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CONNECTION WITH OTHER |
NAME |
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NAME OF OTHER COMPANY |
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COMPANY |
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Chad Stephens |
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Director |
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Sonny Surkin |
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Director |
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J.P. Yarusinski |
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Director |
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Justin Wu |
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Vice President |
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Zevenbergen Capital Investments LLC is the investment subadviser for the Aggressive Growth Stock
and Emerging Growth Stock Funds. The principal address of Zevenbergen Capital Investments LLC is
601 Union Street, Seattle, Washington 98101.
Other business, profession, vocation, or employment of a substantial nature in which each director
or principal officer of the subadviser is or has been, at any time during the last two fiscal
years, engaged for his own account or in the capacity of director, officer, employee, partner or
trustee are as follows:
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Connection with Other |
Name |
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Name of Other Company |
|
Company |
Brooke de Boutray
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Rivendell Capital Inc.
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|
Vice President and Director |
Managing Director, Portfolio Manager
|
|
Seattle University
|
|
Member, Department of Finance Advisory Board |
Lisa Foley
Managing Director, Investment Officer
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|
Rivendell Capital Inc.
|
|
Secretary |
Leslie Tubbs
Managing Director, Portfolio Manager and Chief Compliance Officer
|
|
Rivendell Capital Inc.
|
|
Treasurer |
Nancy A. Zevenbergen
President and Chief Investment Officer
|
|
Rivendell Capital Inc.
Seattle Pacific University Foundation
|
|
President and Director
Director |
Alpha Equity Management LLC is the investment subadviser for the International Equity 130/30 Fund,
the Real Estate 130/30 Fund and the U.S. Equity 130/30 Fund. The principal address of Alpha Equity
Management LLC is 90 State House Square, Suite 1100, Hartford, CT 06103.
Other business, profession, vocation, or employment of a substantial nature in which each director
or principal officer of the subadviser is or has been, at any time during the last two fiscal
years, engaged for his own account or in the capacity of director, officer, employee, partner or
trustee are as follows:
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Connection with Other |
Name |
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Name of Other Company |
|
Company |
Kevin Means
Chief Investment Officer
|
|
None
|
|
None |
Vince Fioramonti
Director of Trading and Operations
|
|
None
|
|
None |
Donald Townswick
Director of Research
|
|
None
|
|
None |
Neil Kochen
Chief Risk Officer
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|
None
|
|
None |
C-22
ITEM 27. Principal Underwriters:
(a) |
|
Foreside Distribution Services L.P. (Foreside or the Distributor) acts as principal
underwriter for the following investment companies: |
American Independence Funds Trust
The Bjurman, Barry Funds
Commonwealth International Series Trust
The Coventry Group
Coventry Funds Trust
First Funds
Capital One Funds
Greenwich Advisors Trust
HSBC Advisor Funds Trust
HSBC Investor Funds
Pacific Capital Funds
RMR Series Trust
RidgeWorth Variable Trust
The Blue Fund Group
The Lou Holland Trust
The Thirty-Eight Hundred Fund, LLC
Vintage Mutual Funds, Inc.
Foreside is registered with the Securities and Exchange Commission as a broker-dealer and is a
member of the Financial Regulatory Authority or FINRA. Foresides main address is 100 SUMMER ST.
15TH FLOOR, Boston, Massachusetts 02110. Office of Supervisory Jurisdiction (OSJ) Branch
is at 3435 Stelzer Road, Columbus, Ohio 43219. Foreside is an indirect wholly-owned subsidiary of
Foreside Financial Group LLC.
Item 27(b) Information about the Directors and Officers of Foreside are as follows:
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|
|
Name |
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Address |
|
Position with Underwriter |
Mark S. Redman
|
|
3435 Stelzer Rd., Columbus, OH 43219
|
|
President and Director |
Elliott Dobin
|
|
100 Summer St., Boston, MA 02110
|
|
Secretary |
Andrew H. Byer
|
|
3435 Stelzer Rd., Columbus, OH 43219
|
|
Co-Chief Compliance Officer |
Linda C. Carley
|
|
100 Summer St, Boston, MA 02110
|
|
Co-Chief Compliance Officer |
Wayne A. Rose
|
|
100 Summer St., Boston, MA 43219
|
|
Assistant Chief Compliance Officer |
James E. (Ed) Pike
|
|
3435 Stelzer Rd., Columbus, OH 43219
|
|
Financial and Operations Principal |
Richard J. Berthy
|
|
Two Portland Square, Portland, ME 04101
|
|
Treasurer, Assistant Secretary and Director |
Item 27(c) Not applicable.
C-23
ITEM 28. Location of Accounts and Records:
Books or other documents required to be maintained by Section 31(a) of the Investment Company Act
of 1940, and the rules promulgated thereunder, are maintained as follows:
(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and (b); (3); (6); (8); (12); and
31a-1(d), the required books and records are maintained at the offices of Registrants custodians:
SunTrust Bank
303 Peachtree Street, N.E.
Atlanta, GA 30308
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
(Institutional Cash Management Money Market Fund, International Equity Fund, International Equity Index Fund, Strategic Income Fund, International Equity 130/30 Fund, Real Estate 130/30 Fund and U.S. Equity 130/30 Fund)
(b) With respect to Rules 31a-1(a); 31a-1(b)(1),(4); (2)(C) and (D); (4); (5); (6); (8); (9); (10);
(11); and 31a-1(f), the required books and records are maintained at the offices of Registrants
administrator:
Citi Fund Services Ohio, Inc. (formerly, BISYS Fund Services, Ohio, Inc.)
3435 Stelzer Road
Columbus, Ohio 43219
(c) With respect to Rules 31a-1(b)(5), (6), (9) and (10) and 31a-1(f), the required books and
records are maintained at the principal offices of the Registrants adviser and subadviser:
RidgeWorth Capital Management, Inc.
50 Hurt Plaza, Suite 1400
Atlanta, Georgia 30303
Alpha Equity Management LLC
90 State House Square
Suite 1100
Hartford, CT 06103
Ceredex Value Advisers LLC
300 South Orange Avenue, Suite 1600
Orlando, FL 32801
(records relating to its function as subadviser)
Certium Asset Management LLC
50 Hurt Plaza, Suite 1400
Atlanta, GA 30303
(records relating to its function as subadviser)
IronOak Advisors LLC
919 East Main Street
Richmond, VA 23219
(records relating to its function as subadviser)
C-24
Seix Investment Advisors LLC
10 Mountain View Road
Suite C-200
Upper Saddle River, New Jersey 07458
Silvant Capital Management LLC
50 Hurt Plaza, Suite 1400
Atlanta, GA 30303
(records relating to its function as subadviser)
StableRiver Capital Management LLC
50 Hurt Plaza, Suite 1400
Atlanta, GA 30303
(records relating to its function as subadviser)
Zevenbergen Capital Investments LLC
601 Union Street
Seattle, Washington 98101
(records relating to its function as subadviser)
(d) Foreside Distribution Services, L.P.
100 Summer Street, 15th Floor
Boston, MA 02110
(records relating to its function as distributor)
ITEM 29. Management Services: None.
ITEM 30. Undertakings: None.
C-25
NOTICE
A copy of the Agreement and Declaration of Trust for the Registrant is on file with the Secretary
of State of the Commonwealth of Massachusetts and notice is hereby given that this Registration
Statement has been executed on behalf of the Registrant by an officer of the Registrant as an
officer and by its trustees as trustees and not individually and the obligations of or arising out
of this Registration Statement are not binding upon any of the trustees, officers, or shareholders
individually but are binding only upon the assets and property of the Registrant.
C-26
RIDGEWORTH FUNDS
RIDGEWORTH VARIABLE TRUST
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that each of the undersigned as trustees of RidgeWorth Funds
and RidgeWorth Variable Trust (each, a Trust), business trusts organized under the laws of the
Commonwealth of Massachusetts, hereby constitutes and appoints Kerry Reilly and Cynthia Surprise,
and each of them singly, his or her true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, to sign for him or her and in his or her name, place and stead,
and in the capacity indicated below, to sign any and all Registration Statements and all amendments
thereto relating to the offering of each Trusts shares under the provisions of the Investment
Company Act of 1940 and/or the Securities Act of 1933, each such Act as amended, and to file the
same, with all exhibits thereto, and other documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, acting
alone, full power and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and purposes as he or she
might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned have herewith set their names as of the 20th
day of May 2008.
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/s/ Jeffrey Biggar
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/s/ George C. Guynn |
Jeffrey M. Biggar, Trustee
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George C. Guynn, Trustee |
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/s/ Sidney E. Harris
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/s/ Warren Y. Jobe |
Sidney E. Harris, Trustee
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Warren Y. Jobe, Trustee |
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/s/ Connie McDaniel
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/s/ Clarence Ridley |
Connie D. McDaniel, Trustee
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Clarence H. Ridley, Trustee |
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/s/ Charles D. Winslow |
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Charles D. Winslow, Trustee |
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C-27
Exhibit Index
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Exhibit |
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Document |
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(b)(2)
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Amendment to the By-Laws |
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(d)(2)
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Form of Amended Schedule A to the Amended and Restated Investment Advisory Agreement between
the Registrant and RidgeWorth Capital Management, Inc. (formerly Trusco Capital Management,
Inc.) dated November 14, 2006 |
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(d)(4)
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Form of Expense Limitation Agreement dated April 1, 2008 among RidgeWorth Capital
Management, Inc., Seix Investment Advisors LLC, Silvant Capital Management, LLC and
StableRiver Capital Management, LLC |
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(d)(6)
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Form of Amendment dated April 1, 2008 to the Investment Subadvisory Agreement dated November
19, 2004, between RidgeWorth Capital Management, Inc. (formerly Trusco Capital Management, Inc.)
and Zevenbergen Capital Investments, LLC |
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(d)(13)
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Form of Investment Subadvisory Agreement dated March 31, 2008, between the RidgeWorth
Capital Management, Inc. (formerly, Trusco Capital Management, Inc.) and Seix Investment
Advisors LLC |
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(e)(3)
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Form of Amendment dated April 1, 2008 to the Distribution Agreement dated September 1, 2007,
between the Registrant and Foreside Distribution Services L.P. |
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(g)(6)
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Form of Amendment dated March 31, 2008 to the Custodian Agreement dated February 1, 1994
between the Registrant and SunTrust Bank |
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(g)(9)
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Form of Amendment dated March 31, 2008 to the Custodian Agreement dated January 29, 2003
among the Registrant, RidgeWorth Variable Trust (formerly STI Classic Variable Trust) and
Brown Brothers Harriman & Co. |
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(h)(9)
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Form of Amendment dated April 1,2008 to the Master Services Agreement between the Registrant
and Citi Fund Services, Ohio, Inc., (formerly, BISYS Fund Services, Ohio, Inc.) |
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(h)(10)
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Form of Amendment dated May ___, 2008 to the Master Services Agreement between the
Registrant and Citi Fund Services, Ohio, Inc., (formerly, BISYS Fund Services, Ohio, Inc.) |
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(h)(11)
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Form of Shareholder Service Plan and Agreement relating to Corporate Trust Shares |
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(h)(14)
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Form of Amendment dated May 1, 2008 to the Compliance Services Agreement among the
Registrant, STI Classic Variable Trust and Citi Fund Services, Inc. (formerly, BISYS Fund Services,
Ohio, Inc.) dated October 1, 2004. |
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(m)(4)
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Form of Amended Schedule A to the Distribution and Service Plan for Class A Shares dated May
1, 2008 |
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(n)(1)
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Rule 18F-3 Multiple Class Plan adopted May 24, 1995, last amended May 20, 2008. |
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(p)(1)
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Code of Ethics, dated May 20, 2008, for the Registrant |
C-28
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 (the Securities Act) and the
Investment Company Act of 1940, as amended, the Registrant has duly caused this Post-Effective
Amendment No. 75 to the Registrants Registration Statement (the Amendment) to be signed on its
behalf by the undersigned, duly authorized, in the City of Atlanta, State of Georgia on the
30th day of May, 2008.
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By: |
/s/ Julia Short
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Julia R. Short, |
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President and Chief Executive Officer |
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Pursuant to the requirements of the Securities Act, this Amendment has been signed below by the
following persons in the capacity and as of the dates indicated.
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Trustee |
Jeffrey M. Biggar |
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Trustee |
George C. Guynn |
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Trustee |
Sidney E. Harris |
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Trustee |
Warren Y. Jobe |
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Trustee |
Connie D. McDaniel |
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Trustee |
Clarence H. Ridley |
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Trustee |
Charles D. Winslow |
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/s/ Julia Short
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President and |
Julia R. Short
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Chief Executive Officer |
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Treasurer and Chief |
Martin R. Dean
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Financial Officer |
* By: /s/ Cynthia Surprise
Cynthia Surprise, pursuant to the powers of attorney filed herewith
C-29