the benefits of mid-cap investing

Why Mid-Cap?

First Quarter 2010

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2Disclosures

Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and principal value of an investment will fluctuate thus an investor’s shares, when redeemed, may be worth more or less than their original cost.

Mutual fund investing involves risk, including possible loss of principal. Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high grade fixed income securities. Mid capitalization funds typically carry additional risks since smaller companies generally have a higher risk of failure.

This paper reflects the analysis and opinions of RidgeWorth Investments as of March 2010. Because market and economic conditions are often subject to rapid change, the analysis and opinions provided may change without notice. The analysis and opinions may not be relied upon as investment advice.

Statements of fact are from sources considered reliable but no representation or warranty is made as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

In preparing this paper, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from reliable sources.

An investor should consider the fund’s investment objectives, risks, and charges and expenses carefully before investing or sending money. This and other important information about the RidgeWorth Funds can be found in the fund’s prospectus. To obtain a prospectus, please call 1-888-784-3863 or visit www.ridgeworth.com. Please read the prospectus carefully before investing.

® 2010 RidgeWorth Funds. RidgeWorth Funds are distributed by RidgeWorth Distributors LLC. RidgeWorth Investments is the trade name for RidgeWorth Capital Management, Inc., the adviser to the RidgeWorth Funds, and is not affiliated with the distributor.

3Table of Contents

A Long Record of Outperformance…………………………….

A Consistent Record of Outperformance………….................

A Better Risk/Reward Relationship........................................

Performance Over Economic Cycles………………………….

Mid-caps and the Current Market Environment……………….

Conclusion………………………………………………………...

Glossary…………………………………………………………...

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An investment in mid-caps would have rewarded investors over the long term

Between 1979 and 2009 mid-caps significantly outpaced large and small caps. A $10,000 investment in mid-caps would have grown to nearly $470,000 — $175,000+ greater

than either large or small caps.

A Long Record of Outperformance

Past performance does not guarantee future results.

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Mid-caps have outperformed other cap sizes over short and long time periods

In periods ranging from one to 30 years the annualized returns of mid-caps were higher than the other three market caps for the period ending 12/31/09.

The outperformance is most significant in the 5- to 15-year time periods.



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Mid-cap outperformance can be attributed to several factors

Mid-cap companies are typically small cap companies that have succeeded

Mid-cap companies typically have greater financial liquidity and better capital-raising ability than small caps

Mid-cap companies typically have higher cash flows and earnings acceleration compared to large cap companies

Mid-cap companies receive less analyst coverage than large cap companies


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Over rolling time periods ranging from one- to 10-years, mid-caps have outperformed large and small caps well over half the time.

In rolling 10-year periods, mid-caps outperformed small caps every single time. Mid-caps have exhibited outperformance in both recessionary and expansionary periods.


Mid-cap stock outperformance has been consistent over time

A Consistent Record of Outperformance

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Recently, mid-caps have exhibited volatility that is more consistent with small-caps. Over longer time periods the standard deviation of mid-caps has been closer to large caps. Higher returns than large and small caps and volatility that is aligned with large caps have

provided mid-caps with a superior risk/reward profile.


Mid-caps have had a higher Sharpe Ratio than other cap sizes

A Better Risk/Reward Relationship

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Mid-caps have captured most of the market’s upswings without participating in all of the downside of small cap stocks.

Relative to large caps, mid-caps have often captured more than 120% of the upside while typically capturing only 100-120% of the downside.


Mid-caps participated in much of the market’s upside, while avoiding much of it’s downside

A Better Risk/Reward Relationship

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On average, bear markets have bottomed four months prior to the official end of a recession.

As the market approaches the bottom, mid-caps have historically underperformed large caps.

But, mid-caps have accelerated faster than large caps coming out of recessions.


Mid-cap performance has followed a predictable pattern over full market cycles

Performance Over Economic Cycles

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When expected volatility spiked in the late 1990s and in 2009 mid-caps underperformed large caps.

In 2003, when volatility began to recede, mid-cap outperformance relative to large caps skyrocketed.


Expected volatility has been an indicator of mid-cap performance relative to mega caps


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When expected volatility rose mid-caps usually outperformed small caps. Immediately following periods of high volatility, small caps outperformed mid-caps. In 2008, the relationship broke down for a brief period after Lehman declared bankruptcy.


The opposite relationship has generally been true when comparing mid-caps to small caps


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The exact timing of the recession’s end is still unknown, however, consensus is that the transition from recession to expansion is well underway.

As this transition continues, a number of current and expected environmental factors bode well for mid-cap stocks and active mid-cap managers.

Increasing investor risk appetites Recent outperformance of consumer discretionary versus consumer staples Expected emphasis on quality Escalating Mergers & Acquisitions activity

March 2009 signaled the transition from recession to expansion

Mid-caps and the Current Market Environment

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Including a mid-cap allocation has historically resulted in improved portfolio performance with a minimal increase in risk.

The incremental benefit of adding a 40% allocation of mid-caps would have generated a 25% increase in return with only 12% more risk for the one-year period.

Investors’ allocations to mid-cap should be consistent with their risk tolerance

Mid-caps may improve the risk/return relationship over the long term

Mid-caps and the Current Market Environment


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Investors should consider an allocation to mid-caps as part of a diversified portfolio

Conclusion

Consistent outperformance relative to large caps and small caps

A better risk-reward profile than other market cap sizes

Less extreme behavior under changing economic conditions

Favorable characteristics regardless of economic environment

Investors currently on the sidelines of the market will likely begin to move back into the equity markets due to an increased appetite for risk.

An analysis of mid-caps relative to other capitalization segments reveals the continuing strength of mid-caps as part of a diversified investment portfolio.

Investors who are ready to re-enter the equity markets may be well served by adding an allocation of mid-caps as part of a diversified portfolio because mid-caps have had:

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Index Definitions & Investment Terms

Glossary

Russell 1000 IndexMeasures the performance of the large cap segment of the U.S. equity universe, representing approximately 92% of the U.S. market.

Russell Midcap Index Measures the performance of the mid-cap segment of the U.S. equity universe, representing approximately 27% of the total market capitalization of the Russell 1000 companies.

Russell 2000 Index Measures the performance of the small cap segment of the U.S. equity universe, representing approximately 8% of the total market capitalization of that index.

Sharpe Ratio A risk-adjusted measure that is calculated using standard deviation and excess return to determine reward per unit of risk. The higher the Sharpe Ratio, the better the fund’s historical risk-adjusted performance

Thank You

the benefits of mid-cap investing

Economy & Finance