The Short-Intermediate Tax-Exempt Fund returned 0.45% during the quarter.
The Funds overweight in higher quality, more conservative sectors detracted from relative performance at a time when yield spreads narrowed on lower rated investment-grade issues. However, we believe that higher quality bonds provide superior liquidity and lower volatility. The Funds yield curve positioning enhanced relative performance, given that the curve flattened during the quarter. In addition, we maintained the Funds underweight within the three- to five-year maturity range, as we believe that this market segment offers lower total return prospects given the Feds stated plans. Lastly, we added to our overweight in six- to seven-year maturities to take advantage of yield curve steepness in this range.
Holdings are subject to change and current and future portfolio holdings are subject to risk.
If you are an investor seeking higher current income, but potentially less price volatility than the Intermediate Tax-Exempt Fund, with income exempt from regular federal income tax, you may find this Fund attractive. It is well suited for income-oriented investors in higher tax brackets who are willing to accept some risk of principal in exchange for higher yield potential. Income from the Fund may be subject to federal alternative minimum tax (AMT), state and local taxes.