Fund Descriptions
Small-Company Stock Fund

“This Fund invests in smaller companies—usually those that have a market capitalization of about $2 billion or less,” explains portfolio manager Mark Ashton. “We look for stocks that are priced below what we consider to be their intrinsic value and for companies that are positioned to make a change in their business that will lead to an improvement in their competitive position or financial returns.”

This approach to selecting portfolio securities is often referred to as a value approach. For this Fund, the managers apply similar buy and sell discipline as the Value Fund; however the universe of investment candidates is different. This Fund concentrates on smaller sized companies, and the portfolio is typically fairly concentrated, with assets usually invested in 40 to 50 names.

“As value managers, we are looking for small-company stocks trading at prices that do not reflect the companies’ future growth prospects. But we also have to have some reason to believe that the share price will improve in a reasonable time frame. The catalyst for that change could be a refocused business plan, new management, a better business climate or the likelihood of a buy-out or merger.”

Investing in small-company stocks offers the potential for strong returns. Typically, small companies have fewer layers of management approval and are therefore able to respond to market and competitive conditions more quickly. However, there are also additional risks. Smaller companies typically have less diverse product lines and lack the “deep pockets” resources of large companies.

Performance

The tables below show the Fund’s average annual and year-to-date total returns for various holding periods compared to its benchmark index. An index is a collection of securities intended to represent some slice of the total securities market.

The bar chart shows the Fund's annual return in each of the last 10 years or for each year since the Fund's inception. This indicates how widely performance has varied year-by-year.

Small-Company Stock Fund Historical Annual Total Returns

The total returns shown above represent past performance which does not guarantee future results. Investment return and principal value of an investment will fluctuate. An investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data quoted. Investing in small-company stocks poses special risks, such as increased volatility and limited liquidity.

Portfolio Composition

The following tables show how the Small-Company Stock Fund is diversified and what its top holdings are.

Small-Company Stock Fund Industry Diversification
On 09/30/08 On 06/30/08 Industrials 21.0% 22.8% Consumer Discretionary 18.4% 12.5% Financials 16.6% 15.1% Information Technology  11.0% 14.3% Consumer Staples  9.5%  3.7% Materials   6.9%  4.9% Energy   5.8% 12.8% Utilities   1.8% 3.0% Cash equivalents   9.0% 10.9% Total 100% 100%

Small-Company Stock Fund Top Ten Holdings
% of Total Investment at 09/30/08 Carlisle Companies, Inc.  4.1% Westlake Chemical Corp. 3.9% Belden, Inc. 3.7% Valley National Bancorp 3.6% J.M. Smucker Co. (The) 3.5% Alberto-Culver Co. (Class A) 3.5% Brinker International, Inc. 3.5% Dillard's, Inc. 3.3% Cimarex Energy Co. 3.2% Regal-Beloit Corp. 3.1% Total 35.4%

Fund assets on 12/31/08

$44,627,000

Comparison of Growth

This line graph is a comparison of the change in value of a $10,000 investment in the Fund and the Russell 2000 Index.

Small-Company Stock Fund Growth of $10,000

The Small-Company Stock Fund’s average annual total returns are net of any fee waivers and reimbursements. Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares.

Distributions

If this Fund has declared income or capital gains distributions in the current year, they will be listed in the table below.  See Track Earnings Distributions for the Fund's distribution schedule.

Small-Company Stock Fund 2008 Earnings Distributions
Distribution Type Declaration Date $/Per Share Ordinary Income   12/31/08    $0.1149

Small-Company Stock Fund 2007 Earnings Distributions
Distribution Type Declaration Date $/Per Share Ordinary Income   12/31/07    $0.1940  Long Term Capital Gains  12/31/07  $0.9647

Share Price History

This table shows how widely the Fund’s share price has fluctuated over time.

Small-Company Stock Share Price History

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Year End $8.85 $8.32 $9.51 $10.55 $10.49 $13.89 $15.69 $17.00 $19.06 $18.16  $11.81 Year High $10.33 $10.43 $9.69 $10.70 $12.85 $14.01 $15.76 $17.47 $20.24 $21.11  $18.58 Year Low $7.59 $8.27 $7.14 $8.48 $9.05 $9.30 $13.18 $14.86 $17.23 $18.16  $9.36