Select Large Cap Growth Stock

Performance Update:
As we entered the fourth quarter, many market pundits expressed relief that the worst recession since the Great Depression was finally over, and the consensus view point looking into 2010 became the notion that GDP growth will expand at a below normal pace relative to history. It has been theorized that this predicted "new normal" economic expansion period will be different than the past because the U.S. consumer has retrenched, budget deficits continue to expand and inflation could be just around the corner. However, the trend in leading economic indicators has continued to show improvement month after month.

With this back drop of improved economic activity the Russell 1000 Growth Index continued its recovery during the fourth quarter returning 7.94% and significantly exceeding other large capitalization indices. The RidgeWorth Select Large Cap Growth Stock Fund I shares lagged the index by 219 basis points returning 5.75%. Large cap growth had a stellar year as measured by the Russell index finishing the year up 37.21%.

Contributors:
Several stocks had very strong returns during the quarter. After being a strong performer for the Fund in the third quarter, Google continued its upward advance adding 30 basis points of relative return and was up more than 20% in the fourth quarter. Google continued to grow market share during the quarter at Yahoo's expense. Visa's stock price also climbed more than 20% during the quarter as transaction and billed business grew during the quarter after shirking the previous quarter. In addition, the recent addition of American Tower to the Fund added value as the stock rose by 18% during the quarter. American Tower operates and owns communication towers. Business fundamentals are strong and improving for this high quality leader in towers. It has strong free cash flow, pricing power and scale with good revenue visibly.

Detractors:
While the Fund was up 5.75% for the quarter, on a relative basis stock selection within Health Care and Consumer Staples hampered results in the quarter. Two stocks from these sectors contributed more than 50% of the relative underperformance. Within Consumer Staples, CVS/Caremark, a retail pharmacy combined with a pharmacy benefit management company, stumbled in its marketing effort to renew contracts resulting in large contract losses affecting the company's future earnings growth rate. This new information surprised investors and the stock declined 20% when it opened for trading. Amgen, a biotechnology company, declined by 6% after the company reported negative clinical trial data specifically relating to cancer treatment for Aranesp. Some investors, fearing that all Aranesp sales would go to zero, sold the stock. Aranesp represents 18% of Amgen's revenues; however, we believe doctors will continue using Aranesp in treating kidney disease. Amgen remains a core holding due to its strong balance sheet and expected approval of a new blockbuster drug.

Strategy and Outlook:
The investment team continues to focus on stocks that best fit our investment criteria: those with positive fundamental trends that we believe will lead to rising earnings, efficiently managed capital structures and reasonable valuations. The team attempts to derive the majority of outperformance through stock selection and to minimize the impact of unintended style bias and/or macroeconomic risks. This bottom-up stock selection coupled with disciplined risk management is cornerstone to the investment process.

Securities mentioned (% of portfolio): Visa Incorporated (3.37), Google Incorporated (Cl A) (4.74), priceline.com Incorporated (2.05), American Tower Corporation (2.88), Analog Devices Incorporated (2.97), CVS Caremark Corporation (no longer in portfolio), Fluor Corporation (1.23), Amgen Incorporated (3.50), Goldman Sachs Group Incorporated (1.41), Kohl’s Corporation (2.44).

Stocks are more volatile and carry more risk and return potential than other forms of investments. Mutual fund investing involves risk,including the possible loss of principal.

The Russell 1000 Growth Index is an unmanaged index composed of securities in the Russell 1000 Index, with higher than average price-to-book ratios and higher than average forecasted growth values.

The views expressed by the Fund’s managers are as of the quarter-end specified. This information is subject to change without notice as market conditions change, and is not intended to predict the performance of any individual security, market sector, or RidgeWorth Fund.

Past performance does not guarantee future results.