Table of Contents
As filed with the Securities and Exchange Commission on March 29, 2018
Securities Act File No. 33-12911
1940 Act Registration No. 811-5075
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
☐ Pre-Effective Amendment No.
☐ Post-Effective Amendment No.
(Check appropriate box or boxes)
THRIVENT MUTUAL FUNDS
(Exact Name of Registrant as Specified in Charter)
625 FOURTH AVENUE SOUTH
MINNEAPOLIS, MINNESOTA 55415
(Address of Principal Executive Offices)
612-844-4198
(Area Code and Telephone Number)
MICHAEL W. KREMENAK
SECRETARY AND CHIEF LEGAL OFFICER
THRIVENT MUTUAL FUNDS
625 FOURTH AVENUE SOUTH
MINNEAPOLIS, MINNESOTA 55415
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after this registration statement becomes effective. It is proposed that this filing will become effective on April 30, 2018 pursuant to Rule 488 under the Securities Act of 1933.
Title of Securities Being Registered: Shares of beneficial interest, par value $.01 per share. The Registrant has registered an indefinite number of shares of beneficial interest pursuant to Section 24(f) of the Investment Company Act of 1940, as amended, and is in a continuous offering of such shares under an effective registration statement (File Nos. 33-12911 and 811-5075). No filing fee is due herewith because of reliance on Section 24(f) of the Investment Company Act of 1940, as amended.
Table of Contents
LETTER FOR SHAREHOLDERS
Dear Shareholder:
The Board of Trustees of Thrivent Mutual Funds (the “Trust”) has scheduled special meetings of shareholders for June 21, 2018 to seek approval of the merger of Thrivent Growth and Income Plus Fund (the “Target Fund”) into Thrivent Moderately Aggressive Asset Allocation Fund (the “Acquiring Fund”). At the meeting, the shareholders of the Target Fund will be asked to consider and approve an Agreement and Plan of Reorganization (an “Agreement”) providing for its reorganization into the Acquiring Fund.
If you are not planning to attend the meeting in person, please vote before June 21 in one of the ways described below.
If the merger is approved, your investment in the Target Fund will automatically be transferred into the Acquiring Fund. We will send you a written confirmation after this takes place. This transfer is not expected to be a taxable event. (Of course, you may transfer your investment to a completely different series, which will not count as one of your permitted annual exchanges.)
Your vote counts! You may vote quickly and easily in any one of these ways:
● | Via Internet: see the instructions on the enclosed proxy card. |
● | Via Telephone: see the instructions on the enclosed proxy card. |
● | Via Mail: use the enclosed proxy card and postage-paid envelope. |
● | In person: attend the shareholder meetings on June 21 at the Thrivent Financial corporate office in Minneapolis. |
If you’d like more information about the Funds, you may order a statement of additional information to the Funds’ prospectuses, a shareholder report or the statement of additional information regarding the proposed Fund reorganizations (request the “Reorganization SAI”) by:
● | Telephone: 800-847-4836 |
● | Mail: Thrivent Mutual Funds, P.O. Box 219348, Kansas City, Missouri 64121-9348 |
● | Internet: ThriventFunds.com |
Thank you for taking this matter seriously and participating in this important process.
Sincerely,
David S. Royal
President
Thrivent Mutual Funds
Table of Contents
Questions & Answers
For Shareholders of Thrivent Growth and Income Plus Fund
Although we recommend that you read the complete Prospectus/Proxy Statement, we have provided the following questions and answers to clarify and summarize the issues to be voted on.
Q: Why is a shareholder meeting being held?
A: A special meeting of shareholders (the “Meeting”) of Thrivent Growth and Income Plus Fund (the “Target Fund”) is being held to seek shareholder approval of a reorganization (the “Reorganization”) of the Target Fund into Thrivent Moderately Aggressive Allocation Fund (the “Acquiring Fund”). Please refer to the Prospectus/Proxy Statement for a detailed explanation of the proposed Reorganization and for a more complete description of the Acquiring Fund.
Q: Why is the Reorganization being recommended?
A: After careful consideration, the Board of Trustees (the “Board”) of Thrivent Mutual Funds (the “Trust”) has determined that the Reorganization is in the best interests of the shareholders of the Target Fund and recommends that you cast your vote “FOR” the proposed Reorganization. The Target Fund and the Acquiring Fund both invest in equity securities and debt securities in approximately the same proportion and each is a series of the Trust, an open-end management investment company registered under the Investment Company Act of 1940. Thrivent Asset Management, LLC (“Thrivent Asset Mgt.” or the “Adviser”) is the investment adviser for the Target Fund and the Acquiring Fund.
The Board believes that the Reorganization would be in the best interests of the shareholders of the Target Fund because: (i) shareholders will become shareholders of a larger combined fund with greater potential to increase asset size and achieve economies of scale; (ii) the Acquiring Fund invests in a more diversified portfolio of equity and fixed income securities; (iii) the Acquiring Fund has achieved stronger performance than the Target Fund for the one-, three- and five-year periods ended December 29, 2017, though there is no guarantee of future performance; (iv) the Adviser believes that it can most effectively manage the assets currently in the Target Fund by combining such assets with the Acquiring Fund; and (v) the Acquiring Fund has a lower gross expense ratio than the Target Fund and shareholders of the Target Fund will experience a lower net expense ratio in the Acquiring Fund following the Reorganization.
Q: Who can vote?
A: Shareholders of the Target Fund are entitled to vote.
Q: How will the Reorganization affect me?
A: Assuming shareholders approve the proposed Reorganization, the assets of the Target Fund will be combined with those of the Acquiring Fund. The Class A and Class S Shares of the Target Fund automatically would be exchanged for an equal dollar value of Class A and Class S Shares of the Acquiring Fund. Following the Reorganization, the Target Fund will dissolve.
Q: Will I have to pay any commission or other similar fee as a result of the Reorganization?
A: No. You will not pay any commissions or other similar fees as a result of the Reorganization. If you hold Class A Shares of the Target Fund, you will receive Class A Shares of the Acquiring Fund. If you hold Class S Shares of the Target Fund, you will receive Class S Shares of the Acquiring Fund.
Q: Will the total annual operating expenses that my fund investment bears increase as a result of the Reorganization?
A: No, they will likely decrease. For more information about how fund expenses may change as a result of the Reorganization, please see the comparative and pro forma table and related disclosures in the COMPARISON OF THE FUNDS—Expenses section of the Prospectus/Proxy Statement.
Table of Contents
Q: Will I have to pay any U.S. federal income taxes as a result of the Reorganization?
A: The Reorganization is expected to be tax-free for federal income tax purposes. The Target Fund will seek an opinion of counsel to this effect. Generally, shareholders will not incur capital gains or losses on the exchange of Target Fund shares for Acquiring Fund shares as a result of the Reorganization.
Q: If shareholders of the Target Fund do not approve the Reorganization, what will happen to the Target Fund?
A: Thrivent Asset Mgt. will reassess what changes it would like to make to a Target Fund, including a possible repurposing of the Target Fund’s principal investment strategies or recommending a liquidation of the Target Fund to the Board. It may ultimately decide to make no changes.
Q: Who pays the costs of the Reorganization?
A: The expenses of the Reorganization, including the costs of the Meeting, will be paid by Thrivent Asset Mgt. or an affiliate and will not be borne by Target Fund shareholders.
Q: How can I vote?
A: Shareholders are invited to attend the Meeting and to vote in person. You may also vote by executing a proxy using one of three methods:
• | By Internet: Instructions for casting your vote via the Internet can be found in the enclosed proxy voting materials. The required control number is printed on your enclosed proxy card. If this feature is used, there is no need to mail the proxy card. |
• | By Telephone: Instructions for casting your vote via telephone can be found in the enclosed proxy voting materials. The toll-free number and required control number are printed on your enclosed proxy card. If this feature is used, there is no need to mail the proxy card. |
• | By Mail: If you vote by mail, please indicate your voting instructions on the enclosed proxy card, date and sign the card, and return it in the envelope provided, which is addressed for your convenience and needs no postage if mailed in the United States. |
Shareholders who execute proxies by Internet, telephone or mail may revoke them at any time prior to the Meeting by filing with the Target Fund a written notice of revocation, by executing another proxy bearing a later date, by voting later by Internet or telephone or by attending the Meeting and voting in person. Merely attending the Meeting, however, will not revoke any previously submitted proxy.
Q: When should I vote?
A: Every vote is important and the Board encourages you to record your vote as soon as possible. Voting your proxy now will ensure that the necessary number of votes is obtained, without the time and expense required for additional proxy solicitation.
Q: Who should I call if I have questions about the proposal in the Prospectus/Proxy Statement?
A: Call 866-865-3843 with your questions.
Table of Contents
Q: How can I get more information about the Target and Acquiring Funds?
A: You may obtain (1) a prospectus, statement of additional information or annual/semiannual report for the Funds or (2) the statement of additional information regarding the Reorganization (request the “Reorganization SAI”) by:
• | Telephone: 800-847-4836 and say “mutual funds” |
• | Mail: Thrivent Mutual Funds, P.O. Box 219348, Kansas City, Missouri 64121-9348 |
• | Internet: |
— | For a copy of a prospectus, a statement of additional information, or a shareholder report: |
ThriventFunds.com |
— | For a copy of this Prospectus/Proxy Statement or the Reorganization SAI: |
www.proxy-direct.com/thr-29820 |
Table of Contents
Thrivent Growth and Income Plus Fund
a series of
THRIVENT MUTUAL FUNDS
625 Fourth Avenue South
Minneapolis, Minnesota 55415
800-847-4836
ThriventFunds.com
NOTICE OF SPECIAL MEETING
OF SHAREHOLDERS
To be Held on June 21, 2018
NOTICE IS HEREBY GIVEN THAT a special meeting of shareholders (the “Meeting”) of Thrivent Growth and Income Plus Fund (the “Target Fund”), a series of Thrivent Mutual Funds (the “Trust”), will be held at the offices of Thrivent Financial for Lutherans, 625 Fourth Avenue South, Minneapolis, Minnesota 55415 on June 21, 2018 at 10:00 a.m. Central time for the following purposes:
1. | To approve an Agreement and Plan of Reorganization pursuant to which the Target Fund would (i) transfer all of its assets to Thrivent Moderately Aggressive Allocation Fund (the “Acquiring Fund”), a series of the Trust, in exchange for Class A and Class S Shares of the Acquiring Fund, (ii) distribute such Class A and Class S Shares of the Acquiring Fund to shareholders of the Target Fund, and (iii) dissolve. |
2. | To transact such other business as may properly be presented at the Meeting or any adjournment thereof. |
The Board of Trustees of the Trust (the “Board”) has fixed the close of business on April 20, 2018 as the record date for the determination of shareholders entitled to notice of, and to vote at, the Meeting and all adjournments thereof.
Shareholders are invited to attend the meeting and vote in person. You may also vote by executing a proxy using one of three methods:
• | By Internet—Instructions for casting your vote via the Internet can be found in the enclosed proxy voting materials. The required control number is printed on your enclosed proxy card. If this feature is used, there is no need to mail the proxy card. |
• | By Telephone—Instructions for casting your vote via telephone can be found in the enclosed proxy voting materials. The toll-free number and required control number are printed on your enclosed proxy card. If this feature is used, there is no need to mail the proxy card. |
• | By Mail—If you vote by mail, please indicate your voting instructions on the enclosed proxy card, date and sign the card, and return it in the envelope provided, which is addressed for your convenience and needs no postage if mailed in the United States. |
Shareholders who execute proxies by Internet, telephone, or mail may revoke them at any time prior to the Meeting by filing with the Target Fund a written notice of revocation, by executing another proxy bearing a later date, or by attending the Meeting and voting in person. Merely attending the Meeting, however, will not revoke any previously submitted proxy.
The Board recommends that you cast your vote FOR the proposed Reorganization as described in the Prospectus/Proxy Statement.
YOUR VOTE IS IMPORTANT
Please return your proxy card or record your voting instructions by telephone or via the Internet promptly no matter how many shares you own. In order to avoid the additional expense of further solicitation, we ask that you mail your proxy card or record your voting instructions by telephone or via the Internet promptly regardless of whether you plan to be present in person at the Meeting.
|
Date: April 30, 2018
Michael W. Kremenak
Secretary
Thrivent Mutual Funds
Table of Contents
COMBINED PROSPECTUS/PROXY STATEMENT
THRIVENT GROWTH AND INCOME PLUS FUND
a series of
THRIVENT MUTUAL FUNDS
625 Fourth Avenue South
Minneapolis, Minnesota 55415
800-847-4836
April 30, 2018
This Prospectus/Proxy Statement is furnished to you as a shareholder of Thrivent Growth and Income Plus Fund (the “Target Fund”), a series of Thrivent Mutual Funds (the “Trust”). A special meeting of shareholders of the Target Fund will be held on June 21, 2018 (the “Meeting”) to consider the approval of a Reorganization (the “Reorganization”) of the Target Fund into Thrivent Moderately Aggressive Allocation Fund (the “Acquiring Fund”). The Board of Trustees of the Trust (the “Board”) requests that you vote your shares by completing and returning the enclosed proxy card or by recording your voting instructions by telephone or via the Internet regardless of whether you plan to be present at the Meeting in order to avoid the additional expense of further solicitation.
The Acquiring Fund and the Target Fund are sometimes referred to herein individually as a “Fund” or collectively as the “Funds.” Each of the Acquiring Fund and the Target Fund is organized as a series of the Trust, an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The Target Fund is a diversified company and the Acquiring Fund is non-diversified company, each as defined under the 1940 Act.
This Prospectus/Proxy Statement sets forth concisely the information shareholders of the Target Fund ought to know before voting on the Reorganization. Please read it carefully and retain it for future reference.
The following documents, each having been filed with the Securities and Exchange Commission (the “SEC”), are incorporated herein by reference:
• | The Thrivent Mutual Funds Prospectuses, dated February 28, 2018 and as supplemented through the date hereof (the “Trust Prospectus”). |
• | A Statement of Additional Information, dated April 30, 2018, relating to this Combined Prospectus/Proxy Statement (the “Reorganization SAI”); |
• | The Thrivent Mutual Funds Statement of Additional Information, dated February 28, 2018 and as supplemented through the date hereof (the “Trust SAI”). |
Copies of the foregoing may be obtained without charge by calling or writing the Fund as set forth below. If you wish to request the Reorganization SAI, please ask for the “Reorganization SAI.”
In addition, each Fund will furnish, without charge, a copy of its most recent annual report and subsequent semi-annual report, if any, to a shareholder upon request.
Copies of each Fund’s most recent prospectus, statement of additional information, annual report and semi-annual report can be obtained at ThriventFunds.com. Requests for documents can also be made by calling 800-847-4836 or writing Thrivent Mutual Funds, P.O. Box 219348, Kansas City, Missouri 64121-9348.
The Funds file reports and other information with the SEC. Information filed by the Funds with the SEC can be reviewed and copied at the SEC’s Public Reference Room in Washington, DC or on the EDGAR database on the SEC’s internet site (https://www.sec.gov). Information on the operation of the SEC’s Public Reference Room may be obtained by calling the SEC at 202-551-8090. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC’s e-mail address (publicinfo@sec.gov) or by writing the Public Reference Section of the SEC, Washington, DC 20549-1520.
The Board knows of no business other than that discussed above that will be presented for consideration at the Meeting. If any other matter is properly presented, it is the intention of the persons named in the enclosed proxy to vote in accordance with their best judgment.
No person has been authorized to give any information or make any representation not contained in this Prospectus/Proxy Statement and, if so given or made, such information or representation must not be relied upon as having been authorized. This Prospectus/Proxy Statement does not constitute an offer to sell or a solicitation of an
1
Table of Contents
offer to buy any securities in any jurisdiction in which, or to any person to whom, it is unlawful to make such offer or solicitation.
Neither the Securities and Exchange Commission nor any state regulator has approved or disapproved of these shares or passed upon the adequacy of this Prospectus/Proxy Statement. A representation to the contrary is a crime.
The date of this Prospectus/Proxy Statement is April 30, 2018. The Prospectus/Proxy Statement will be sent to shareholders on or around May 7, 2018.
2
Table of Contents
Page | ||
4 | ||
4 | ||
4 | ||
6 | ||
6 | ||
6 | ||
9 | ||
9 | ||
10 | ||
Purchase, Valuation, Redemption and Exchange of Shares, Dividends and Distributions | 12 | |
14 | ||
14 | ||
15 | ||
16 | ||
16 | ||
17 | ||
18 | ||
18 | ||
18 | ||
19 | ||
Material Federal Income Tax Consequences of the Reorganization | 20 | |
21 | ||
22 | ||
22 | ||
22 | ||
22 | ||
22 | ||
22 | ||
23 | ||
23 | ||
23 | ||
23 | ||
23 |
3
Table of Contents
The following is a summary of certain information contained elsewhere in this Prospectus/Proxy Statement and is qualified in its entirety by reference to the more complete information contained in this Prospectus/Proxy Statement. Shareholders should read the entire Prospectus/Proxy Statement carefully.
The Board, including the trustees who are not “interested persons” (as defined in the 1940 Act) of each Fund (the “Independent Trustees”), has unanimously approved an Agreement and Plan of Reorganization (the “Reorganization Agreement”) on behalf of each Fund, subject to Target Fund shareholder approval. The Reorganization Agreement provides for:
• | the transfer of all of the assets of the Target Fund to the Acquiring Fund in exchange for Class A and Class S Shares of the Acquiring Fund; |
• | the distribution by the Target Fund of such Acquiring Fund Class A and Class S Shares to Target Fund shareholders; and |
• | the dissolution of the Target Fund. |
When the Reorganization is complete, Target Fund shareholders will hold Acquiring Fund shares. The aggregate value of the Acquiring Fund shares a Target Fund shareholder will receive in the Reorganization will equal the aggregate value of the Target Fund shares owned by such shareholder immediately prior to the Reorganization. After the Reorganization, the Acquiring Fund will continue to operate with the investment objective and investment policies set forth in this Prospectus/Proxy Statement.
As discussed in more detail elsewhere in this Prospectus/Proxy Statement, the Board believes that the Reorganization would be in the best interests of the Target Fund’s shareholders because: (i) shareholders will become shareholders of a larger combined fund with greater potential to increase asset size and achieve economies of scale; (ii) the Acquiring Fund invests in a more diversified portfolio of equity and fixed income securities; (iii) the Acquiring Fund has achieved stronger performance than the Target Fund for the one-, three- and five-year periods ended December 29, 2017, though there is no guarantee of future performance; (iv) Thrivent Asset Management, LLC (“Thrivent Asset Mgt.” or the “Adviser”) believes that it can most effectively manage the assets currently in the Target Fund by combining such assets with the Acquiring Fund; and (v) the Acquiring Fund has a lower gross expense ratio than the Target Fund and shareholders of the Target Fund will experience a lower net expense ratio in the Acquiring Fund following the Reorganization.
In addition, the Board, when determining whether to approve the Reorganization, considered, among other things, the future growth prospects of each of the Target Fund and the Acquiring Fund, the fact that the Target Fund shareholders would not experience any diminution in shareholder services as a result of the Reorganization, and the fact that the Reorganization is expected to be a tax-free reorganization for federal income tax purposes.
Background and Reasons for the Reorganization
The Target Fund and the Acquiring Fund have similar investment objectives, but the Target Fund has an objective to seek income while the Acquiring Fund does not. The investment objective of the Target Fund is to seek long-term capital growth and income. The investment objective of the Acquiring Fund is to seek long-term capital growth.
The two Funds also have some similarities and some differences in their principal investment strategies, which are described in more detail in the COMPARISON OF FUNDS—Investment Objective and Principal Strategies section of the Prospectus/Proxy Statement. Both Funds invest in a combination of equity securities and debt securities in approximately the same proportion; the Target Fund’s target allocation is 70% equity securities and 30% debt securities and the Acquiring Fund’s target allocation is 77% equity securities and 23% debt securities. The equity securities in which the Target Fund invests are primarily income-producing, while the Acquiring Fund does not necessarily invest in income-producing equity securities. Another difference is that the Acquiring Fund invests in a combination of other funds managed by the Adviser and directly held financial instruments, but the Target Fund does not generally invest in other funds managed by the Adviser.
4
Table of Contents
In determining whether to recommend approval of the Reorganization Agreement to Target Fund shareholders, the Board considered a number of factors, including, but not limited to: (i) the expenses and advisory fees applicable to the Funds before the proposed Reorganization and the estimated expense ratios of the combined Fund after the proposed Reorganization; (ii) the comparative investment performance of the Funds; (iii) the future growth prospects of each Fund; (iv) the terms and conditions of the Reorganization Agreement; (v) whether the Reorganization would result in the dilution of shareholder interests; (vi) the compatibility of the Funds’ investment objectives, policies, risks and restrictions; (vii) that the proposed Reorganization was expected to be a tax-free reorganization for federal income tax purposes; (viii) the compatibility of the Funds’ service features available to shareholders, including exchange privileges; and (ix) the estimated costs of the Reorganization, which would be borne by the Adviser. The Board concluded that these factors supported a determination to approve the Reorganization Agreement.
The Board has determined that the Reorganization is in the best interests of the Target Fund and that the interests of the Target Fund’s shareholders will not be diluted as a result of the Reorganization. In addition, the Board has determined that the Reorganization is in the best interests of the Acquiring Fund and that the interests of the Acquiring Fund’s shareholders will not be diluted as a result of the Reorganization.
The Board is asking shareholders of the Target Fund to approve the Reorganization at the Meeting to be held on June 21, 2018. If shareholders of the Target Fund approve the proposed Reorganization, it is expected that the closing date of the transaction (the “Closing Date”) will be after the close of business on or about June 28, 2018, but it may be at a different time as described herein. If shareholders of the Target Fund do not approve the proposed Reorganization, the Board will consider alternatives, including repurposing the Target Fund’s principal strategies.
The Board recommends that you vote “FOR” the Reorganization.
5
Table of Contents
Investment Objective and Principal Strategies
Investment Objective. The Target Fund and the Acquiring Fund have similar investment objectives, but the Target Fund has an objective to seek income while the Acquiring Fund does not. The investment objective of the Target Fund is to seek long-term capital growth and income. The investment objective of the Acquiring Fund is to seek long-term capital growth.
Principal Strategies. Both Funds invest in a combination of equity securities and debt securities in approximately the same proportion; the Target Fund’s target allocation is 70% equity securities and 30% debt securities and the Acquiring Fund’s target allocation is 77% equity securities and 23% debt securities. While the Acquiring Fund invests in a combination of other funds managed by the Adviser and directly held financial instruments, the Target Fund does not generally invest in other funds managed by the Adviser. However, the Target Fund may invest in unaffiliated exchange-traded funds (“ETFs”) as a principal investment strategy.
The equity securities in which the Target Fund are primarily income-producing, while the Acquiring Fund does not necessarily invest in income-producing equity securities. Under normal circumstances, the Target Fund invests in real estate investment trusts (“REITs”). The Acquiring Fund does not invest in REITs as a principal investment strategy.
Both Funds invest in a variety of fixed income securities of any maturity or credit quality. Both Funds invest in in leveraged loans, which are senior secured loans that are made by banks or other lending institutions to companies that are rated below investment grade.
Both Funds can utilize derivatives (such as futures and swaps) for investment exposure or hedging purposes. The Funds may enter into standardized derivatives contracts traded on domestic or foreign securities exchanges, boards of trade, or similar entities, and non-standardized derivatives contracts traded in the over-the-counter market. In addition, both Funds have exposure to foreign securities, including those of issuers in emerging markets.
Fund Holdings. A description of the Funds’ policies and procedures with respect to the disclosure of the Funds’ portfolio securities is available on the Funds’ website.
The Funds are subject to similar principal risks, with a few differences. These risks are described below. Shares of the each Fund will rise and fall in value and there is a risk that you could lose money by investing in each Fund.
Principal risks to which both Funds are subject
Allocation Risk. The Fund’s investment performance depends upon how its assets are allocated across broad asset categories and applicable sub-classes within such categories. Some broad asset categories and sub-classes may perform below expectations or the securities markets generally over short and extended periods. In particular, underperformance in the equity markets would have a material adverse effect on the Fund’s total return given its significant allocation to equity securities. Therefore, a principal risk of investing in the Fund is that the allocation strategies used and the allocation decisions made will not produce the desired results.
Credit Risk. Credit risk is the risk that an issuer of a debt security to which the Fund’s portfolio is exposed may no longer be able or willing to pay its debt. As a result of such an event, the debt security may decline in price and affect the value of the Fund.
Derivatives Risk. The use of derivatives (such as futures and swaps) involves additional risks and transaction costs which could leave the Fund in a worse position than if it had not used these instruments. The use of derivatives can lead to losses because of adverse movements in the price or value of the underlying asset, index or rate, which may be magnified by certain features of the contract. Changes in the value of the derivative may not correlate as intended with the underlying asset, rate or index, and the Fund could lose much more than the original amount invested. Derivatives can be highly volatile, illiquid and difficult to value. Certain derivatives may also be subject to counterparty risk, which is that the other party in the transaction will not fulfill its contractual obligations due to its financial condition, market events, or other reasons.
6
Table of Contents
Emerging Markets Risk. The economic and political structures of developing countries, in most cases, do not compare favorably with the U.S. or other developed countries in terms of wealth and stability, and their financial markets often lack liquidity. Fund performance will likely be negatively affected by portfolio exposure to countries in the midst of, among other things, hyperinflation, currency devaluation, trade disagreements, sudden political upheaval, or interventionist government policies. Significant buying or selling actions by a few major investors may also heighten the volatility of emerging markets. These factors make investing in emerging market countries significantly riskier than in other countries, and events in any one country could cause the Fund’s share price to decline.
Foreign Securities Risk. Foreign securities are generally more volatile than their domestic counterparts, in part because of higher political and economic risks, lack of reliable information and fluctuations in currency exchange rates. Foreign securities may also be more difficult to resell than comparable U.S. securities because the markets for foreign securities are often less liquid. Even when a foreign security increases in price in its local currency, the appreciation may be diluted by adverse changes in exchange rates when the security’s value is converted to U.S. dollars. Foreign withholding taxes also may apply and errors and delays may occur in the settlement process for foreign securities. All of these risks may be heightened for securities of issuers located in, or with significant operations in, emerging market countries.
High Yield Risk. High yield securities – commonly known as “junk bonds” – to which the Fund’s portfolio is exposed are considered predominantly speculative with respect to the issuer’s continuing ability to make principal and interest payments. If the issuer of the security is in default with respect to interest or principal payments, the value of the Fund may be negatively affected.
Interest Rate Risk. Interest rate risk is the risk that bond prices decline in value when interest rates rise for bonds that pay a fixed rate of interest. Bonds with longer durations or maturities tend to be more sensitive to changes in interest rates than bonds with shorter durations or maturities. In addition, both mortgage-backed and asset-backed securities are sensitive to changes in the repayment patterns of the underlying security. If the principal payment on the underlying asset is repaid faster or slower than the holder of the asset-backed or mortgage-backed security anticipates, the price of the security may fall, particularly if the holder must reinvest the repaid principal at lower rates or must continue to hold the security when interest rates rise. This effect may cause the value of the Fund to decline and reduce the overall return of the Fund. Changes by the Federal Reserve to monetary policies could affect interest rates and the value of some securities.
Investment Adviser Risk. The Fund is actively managed and the success of its investment strategy depends significantly on the skills of the Adviser in assessing the potential of the investments in which the Fund invests. This assessment of investments may prove incorrect, resulting in losses or poor performance, even in rising markets.
Issuer Risk. Issuer risk is the possibility that factors specific to a company to which the Fund’s portfolio is exposed will affect the market prices of the company’s securities and therefore the value of the Fund. Common stock of a company is subordinate to other securities issued by the company. If a company becomes insolvent, interests of investors owning common stock will be subordinated to the interests of other investors in, and general creditors of, the company.
Leveraged Loan Risk. Leveraged loans (also known as bank loans) are subject to the risks typically associated with debt securities. In addition, leveraged loans, which typically hold a senior position in the capital structure of a borrower, are subject to the risk that a court could subordinate such loans to presently existing or future indebtedness or take other action detrimental to the holders of leveraged loans. Leveraged loans are also subject to the risk that the value of the collateral, if any, securing a loan may decline, be insufficient to meet the obligations of the borrower, or be difficult to liquidate. Some leveraged loans are not as easily purchased or sold as publicly-traded securities and others are illiquid, which may make it more difficult for the Fund to value them or dispose of them at an acceptable price. Below investment-grade leveraged loans are typically more credit sensitive. In the event of fraud or misrepresentation, the Fund may not be protected under federal securities laws with respect to leveraged loans that may not be in the form of “securities.” The settlement period for some leveraged loans may be more than seven days.
Liquidity Risk. Liquidity is the ability to sell a security relatively quickly for a price that most closely reflects the actual value of the security. High-yield bonds and leveraged loans have a less liquid resale market. In addition, dealer inventories of bonds are at or near historic lows in relation to market size, which has the potential to decrease liquidity and increase price volatility in the fixed income markets, particularly during periods of economic or market
7
Table of Contents
stress. As a result, the Adviser may have difficulty selling or disposing of securities quickly in certain markets or may only be able to sell the holdings at prices substantially less than what the Adviser believes they are worth.
Market Risk. Over time, securities markets generally tend to move in cycles with periods when security prices rise and periods when security prices decline. The value of the Fund’s investments may move with these cycles and, in some instances, increase or decrease more than the applicable market(s) as measured by the Fund’s benchmark index(es). The securities markets may also decline because of factors that affect a particular industry.
Mortgage-Related and Other Asset-Backed Securities Risk. The value of mortgage-related and asset-backed securities will be influenced by the factors affecting the housing market and the assets underlying such securities. As a result, during periods of declining asset value, difficult or frozen credit markets, swings in interest rates, or deteriorating economic conditions, mortgage-related and asset-backed securities may decline in value, face valuation difficulties, become more volatile and/or become illiquid.
Volatility Risk. Volatility risk is the risk that certain types of securities shift in and out of favor depending on market and economic conditions as well as investor sentiment. The value of the Fund’s shares may be affected by weak equity markets or changes in interest rate or bond yield levels. As a result, the value of the Fund’s shares may fluctuate significantly in the short term.
Additional principal risks to which only the Target Fund is subject
Convertible Securities Risk. Convertible securities are subject to the usual risks associated with debt securities, such as interest rate risk and credit risk. Convertible securities also react to changes in the value of the common stock into which they convert, and are thus subject to market risk. The Fund may also be forced to convert a convertible security at an inopportune time, which may decrease the Fund’s return.
ETF Risk. An ETF is subject to the risks of the underlying investments that it holds. In addition, for index-based ETFs, the performance of an ETF may diverge from the performance of such index (commonly known as tracking error). ETFs are subject to fees and expenses (like management fees and operating expenses) that do not apply to an index, and the Fund will indirectly bear its proportionate share of any such fees and expenses paid by the ETFs in which it invests.
Portfolio Turnover Rate Risk. The Fund may engage in active and frequent trading of portfolio securities in implementing its principal investment strategies. A high rate of portfolio turnover (100% or more) involves correspondingly greater expenses which are borne by the Fund and its shareholders and may also result in short-term capital gains taxable to shareholders.
Preferred Securities Risk. There are certain additional risks associated with investing in preferred securities, including, but not limited to, preferred securities may include provisions that permit the issuer, at its discretion, to defer or omit distributions for a stated period without any adverse consequences to the issuer; preferred securities are generally subordinated to bonds and other debt instruments in a company’s capital structure in terms of having priority to corporate income and liquidation payments, and therefore will be subject to greater credit risk than more senior debt instruments; preferred securities may be substantially less liquid than many other securities, such as common stocks or U.S. Government securities; generally, traditional preferred securities offer no voting rights with respect to the issuing company unless preferred dividends have been in arrears for a specified number of periods, at which time the preferred security holders may elect a number of directors to the issuer’s board; and in certain varying circumstances, an issuer of preferred securities may redeem the securities prior to a specified date.
Real Estate Investment Trust (“REIT”) Risk. REITs generally can be divided into three types: equity REITs, mortgage REITs, and hybrid REITs (which combine the characteristics of equity REITs and mortgage REITs). Equity REITs will be affected by changes in the values of, and income from, the properties they own, while mortgage REITs may be affected by the credit quality of the mortgage loans they hold. All REIT types may be affected by changes in interest rates. REITs are subject to additional risks, including the fact that they are dependent on specialized management skills that may affect the REITs’ abilities to generate cash flows for operating purposes and for making investor distributions. REITs may have limited diversification and are subject to the risks associated with obtaining financing for real property. As with any investment, there is a risk that REIT securities and other real estate industry investments may be overvalued at the time of purchase. In addition, a REIT can pass its income through to its investors without any tax at the entity level if it complies with various requirements under the Internal Revenue Code. There is the risk, however, that a REIT held by the Fund will fail to qualify for this tax-free pass-through treatment of its income. In addition, due to recent changes in the tax laws, certain tax benefits of REITs may not be passed through to mutual fund shareholders. By investing in REITs indirectly through the Fund, in addition to
8
Table of Contents
bearing a proportionate share of the expenses of the Fund, you will also indirectly bear similar expenses of the REITs in which the Fund invests.
Sovereign Debt Risk. Sovereign debt securities are issued or guaranteed by foreign governmental entities. These investments are subject to the risk that a governmental entity may delay or refuse to pay interest or repay principal on its sovereign debt, due, for example, to cash flow problems, insufficient foreign currency reserves, political considerations, the relative size of the governmental entity’s debt position in relation to the economy or the failure to put in place economic reforms required by the International Monetary Fund or other multilateral agencies.
Additional principal risks to which only the Acquiring Fund is subject
Underlying Fund Risk. The performance of the Fund is dependent, in part, upon the performance of the underlying Funds in which the Fund invests. As a result, the Fund is subject to the same risks as those faced by the underlying Funds.
The Board. The Board has oversight responsibilities for each Fund and performs its fiduciary duties imposed on the directors of investment companies by the 1940 Act and under applicable state law.
The Adviser. Thrivent Asset Mgt. is the investment adviser for each Fund and manages each Fund on a day-to-day basis. Thrivent Asset Mgt. and its investment advisory affiliate, Thrivent Financial for Lutherans (“Thrivent Financial”) have been in the investment advisory business since 1986 and managed approximately $120.6 billion in assets as of December 31, 2017, including approximately $50.3 billion in mutual fund assets. These advisory entities are located at 625 Fourth Avenue South, Minneapolis, Minnesota 55415.
The Funds’ annual report to shareholders discusses the basis for the Board approving the investment advisory agreement during the period covered by the report.
Portfolio Management. Stephen D. Lowe, CFA has been a portfolio manager of the Target Fund since August 2013. Mark L. Simenstad, CFA, Noah J. Monsen, CFA, and Reginald L. Pfeifer, CFA have served as portfolio managers of the Target Fund since May 2015. John T. Groton, Jr., CFA has served as a portfolio manager of the Target Fund since February 2016. Mr. Lowe is Vice President of Fixed Income Mutual Funds and Separate Accounts and has been with Thrivent Financial since 1997. He has served as a portfolio manager since 2009. Mr. Simenstad is Chief Investment Strategist and has been with Thrivent Financial since 1999. Mr. Monsen has been with Thrivent Financial since 2000 and has served in an investment management capacity since 2008. Mr. Pfeifer has been with Thrivent Financial since 1990 and has served as an equity portfolio manager since 2003. Mr. Groton is the Director of Equity Research and has been with Thrivent Financial since 2007.
David C. Francis, CFA and Mark L. Simenstad, CFA have served as portfolio managers of the Acquiring Fund since June 2005. Darren M. Bagwell, CFA and Stephen D. Lowe, CFA have served as portfolio managers of the Acquiring Fund since April 2016. David S. Royal has served as a portfolio manager of the Acquiring Fund since April 2018. Mr. Francis is Vice President of Investment Equities and has been with Thrivent Financial since 2001. Mr. Simenstad is Chief Investment Strategist and has been with Thrivent Financial since 1999. Mr. Bagwell has been with Thrivent Financial since 2002 in an investment management capacity and currently is a Senior Equity Portfolio Manager. Mr. Lowe is Vice President of Fixed Income Mutual Funds and Separate Accounts and has been with Thrivent Financial since 1997. He has served as a portfolio manager since 2009. Mr. Royal is the Chief Investment Officer and has been with Thrivent Financial since 2006.
The Trust SAI provides information about the portfolio managers’ compensation, other accounts managed by the portfolio managers, and the portfolio managers’ ownership of shares of the Funds.
Advisory Fees. Each Fund pays an annual investment advisory fee to the Adviser. The advisory contract between the Adviser and the Fund provides for the following advisory fees for each class of shares of a Fund, expressed as an annual rate of average daily net assets:
9
Table of Contents
Target Fund |
0.650% of average daily net assets up to $250 million |
0.600% of average daily net assets over $250 million |
Acquiring Fund |
0.700% of average daily net assets up to $500 million |
0.675% of average daily net assets greater than $500 million up to $2 billion |
0.650% of average daily net assets greater than $2 billion up to $5 billion |
0.625% of average daily net assets greater than $5 billion up to $10 billion |
0.600% of average daily net assets over $10 billion |
During the fiscal year ended December 31, 2017, the contractual advisory fees for the Class A shares of the Target Fund were 0.65% of the Target Fund’s average daily net assets, and the contractual advisory fees for the Class S shares of the Target Fund were 0.65% of the Target Fund’s average daily net assets.
During the fiscal year ended October 31, 2017, the contractual advisory fees for the Class A shares of the Acquiring Fund were 0.68% of the Acquiring Fund’s average daily net assets, and the contractual advisory fees for the Class S shares of the Acquiring Fund were 0.68% of the Acquiring Fund’s average daily net assets. The Adviser has contractually agreed, for as long as the current fee structure is in place and through at least February 28, 2019, to waive an amount equal to any investment advisory fees indirectly incurred by the Acquiring Fund as a result of its investment in any other mutual fund for which the Adviser or an affiliate serves as investment adviser, other than Thrivent Cash Management Trust.
For a complete description of each Fund’s advisory services, see the section of the Trust Prospectus entitled “Management, Organization and Capital Structure” and the section of the Trust SAI entitled “Investment Adviser, Investment Subadvisers, and Portfolio Managers.”
12b-1 Plan. The Trust has adopted a Distribution Plan and Agreement pursuant to Rule 12b-1 under the 1940 Act (the “Rule 12b-1 Plan”) with respect to the Class A shares of each Fund. Thrivent Distributors, LLC (the “Distributor”), an affiliate of the Adviser, located at 625 Fourth Avenue South, Minneapolis, Minnesota 55415, serves as the distributor of each Fund. Under the Rule 12b-1 Plan, Class A shares of each Fund pay the Distributor an aggregate fee for distribution and shareholder servicing equal to an annual rate of 0.25% of the average daily net asset value represented by such shares. Class S shares are not subject to a Rule 12b-1 Plan and the Funds do not pay any percentage of their assets attributable to Class S shares for distribution or shareholder servicing. For a complete description of these arrangements with respect to each Fund, see the section of the Class A Prospectus entitled “Shareholder Information—Rule 12b-1 Fees” and the section of the Trust SAI entitled “Underwriting and Distribution Service.” These sections are incorporated by reference herein.
The table below sets forth the fees and expenses that investors may pay to buy and hold shares of each of the Target Fund and the Acquiring Fund, including (i) the fees and expenses paid by the Target Fund for the twelve-month period ended December 31, 2017, (ii) the fees and expenses paid by the Acquiring Fund for the twelve-month period ended October 31, 2017, and (iii) pro forma fees and expenses for the Acquiring Fund for the twelve-month period ended October 31, 2017, assuming the Reorganization had been completed as of the beginning of such period.
10
Table of Contents
Class A Shares | Class S Shares | |||||||||||||||||||||||||||
Actual | Pro Forma | Actual | Pro Forma | |||||||||||||||||||||||||
Target Fund | Acquiring Fund | Acquiring Fund (assuming merger with Target Fund) | Target Fund | Acquiring Fund | Acquiring Fund (assuming merger with Target Fund) | |||||||||||||||||||||||
Shareholder Fees (fees paid directly from your investment) | ||||||||||||||||||||||||||||
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) | 4.50 | % | 4.50 | % | 4.50 | % | N/A | N/A | N/A | |||||||||||||||||||
Maximum Deferred Sales Charge (Load) (as a percentage of net asset value at time of purchase or redemption, whichever is lower)* | 1.00 | % | 1.00 | % | 1.00 | % | N/A | N/A | N/A | |||||||||||||||||||
Annual Fund Operating Expenses as a Percentage of Average Net Assets (expenses that are deducted from Fund assets) | ||||||||||||||||||||||||||||
Management Fees | 0.65 | % | 0.68 | % | 0.68 | % | 0.65 | % | 0.68 | % | 0.68 | % | ||||||||||||||||
Distribution and Service (12b-1 Fees) | 0.25 | % | 0.25 | % | 0.25 | % | None | None | None | |||||||||||||||||||
Other Expenses | 0.51 | % | 0.15 | % | 0.15 | % | 0.55 | % | 0.15 | % | 0.15 | % | ||||||||||||||||
Acquired (Underlying) Fund Fees and Expenses | 0.03 | % | 0.31 | % | 0.31 | % | 0.03 | % | 0.31 | % | 0.31 | % | ||||||||||||||||
Total Annual Operating Expenses | 1.44 | % | 1.39 | % | 1.39 | % | 1.23 | % | 1.14 | % | 1.14 | % | ||||||||||||||||
Less Expense Reimbursement** | 0.31 | % | 0.27 | % | 0.27 | % | 0.30 | % | 0.27 | % | 0.27 | % | ||||||||||||||||
Net Annual Fund Operating Expenses | 1.13 | % | 1.12 | % | 1.12 | % | 0.93 | % | 0.87 | % | 0.87 | % |
* When you invest $1,000,000 or more, a deferred sales charge of 1% will apply to shares redeemed within one year.
** The Adviser has contractually agreed, through at least February 28, 2019, to waive a portion of the management fees associated with the Class A and Class S shares of the Thrivent Growth and Income Plus Fund in order to limit the Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements to an annual rate of 1.10% of the average daily net assets of the Class A shares and 0.90% of the average daily net assets of the Class S shares. This contractual provision, however, may be terminated before the indicated termination date upon the mutual agreement between the Independent Trustees and the Adviser.
** The Adviser has contractually agreed, for as long as the current fee structure is in place and through at least February 28, 2019, to waive an amount equal to any investment advisory fees indirectly incurred by Moderately Aggressive Allocation Fund as a result of its investment in any other mutual fund for which the Adviser or an
11
Table of Contents
affiliate serves as investment adviser, other than Thrivent Cash Management Trust. This contractual provision may be terminated upon the mutual agreement between the Independent Trustees and the Adviser.
Example
The following example, using the actual expenses for the most recent fiscal year ends and pro forma operating expenses for the twelve-month period ended October 31, 2017, is intended to help you compare the costs of investing in the Acquiring Fund pro forma after the Reorganization with the costs of investing in each of the Target Fund and the Acquiring Fund without the Reorganization. The example assumes that you invest $10,000 in each Fund for the time period indicated and that you redeem all of your shares at the end of each period. The example also assumes that your investments have a 5% return each year and that each Fund’s operating expenses remain the same each year. Although your actual returns may be higher or lower, based on these assumptions your costs would be:
Actual | Pro Forma | |||||||||||
Target Fund | Acquiring Fund | Acquiring Fund (assuming merger with the Target Fund) | ||||||||||
Total operating expenses for Class A Shares assuming redemption at the | ||||||||||||
One Year | $560 | $559 | $559 | |||||||||
Three Years | $856 | $845 | $845 | |||||||||
Five Years | $1,173 | $1,152 | $1,152 | |||||||||
Ten Years | $2,071 | $2,021 | $2,021 | |||||||||
Total operating expenses for Class S Shares assuming redemption at the | ||||||||||||
One Year | $95 | $89 | $89 | |||||||||
Three Years | $361 | $335 | $335 | |||||||||
Five Years | $647 | $602 | $602 | |||||||||
Ten Years | $1,462 | $1,362 | $1,362 |
Portfolio Turnover
Each Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in Total Annual Operating Expenses or in the Example, affect the Funds’ performance. During the fiscal year ended October 31, 2017, the Acquiring Fund’s portfolio turnover rate was 103% of the average value of its portfolio. During the fiscal year ended December 31, 2017, the Target Fund’s portfolio turnover rate was 121% of the average value of its portfolio.
Purchase, Valuation, Redemption and Exchange of Shares; Dividends and Distributions
Pricing of Fund Shares. The price of a Fund’s shares is based on the Fund’s net asset value (“NAV”). Each Fund determines its NAV for a particular class of shares once daily at the close of regular trading on the New York Stock Exchange (“NYSE”), which is normally 4:00 p.m. Eastern time. If the NYSE has an unscheduled early close but certain other markets remain open until their regularly scheduled closing time, the NAV may be determined as of the regularly scheduled closing time of the NYSE. If the NYSE and/or certain other markets close early due to extraordinary circumstances (e.g., weather, terrorism, etc.), the NAV may be calculated as of the early close of the NYSE and/or certain other markets. The NAV generally will not be determined on days when, due to extraordinary circumstances, the NYSE and/or certain other markets do not open for trading. The Funds generally do not determine NAV on holidays observed by the NYSE or on any other day when the NYSE is closed. The NYSE is regularly closed on Saturdays and Sundays, New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The price at which you purchase or redeem shares of a Fund is based on the next calculation of the NAV after the Fund receives your purchase or redemption request in good order.
Each Fund determines the NAV for a particular class by dividing the total Fund assets attributable to that class, less all liabilities attributable to such class, by the total number of outstanding shares of that class. To
12
Table of Contents
determine the NAV, the other Funds generally value their securities at current market value using readily available market prices. If market prices are not available or if the Adviser determines that they do not accurately reflect fair value for a security, the Board of Trustees has authorized the Adviser to make fair valuation determinations pursuant to policies approved by the Board of Trustees. Fair valuation of a particular security is an inherently subjective process, with no single standard to utilize when determining a security’s fair value. In each case where a security is fair valued, consideration is given to the facts and circumstances relevant to the particular situation. This consideration includes a review of various factors set forth in the pricing policies adopted by the Board of Trustees. For any portion of a Fund’s assets that are invested in other mutual funds, the NAV is calculated based upon the NAV of the mutual funds in which the Fund invests, and the prospectuses for those mutual funds explain the circumstances under which they will use fair value pricing and the effects of such a valuation.
Because many foreign markets close before the U.S. markets, significant events may occur between the close of the foreign market and the close of the U.S. markets, when the Fund’s assets are valued, that could have a material impact on the valuation of foreign securities (i.e., available price quotations for these securities may not necessarily reflect the occurrence of the significant event). The Funds, subject to oversight by the Board of Trustees, evaluate the impact of these significant events and adjust the valuation of foreign securities to reflect the fair value as of the close of the U.S. markets to the extent that the available price quotations do not, in the Adviser’s opinion, adequately reflect the occurrence of the significant events.
Please note that the Target Fund and the Acquiring Fund have identical valuation policies. As a result, there will be no material change to the value of the Target Fund’s assets because of the Reorganization.
Also, the Target Fund and the Acquiring Fund have identical policies with respect to frequent purchases and redemptions and standing allocation orders (for more information, please see Frequent Trading Policies and Monitoring Processes and Standing Allocation Order disclosures in the Acquiring Fund’s Prospectus - these disclosures are incorporated herein by reference). The Reorganization will not affect these policies.
Class A Shares. The Class A shares of each Fund are subject to an initial sales charge of up to 4.50%. The initial sales charge applicable to Class A shares of the Acquiring Fund will be waived for Class A shares acquired in the Reorganization. Any subsequent purchases of Class A shares of the Acquiring Fund, excluding Class A shares purchased through the automatic dividend reinvestment plan, after the Reorganization will be subject to an initial sales charge of up to 4.50%. The initial sales charge is reduced for investments in excess of $50,000. Purchases of Class A shares of each Fund in amounts of $1 million or more are not subject to an initial sales charge, but a contingent deferred sales charge of up to 1.00% may be imposed on certain redemptions made within one year of purchase. No contingent deferred sales charge will be imposed on Class A shares of the Target Fund in connection with the Reorganization. For additional information, please see the section entitled “Shareholder Information—Class A Shares” in the Class A Prospectus. This section is incorporated by reference herein.
Class S Shares. Class S shares of each Fund are not subject to an initial sales charge or a contingent deferred sales charge. For additional information, please see the section entitled “Shareholder Information—Class S Shares” in the Class S Prospectus. This section is incorporated by reference herein.
Buying Shares. Shares of each Fund may be purchased through a shareholder’s registered representative, by mail, by telephone, by the Internet, by wire transfer, through an automatic investment plan or by exchange from other Thrivent mutual funds. For additional information regarding buying shares of each Fund and exchanging shares of each Fund, see the sections of the Trust Prospectus entitled “Shareholder Information—Buying Shares” and “Shareholder Information—Exchanging Shares Between Funds.”
Redeeming Shares. When a Fund receives a request for redemption, such Fund will redeem such shares at the next calculation of the Fund’s NAV. A Fund may postpone payment or suspend the right of redemption in unusual circumstances, as permitted by the SEC. When a shareholder purchases shares by check, electronic funds transfer (other than bank wire) or automatic investment plan and elects to redeem those shares soon after their purchase, the Fund may delay paying the redemption proceeds until the shareholder’s payment has cleared, which could take up to 10 days or more from the date of purchase. Shares may be redeemed by mail, by phone, by the Internet, by wire/ACH transfer or through a systematic withdrawal plan. For additional information regarding redeeming shares of each Fund, see the section of the Trust Prospectus entitled “Shareholder Information—Redeeming Shares.” This section is incorporated by reference herein.
13
Table of Contents
Dividends and Distributions. Dividends of the Target Fund and the Acquiring Fund, if any, are generally declared and paid quarterly and annually, respectively. Income dividends are derived from investment income, including dividends, interest, and certain foreign currency gains received by each Fund. Capital gains distributions, if any, usually will be declared and paid in December for the prior twelve-month period ending October 31 for the Acquiring Fund and for prior twelve-month period ending December 31 for the Target Fund. Any election made by Target Fund shareholders in respect of the receipt of dividends and capital gains distributions will continue to apply to Class A and Class S Shares of the Acquiring Fund received in the Reorganization. For additional information regarding these elections see the section of the Trust Prospectus entitle “Distribution Options.” This section is incorporated by reference herein.
The following table sets forth the capitalization of the Target Fund as of October 31, 2017 and the Acquiring Fund as of October 31, 2017 and the pro forma capitalization of the Acquiring Fund as if the Reorganization occurred on October 31, 2017. These numbers may differ as of the Closing Date.
Actual | Pro Forma | |||||||||||||||||||
Target Fund | Acquiring Fund | Acquiring Fund (assuming merger with the Target Fund) | ||||||||||||||||||
Net assets | ||||||||||||||||||||
Class A Shares | $73,970,412 | $2,086,854,644 | $2,160,825,056 | |||||||||||||||||
Class S Shares | $13,040,904 | $389,919,959 | $402,960,863 | |||||||||||||||||
Total Fund Net Assets | $87,011,316 | $2,476,774,603 | $2,563,785,919 | |||||||||||||||||
Net asset value per share | ||||||||||||||||||||
Class A Shares | $10.87 | $15.19 | $15.19 | |||||||||||||||||
Class S Shares | $10.89 | $15.32 | $15.32 | |||||||||||||||||
Shares outstanding | ||||||||||||||||||||
Class A Shares | 6,806,945 | 137,421,261 | 142,292,286 | |||||||||||||||||
Class S Shares | 1,197,625 | 25,445,856 | 26,296,896 | |||||||||||||||||
Total Shares Outstanding | 8,004,570 | 162,867,117 | 168,589,182 |
The pro forma shares outstanding reflect the issuance by the Acquiring Fund of approximately 4,871,025 Class A Shares and 851,040 Class S Shares (for a total of 5,722,065 shares). Such issuance reflects the exchange of the assets of the Target Fund for newly issued Class A Shares and Class S Shares of the Acquiring Fund at the pro forma net asset value per share. The aggregate value of the Acquiring Fund shares that a Target Fund shareholder receives in the Reorganization will equal the aggregate value of the Target Fund shares owned immediately prior to the Reorganization.
Annual Performance Information
The following chart shows the annual returns of the Target Fund since its inception and the Acquiring Fund for the past ten years. The bar charts include the effects of each Fund’s expenses, but not sales charges. If sales charges were included, returns would be lower than those shown. The table includes the effects of Fund expenses and maximum sales charges and assumes that you sold your shares at the end of the period. After-tax returns are shown only for the Class A Shares and after-tax returns for the Class S Shares will differ from those shown for the Class A Shares. The 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. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown and after-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. How either Fund performed in the past (before and after taxes) is not necessarily an indication of how it will perform in the future.
14
Table of Contents
Target Fund - Class A Shares
Acquiring Fund - Class A Shares
As a result of market activity, current performance may vary from the figures shown.
The Target Fund’s (Class A Shares) total return for the three-month period from January 1, 2018 to March 31, 2018 was [ ]%. The Acquiring Fund’s (Class A Shares) total return for the three-month period from January 1, 2018 to March 31, 2018 was [ ]%. Since its inception, the Target Fund’s (Class A Shares) highest quarterly return was 14.37% (for the quarter ended June 30, 2009) and its lowest quarterly return was -16.34% (for the quarter ended December 31, 2011). During the past 10 years, the Acquiring Fund’s (Class A Shares) highest quarterly return was 16.93% (for the quarter ended June 30, 2009) and its lowest quarterly return was -19.42% (for the quarter ended December 31, 2008).
Comparative Performance Information
As a basis for evaluating each Fund’s performance and risks, the following table shows how each Fund’s performance compares with broad-based market indices that the Adviser believes are appropriate benchmarks for such Fund. The Target Fund’s benchmarks are the MSCI World Index – USD Net Returns, which measures the performance of stock markets in developed countries throughout the world, the Bloomberg Barclays U.S. Mortgage-Backed Securities Index, which covers the mortgage-backed securities component of the Bloomberg Barclays U.S. Aggregate Bond Index, the S&P/LSTA Leveraged Loan Index, which reflects the performance of the largest facilities in the leveraged loan market, and the Bloomberg Barclays U.S. High Yield Ba/B 2% Issuer Capped Index, which represents the performance of U.S. short duration, higher-rated high yield bonds. The Acquiring Fund’s benchmarks are the S&P 500 Index, which measures the performance of 500 widely held, publicly traded stocks, the Bloomberg Barclays U.S. Aggregate Bond Index, which measures the performance of U.S. investment grade bonds,
15
Table of Contents
and the MSCI All Country World Index ex-USA – USD Net Returns, which measures the performance of stock markets in developed and emerging markets countries throughout the world (excluding the U.S.). Further, the table includes the effects of each Fund’s expenses, but not sales charges. If sales charges were included, returns would be lower than those shown.
Average annual total returns are shown below for each Fund for the periods ended December 29, 2017 (the most recently completed calendar year prior to the date of this Prospectus/Proxy Statement). Remember that past performance of a Fund is not indicative of its future performance.
Average Annual Total Returns for the Period ended December 29, 2017
Target Fund | Acquiring Fund | |||||||||||
Past 1 Year | Past 5 Years | Since Inception (2/29/2008) | Past 1 Year | Past 5 Years | Past 10 Years | |||||||
Applicable Fund, Class A (before taxes) | 8.45% | 7.08% | 4.10% | 10.95% | 9.08% | 5.24% | ||||||
(after taxes on distributions) | 7.77% | 5.67% | 3.54% | 9.29% | 7.65% | 4.28% | ||||||
(after taxes on distributions and redemptions) | 5.13% | 5.21% | 3.35% | 6.97% | 6.81% | 3.91% | ||||||
S&P 500 Index (reflects no deduction for fees, expenses or taxes) | — | — | — | 21.83% | 15.79% | 8.50% | ||||||
Bloomberg Barclays U.S. Aggregate Bond Index (reflects no deduction for fees, expenses or taxes) | — | — | — | 3.54% | 2.10% | 4.01% | ||||||
MSCI All Country World Index ex-USA - USD Net Returns (reflects no deduction for fees, expenses or taxes) | — | — | — | 27.19% | 6.80% | 1.84% | ||||||
MSCI World Index-USD Net Returns (reflects no deduction for fees, expenses or taxes) | 22.40% | 11.64% | 6.03% | — | — | — | ||||||
Bloomberg Barclays U.S. Mortgage-Backed Securities Index (reflects no deduction for fees, expenses or taxes) | 2.47% | 2.04% | 3.71% | — | — | — | ||||||
Bloomberg Barclays U.S. High Yield Ba/B 2% Issuer Capped Index (reflects no deduction for fees, expenses or taxes) | 6.92% | 5.45% | 7.78% | — | — | — | ||||||
S&P/LSTA Leveraged Loan Index (reflects no deduction for fees, expenses or taxes) | 4.12% | 4.03% | 5.55% | — | — | — |
Thrivent Asset Mgt., 625 Fourth Avenue South, Minneapolis, Minnesota 55415, provides administrative personnel and services necessary to operate the Funds and receives an administration fee from the Funds. The custodian for the Funds is State Street Bank and Trust Company, One Lincoln Street, Boston, Massachusetts 02111. PricewaterhouseCoopers LLP, 45 South Seventh Street, Suite 3400, Minneapolis, MN 55402, serves as the Trust’s independent registered public accounting firm.
The Trust is an open-end management investment company registered under the Investment Company Act of 1940 (the “1940 Act”) and was organized as a Massachusetts Business Trust on March 10, 1987. The Trust is made up of 25 separate series or “Funds.” Each Fund of the Trust, other than the Thrivent Asset Allocation Funds, is diversified.
The Trust is authorized to issue shares of beneficial interest, par value $.01 per share, divisible into an indefinite number of different series and classes and operates as a “series company” as provided by Rule 18f-2 under the 1940 Act.
16
Table of Contents
The Declaration of Trust of the Trust, as amended through the date hereof (the “Declaration of Trust”) provides that each shareholder shall be deemed to have agreed to be bound by its terms. A vote of shareholders and the Board may amend the Declaration of Trust. The Trust may issue an unlimited number of shares in one or more series as the Board of Trustees may authorize.
Each class is subject to such investment minimums and other conditions as set forth in the Trust’s current prospectuses. Such minimums are identical the same share classes of the Target Fund and the Acquiring Fund (so, for example, the Class A Shares of both Funds have the same initial and subsequent investment minimums). The Reorganization will not affect such investment minimums and other conditions.
Differences in expenses among classes are described in the Trust’s Amended and Restated Plan Pursuant to Rule 18f-3 under the 1940 Act. Class A and Class S Shares pay the expenses associated with their different distribution arrangements. Each class may, at the Trustees’ discretion, also pay a different share of other expenses, not including advisory or custodial fees or other expenses related to the management of the Trust’s assets, if these expenses are actually incurred in a different amount by that class, or if the class receives services of a different kind or to a different degree than the other class. All other expenses will be allocated to each class on the basis of the net asset value of the particular Fund.
Each class of shares has identical voting rights except that each class has exclusive voting rights on any matter submitted to shareholders relating solely to the class or where the interests of one class differ from the interests of the other class. Class A Shares have exclusive voting rights on matters involving the Rule 12b-1 Distribution Plan. Matters submitted to shareholder vote must be approved by each Fund separately except:
• | when required otherwise by the 1940 Act; or |
• | when the Trustees determine that the matter does not affect all Funds; then, only the shareholders of the affected Funds may vote. |
Shares are freely transferable, and holders thereof are entitled to receive dividends declared by the Board, and receive the assets of their respective Fund in the event of liquidation. The Trust generally holds shareholder meetings only when required by law or at the written request of shareholders owning at least 10% of the Trust’s outstanding shares. Shareholders may remove the Trustees from office by votes cast in person or by proxy at a shareholder meeting.
At the request of shareholders holding 10% or more of the outstanding shares of the Trust, the Trust will hold a special meeting for the purpose of considering the removal of a Trustee(s) from office, and the Trust will cooperate with and assist shareholders of record who notify the Trust that they wish to communicate with other shareholders for the purpose of obtaining signatures to request such a meeting, all pursuant to and in accordance with Section 16(c) of the 1940 Act.
Under Massachusetts law, shareholders of a business trust may be held personally liable, under certain circumstances, for the obligations of the Trust. However, the Declaration of Trust disclaims shareholder, Trustee and/or officer liability for acts performed on behalf of the Trust or for Trust obligations that are binding only on the assets and property of the Trust. The Funds include this disclaimer in each agreement, obligation, or contract entered into or executed by the Trust or the Board. The Declaration of Trust provides for indemnification out of the Trust’s assets for all losses and expenses of any shareholder held personally liable for the obligations of the Trust. The risk of a shareholder incurring financial loss on account of shareholder liability is remote because it is limited to circumstances where the Trust itself is unable to meet its obligations.
The Trust’s organizational documents are filed as part of the Trust’s registration statement with the SEC, and shareholders may obtain copies of such documents as described on the first page of this Prospectus/Proxy Statement and in the Questions and Answers preceding this Prospectus/Proxy Statement.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase a Fund through a broker-dealer or other financial intermediary, the Fund and its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the
17
Table of Contents
Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
INFORMATION ABOUT THE REORGANIZATION
Under the Reorganization Agreement, the Target Fund will transfer all of its assets to the Acquiring Fund in exchange for Class A and Class S Shares of the Acquiring Fund. The Acquiring Fund Class A and Class S Shares issued to the Target Fund will have an aggregate value equal to the aggregate value of the Target Fund’s net assets immediately prior to the Reorganization. Upon receipt by the Target Fund of Acquiring Fund Class A and Class S Shares, the Target Fund will distribute such shares of the Acquiring Fund to Target Fund shareholders. Then, as soon as practicable after the Closing Date of the Reorganization, the Target Fund will dissolve under applicable state law.
The Target Fund will distribute the Acquiring Fund Class A and Class S Shares received by it pro rata to Target Fund shareholders of record in exchange for their interest in Class A and Class S Shares of the Target Fund. This distribution will be accomplished by opening new accounts on the books of the Acquiring Fund in the names of the Target Fund shareholders and transferring to those shareholder accounts the Acquiring Fund Class A and Class S Shares received by the Target Fund. Each newly-opened account on the books of the Acquiring Fund for the previous Target Fund shareholders will represent the respective pro rata number of Acquiring Fund Class A and Class S Shares due such shareholder.
Accordingly, as a result of the Reorganization, each Target Fund shareholder would own Acquiring Fund Class A and Class S Shares that would have an aggregate value immediately after the Reorganization equal to the aggregate value of that shareholder’s Target Fund shares immediately prior to the Reorganization. The interests of each of the Target Fund’s shareholders will not be diluted as a result of the Reorganization. However, as a result of the Reorganization, a shareholder of the Target Fund or the Acquiring Fund will hold a reduced percentage of ownership in the larger combined fund than the shareholder did in either of the separate Funds.
No sales charge or fee of any kind will be assessed to Target Fund shareholders in connection with their receipt of Acquiring Fund Class A and Class S Shares in the Reorganization.
Any shareholder who has an automatic investment plan or systematic withdrawal plan in place for the Target Fund at the time of the Reorganization will have such plan transferred to the Acquiring Fund unless the shareholder instructs the Fund to change the plan.
Approval of the Reorganization will constitute approval of amendments to any of the fundamental investment restrictions of the Target Fund that might otherwise be interpreted as impeding the Reorganization, but solely for the purpose of and to the extent necessary for consummation of the Reorganization.
Terms of the Reorganization Agreement
The following is a summary of the material terms of the Reorganization Agreement. This summary is qualified in its entirety by reference to the form of Reorganization Agreement, a form of which is attached as Appendix A to the Reorganization SAI.
Pursuant to the Reorganization Agreement, the Acquiring Fund will acquire all of the assets of the Target Fund on the Closing Date in exchange for Class A and Institutional Class Shares of the Acquiring Fund. Subject to the Target Fund’s shareholders approving the Reorganization, the Closing Date shall occur on June 28, 2018 or such other date as determined by an officer of the Fund.
On the Closing Date, the Target Fund will transfer to the Acquiring Fund all of its assets. The Acquiring Fund will in turn transfer to the Target Fund a number of its Class A and Class S Shares equal in value to the value of the net assets of the Target Fund transferred to the Acquiring Fund as of the Closing Date, as determined in accordance with the valuation method described in the Acquiring Fund’s then current prospectus. In order to minimize any potential for undesirable federal income and excise tax consequences in connection with the Reorganization, the
18
Table of Contents
Target Fund will distribute on or before the Closing Date all or substantially all of its undistributed net investment income (including net capital gains) as of such date.
The Target Fund expects to distribute Class A and Class S Shares of the Acquiring Fund received by the Target Fund to shareholders of the Target Fund promptly after the Closing Date and then dissolve.
The Acquiring Fund and the Target Fund have made certain standard representations and warranties to each other regarding their capitalization, status and conduct of business. Unless waived in accordance with the Reorganization Agreement, the obligations of the parties to the Reorganization Agreement are conditioned upon, among other things:
• | the approval of the Reorganization by the Target Fund’s shareholders; |
• | the absence of any rule, regulation, order, injunction or proceeding preventing or seeking to prevent the consummation of the transactions contemplated by the Reorganization Agreement; |
• | the receipt of all necessary approvals, registrations and exemptions under federal and state laws; |
• | the truth in all material respects as of the Closing Date of the representations and warranties of the parties and performance and compliance in all material respects with the parties’ agreements, obligations and covenants required by the Reorganization Agreement; |
• | the effectiveness under applicable law of the registration statement of the Acquiring Fund of which this Prospectus/Proxy Statement forms a part and the absence of any stop orders under the Securities Act of 1933, as amended, pertaining thereto; and |
• | the receipt of an opinion of counsel relating to the characterization of the Reorganization as a tax-free reorganization for federal income tax purposes (as further described herein under the heading “Material Federal Income Tax Consequences of the Reorganization”). |
The Reorganization Agreement may be terminated or amended by the mutual consent of the parties either before or after approval thereof by the shareholders of the Target Fund, provided that no such amendment after such approval shall be made if it would have a material adverse effect on the interests of such Target Fund’s shareholders. The Reorganization Agreement also may be terminated by the non-breaching party if there has been a material misrepresentation, material breach of any representation or warranty, material breach of contract or failure of any condition to closing.
Reasons for the Proposed Reorganization
In determining whether to recommend approval of the Reorganization Agreement to Target Fund shareholders, the Board considered a number of factors, including, but not limited to: (i) the expenses and advisory fees applicable to the Funds before the proposed Reorganization and the estimated expense ratios of the combined Fund after the proposed Reorganization; (ii) the comparative investment performance of the Funds; (iii) the future growth prospects of each Fund; (iv) the terms and conditions of the Reorganization Agreement; (v) whether the Reorganization would result in the dilution of shareholder interests; (vi) the compatibility of the Funds’ investment objectives, policies, risks and restrictions; (vii) that the proposed Reorganization was expected to be a tax-free reorganization for federal income tax purposes; (viii) the compatibility of the Funds’ service features available to shareholders, including exchange privileges; and (ix) the estimated costs of the Reorganization, which would be borne by the Adviser. The Board concluded that these factors supported a determination to approve the Reorganization Agreement.
The Board believes that the Reorganization would be in the best interests of the Target Fund’s shareholders because: (i) shareholders will become shareholders of a larger combined fund with greater potential to increase asset size and achieve economies of scale; (ii) the Acquiring Fund invests in a more diversified portfolio of equity and fixed income securities; (iii) the Acquiring Fund has achieved stronger performance than the Target Fund for the one-, three- and five-year periods ended December 29, 2017, though there is no guarantee of future performance; (iv) the Adviser believes that it can most effectively manage the assets currently in the Target Fund by combining such assets with the Acquiring Fund; and (v) the Acquiring Fund has a lower gross expense ratio than the Target Fund and shareholders of the Target Fund will experience a lower net expense ratio in the Acquiring Fund following the Reorganization.
19
Table of Contents
The Board has determined that the Reorganization is in the best interests of the Target Fund and that the interests of the Target Fund’s shareholders will not be diluted as a result of the Reorganization. In addition, the Board has determined that the Reorganization is in the best interests of the Acquiring Fund and that the interests of the Acquiring Fund shareholders will not be diluted as a result of the Reorganization.
Material Federal Income Tax Consequences of the Reorganization
The following is a general summary of the material anticipated U.S. federal income tax consequences of the Reorganization. This discussion is based upon the Internal Revenue Code of 1986, as amended (the “Code”), Treasury regulations, court decisions, published positions of the Internal Revenue Service (“IRS”) and other applicable authorities, all as in effect on the date hereof and all of which are subject to change or differing interpretations (possibly with retroactive effect). This discussion is limited to U.S. persons who hold shares of the Target Fund as capital assets for U.S. federal income tax purposes on the date of exchange.
This summary does not address all of the U.S. federal income tax consequences that may be relevant to a particular shareholder or to shareholders who may be subject to special treatment under U.S. federal income tax laws. No assurance can be given that the IRS would not assert or that a court would not sustain a position contrary to any of the tax aspects described below. Shareholders should consult their own tax advisers as to the U.S. federal income tax consequences of the Reorganization to them, as well as the effects of state, local and non-U.S. tax laws.
The Reorganization is expected to be a tax-free reorganization for U.S. federal income tax purposes. It is a condition to closing the Reorganization that the Target Fund and the Acquiring Fund receive an opinion from Reed Smith LLP, special counsel to each Fund, dated as of the Closing Date, regarding the characterization of the Reorganization as a “reorganization” within the meaning of Section 368(a)(1) of the Code. As such a reorganization, the U.S. federal income tax consequences of the Reorganization can be summarized as follows: to the effect that on the basis of existing provisions of the Code, the Treasury regulations promulgated thereunder, current administrative rules and court decisions, generally for U.S. federal income tax purposes, except as noted below:
• | the Reorganization will constitute a reorganization within the meaning of Section 368(a)(1) of the Code, and the Target Fund and the Acquiring Fund will each be a “party to a reorganization” within the meaning of Section 368(b) of the Code; |
• | under Section 361 of the Code, no gain or loss will be recognized by the Target Fund upon the transfer of its assets to the Acquiring Fund in exchange for Acquiring Fund shares, or upon the distribution of Acquiring Fund shares by the Target Fund to its shareholders in liquidation; |
• | under Section 1032 of the Code, no gain or loss will be recognized by the Acquiring Fund upon receipt of the assets transferred to the Acquiring Fund in exchange for Acquiring Fund shares; |
• | under Section 362(b) of the Code, the Acquiring Fund’s tax basis in each asset that the Acquiring Fund receives from the Target Fund will be the same as the Target Fund’s tax basis in such asset immediately prior to such exchange; |
• | under Section 1223(2) of the Code, the Acquiring Fund’s holding periods in each asset will include the Target Fund’s holding periods in such asset; |
• | under Section 354 of the Code, no gain or loss will be recognized by shareholders of the Target Fund on the distribution of Acquiring Fund shares to them in exchange for their shares of the Target Fund; |
• | under Section 358 of the Code, the aggregate tax basis of the Acquiring Fund shares that the Target Fund’s shareholders receive in exchange for their Target Fund shares will be the same as the aggregate tax basis of the Target Fund shares exchanged therefor; |
• | under Section 1223(1) of the Code, a Target Fund shareholder’s holding period for the Acquiring Fund shares received in the Reorganization will be determined by including the holding period for the Target Fund shares exchanged therefor, provided that the shareholder held the Target Fund shares as a capital asset on the date of the exchange; and |
• | under Section 381 of the Code, the Acquiring Fund will succeed to and take into account the items of the Target Fund described in Section 381(c) of the Code, subject to the conditions and limitations specified in Section 381, 382, 383 and 384 of the Code and the Treasury regulations thereunder. |
20
Table of Contents
The opinion will be based on certain factual certifications made by the officers of the Target Fund and the Acquiring Fund and will also be based on customary assumptions such as the assumption that the Reorganization will be consummated in accordance with the Reorganization Agreement. The opinion is not a guarantee that the tax consequences of the Reorganization will be as described above. There is no assurance that the IRS or a court would agree with the opinion.
The Acquiring Fund intends to continue to be taxed under the rules applicable to regulated investment companies as defined in Section 851 of the Code which are the same rules currently applicable to Target Fund. In connection with the Reorganization, on or before the Closing Date, the Target Fund will declare to its shareholders a dividend which, together with all of its previous distributions, will have the effect of distributing to shareholders all of its investment company taxable income (computed without regard to the deduction for dividends paid), net tax-exempt interest income and net capital gains through the Closing Date.
Immediately prior to the Reorganization, the Target Fund is not expected to have any unutilized capital loss carryforwards. The final amount of unutilized capital loss carryforwards for the Target Fund is subject to change and will not be determined until the Closing Date. As of January 31, 2018, the capital loss carryforward of the Target Fund and the Acquiring Fund was $0 and $0, respectively.
Generally, the Acquiring Fund will succeed to the capital loss carryforwards of the Target Fund, subject to the limitations described below. If the Target Fund has capital loss carryforwards, such capital losses would, in the absence of the Reorganization, generally be available to offset Target Fund capital gains, thereby reducing the amount of capital gain net income that must be distributed to the Target Fund shareholders.
Under Sections 382 and 383 of the Code, an “equity structure shift” arising as a result of a reorganization under Section 368(a)(1) of the Code can result in limitations on the post-reorganization Fund’s use of capital loss carryforwards of the participating Funds. An “equity structure shift” can trigger limitations on capital loss carryforwards where there is a more than 50% change in the ownership of a Fund.
Even though the Reorganization may result in a more than 50% change in ownership of either fund, the Adviser does not anticipate a limitation since the Funds are not expected to have capital loss carryforwards.
It is expected that, as of the closing of the Reorganization, all of the Target Fund’s investments will be eligible investments of the Acquiring Fund. Nonetheless, the Acquiring Fund anticipates selling some of the Target Fund’s investments after the Reorganization. As of January 31, 2018, the Target Fund’s investments that the Acquiring Fund would anticipate selling have a market value of $23,165,474 and a potential gain of $1,179,421. This would result in $0.0066 capital gain per share, assuming a merger with the Target Fund.
This summary of the U.S. federal income tax consequences of the Reorganization is made without regard to the particular facts and circumstances of any shareholder. Shareholders are urged to consult their own tax advisors as to the specific consequences to them of the Reorganization, including the applicability and effect of state, local, non-U.S. and other tax laws.
It is not expected that the Reorganization will be a taxable event for any shareholder.
Expenses of the Reorganization
All expenses of the Reorganization will be paid by the Adviser or an affiliate and will not be borne by shareholders of the Target Fund.
Reorganization expenses include, but are not limited to: all costs related to the preparation and distribution of materials distributed to the Board; all expenses incurred in connection with the preparation of the Reorganization Agreement and a registration statement on Form N-14; SEC and state securities commission filing fees and legal and audit fees in connection with each Reorganization; the costs of printing and distributing this Prospectus/Proxy Statement; legal fees incurred preparing materials for the Boards attending the Board meetings and preparing the Board minutes; auditing fees associated with the Fund’s financial statements; portfolio transfer taxes (if any); and any similar expenses incurred in connection with the Reorganization. Management of the Funds estimates the total cost of the Reorganization to be approximately $249,343. If the Reorganization is not approved by shareholders, the Adviser will still bear the costs of the proposed Reorganization.
21
Table of Contents
Any brokerage charges associated with the purchase or disposition of portfolio investments by the Target Fund prior to the Reorganization will be borne by the Target Fund. Any brokerage charges associated with the purchase or disposition of portfolio investments by the Acquiring Fund after the Reorganization will be borne by the Acquiring Fund.
The Board has unanimously approved the Reorganization, subject to shareholder approval. Approval of the Reorganization requires the affirmative vote of a “Majority of the Outstanding Voting Securities” of the Target Fund, which is, under the 1940 Act, the lesser of (1) 67% or more of the shares of the Fund present at the Meeting if the holders of more than 50% of the outstanding shares of the Fund are present or represented by proxy, or (2) more than 50% of the outstanding shares of the Fund.
The Board recommends voting “FOR” the proposed Reorganization.
At the close of business on the Record Date, the Acquiring Fund had outstanding shares. As of the Record Date, the trustees and officers of the Acquiring Fund as a group owned less than 1% of the shares of the Acquiring Fund. As of the Record Date, no person was known by the Acquiring Fund to own beneficially or of record as much as 5% of the Acquiring Fund shares except as follows:
Name | Class of Shares | Approximate Percentage of Ownership | ||||||||
% | ||||||||||
% | ||||||||||
% |
At the close of business on the Record Date, the Target Fund had outstanding ______ shares. As of the Record Date, the trustees and officers of the Target Fund as a group owned less than 1% of the shares of the Target Fund. As of the Record Date, no person was known by the Target Fund to own beneficially or of record as much as 5% of the shares of the Target Fund except as follows:
Name | Class of Shares | Approximate Percentage of Ownership | ||||||||
% |
Annual Meeting of Shareholders
There will be no annual or further special meetings of shareholders of the Trust unless required by applicable law or called by the Board in its discretion. Shareholders wishing to submit proposals for inclusion in a proxy statement for a subsequent shareholder meeting should send their written proposals to the Secretary of the Fund, 625 Fourth Avenue South, Minneapolis, Minnesota 55415. Shareholder proposals should be received in a reasonable time before the solicitation is made.
VOTING INFORMATION AND REQUIREMENTS
Approval of the Reorganization requires the affirmative vote of a “Majority of the Outstanding Voting Securities” of the Target Fund, which is, under the 1940 Act, the lesser of (1) 67% or more of the shares of the Fund present at the Meeting if the holders of more than 50% of the outstanding shares of the Fund are present or represented by proxy, or (2) more than 50% of the outstanding shares of the Fund.
22
Table of Contents
The Board has fixed the close of business on April 20, 2018, as the Record Date for the determination of shareholders entitled to notice of, and to vote at, the Meeting. Target Fund shareholders on the Record Date are entitled to one vote for each share held, with no shares having cumulative voting rights.
One-third of the shares of the Target Fund outstanding and entitled to vote at the Meeting represented in person or by proxy constitutes a quorum.
Target Fund shareholders may vote in any one of four ways: (i) via the Internet, (ii) by telephone, (iii) by mail, by returning the proxy card, or (iv) in person at the Meeting. Instructions for Internet and telephone voting are included with the enclosed proxy materials. Shareholders who deliver voting instructions by methods (i), (ii) or (iii) may revoke them at any time prior to the Meeting by delivering a written notice of revocation, by executing another proxy card bearing a later date or by attending the Meeting and giving voting instructions in person. Merely attending the Meeting, however, will not revoke any previously submitted proxy. The required control number for Internet and telephone voting is printed on the enclosed proxy card. The control number is used to match voting proxy cards with shareholders’ respective accounts and to ensure that, if multiple proxy cards are executed, shares are voted in accordance with the proxy card bearing the latest date. The Target Fund employs procedures for Internet and telephone voting, such as requiring the control number from the proxy card in order to vote by either of these methods, which it considers to be reasonable to confirm that the instructions received are genuine. If reasonable procedures are employed, the Target Fund will not be liable for following Internet or telephone votes which it believes to be genuine.
Abstentions and broker non-votes (i.e., where a nominee such as a broker holding shares for beneficial owners votes on certain matters pursuant to discretionary authority or instructions from beneficial owners, but with respect to one or more proposals does not receive instructions from beneficial owners or does not exercise discretionary authority) will be deemed present for quorum purposes. Abstentions and broker non-votes have the same effect as votes “AGAINST” the Reorganization.
All properly executed proxies received prior to the Meeting will be voted at the Meeting in accordance with the instructions marked thereon or otherwise as provided therein. Proxies received prior to the Meeting on which no vote is indicated will be voted “FOR” the approval of the proposed Reorganization.
Solicitation of proxies is being made primarily by the mailing of this Notice and Prospectus/Proxy Statement with its enclosures on or about May 7, 2018. Shareholders of the Target Fund whose shares are held by nominees, such as brokers, can vote their proxies by contacting their respective nominee. In addition to the solicitation of proxies by mail, employees of the Adviser and its affiliates, without additional compensation, may solicit proxies in person or by telephone, telegraph, facsimile or oral communication. The Target Fund may retain Computershare Fund Services (“Computershare”), a professional proxy solicitation firm, to assist with any necessary solicitation of proxies. The estimated cost of additional telephone solicitation by Computershare is approximately $12,553. The proxy solicitation expenses are an expense of the Reorganization and will be allocated as described above.
Other Matters to Come Before the Meeting
The Board knows of no business other than that described in the Notice that will be presented for consideration at the Meeting. If any other matters are properly presented, it is the intention of the persons named on the enclosed proxy to vote proxies in accordance with their best judgment.
In the event that a quorum is present at the Meeting but sufficient votes to approve the proposed Reorganization are not received, proxies (including abstentions and broker non-votes) will be voted in favor of one or more adjournments of the Meeting to permit further solicitation of proxies on the proposed Reorganization, provided that the Board determines that such an adjournment and additional solicitation is reasonable and in the interest of shareholders based on a consideration of all relevant factors, including the nature of the particular
23
Table of Contents
proposals, the percentage of votes then cast, the percentage of negative votes cast, the nature of the proposed solicitation activities and the nature of the reasons for such further solicitation. Any such adjournment will require the affirmative vote of the holders of a majority of the outstanding shares voted at the session of the Meeting to be adjourned.
If you cannot be present in person, you are requested to fill in, sign and return the enclosed proxy card, for which, no postage is required if mailed in the United States, or record your voting instructions by telephone or via the Internet promptly.
|
Michael W. Kremenak |
Secretary |
Thrivent Mutual Funds |
24
Table of Contents
STATEMENT OF ADDITIONAL INFORMATION
Relating to the Acquisition of the Assets of
Thrivent Growth and Income Plus Fund
By and In Exchange for Shares of
Thrivent Moderately Aggressive Allocation Fund
April 30, 2018
This Statement of Additional Information is available to the shareholders of Thrivent Growth and Income Plus Fund (the “Target Fund”), each a series of Thrivent Mutual Funds (the “Trust”), in connection with the proposed reorganization (“the Reorganization”) whereby all of the assets of the Target Fund would be transferred to Thrivent Moderately Aggressive Allocation Fund (the “Acquiring Fund”), a series of the Trust, in exchange for Class A and Class S Shares of the Acquiring Fund. Unless otherwise defined herein, capitalized terms have the meanings given to them in the Prospectus/Proxy Statement dated April 30, 2018 related to the Reorganizations (the “Prospectus/Proxy Statement”). The Acquiring Fund and the Target Fund are sometimes referred to herein individually as a “Fund” or collectively as the “Funds”.
This Statement of Additional Information is not a prospectus and should be read in conjunction with the Prospectus/Proxy Statement. A copy of the Prospectus/Proxy Statement may be obtained, without charge, from, Computershare Fund Services by calling toll-free 866-865-3843 or writing Computershare Fund Services, 2950 Express Drive South, Suite 210, Islandia, NY 11749.
The Acquiring Fund will provide, without charge, upon the request of any person to whom this Statement of Additional Information is delivered, a copy of any and all documents that have been incorporated by reference in the registration statement of which this Statement of Additional Information is a part.
Table of Contents
Page | ||||
1 | ||||
1 | ||||
1 | ||||
A-1 | ||||
Appendix B — Statement of Additional Information of the Trust | B-1 |
Table of Contents
The shareholders of the Target Fund are being asked to approve an Agreement and Plan of Reorganization (the “Reorganization Agreement”) pursuant to which the Target Fund would (i) transfer all of its assets to the Acquiring Fund in exchange for Class A shares and Class S shares of the Acquiring Fund, (ii) distribute such Acquiring Fund shares to shareholders of the Target Fund, and (iii) dissolve. A Form of the Reorganization Agreement is attached hereto as Appendix A.
ADDITIONAL INFORMATION ABOUT THE FUNDS
Incorporated herein by reference in its entirety is the Statement of Additional Information of the Trust, dated February 28, 2018 and as supplemented through the date hereof, which was filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2018 and is attached hereto as Appendix B.
Incorporated herein by reference in their respective entireties are:
(i) | the audited annual financial statements of the Target Fund, as of the Target Fund’s fiscal year end, along with the opinion of independent registered public accounting firm, included as part of the Target Fund’s Form N-CSR as filed with the SEC on February 28, 2018; and |
(ii) | the audited annual financial statements of the Acquiring Fund, as of the Acquiring Fund’s fiscal year end, along with the opinion of independent registered public accounting firm, included as part of the Acquiring Fund’s Form N-CSR as filed with the SEC on December 28, 2017. |
Annual reports referenced as part of a Fund’s filing on Form N-CSR may be obtained by following the instructions on the cover of this Statement of Additional Information and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC or on the EDGAR database on the SEC’s Internet site (https://www.sec.gov). Information on the operation of the SEC’s Public Reference Room may be obtained by calling the SEC at 202-551-8090. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC’s e-mail address (publicinfo@sec.gov) or by writing the Public Reference Section of the SEC, Washington, DC 20549-0102.
Table of Contents
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
A - 1
Table of Contents
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the “Agreement”) is made as of , 2018 by Thrivent Mutual Funds (the “Trust”), a Massachusetts business trust, on behalf of its series, (the “Acquiring Fund”) and (the “Target Fund”).
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Trust, on behalf of each of the Acquiring Fund and the Target Fund, has determined that entering into this Agreement whereby the Target Fund would transfer all of its assets and liabilities to the Acquiring Fund in exchange for shares of the Acquiring Fund, is in the best interests of the shareholders of their respective Trust; and
WHEREAS, the parties intend that this transaction qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”);
NOW, THEREFORE, in consideration of the mutual promises contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:
1. | Plan of Transaction. |
A. Transfer of Assets. Upon satisfaction of the conditions precedent set forth in Sections 7 and 8 hereof, the Target Fund will convey, transfer and deliver to the Acquiring Fund at the closing, provided for in Section 2 hereof, all of the existing assets of the Target Fund (including accrued interest to the Closing Date) (as defined below), free and clear of all liens, encumbrances and claims whatsoever (the assets so transferred collectively being referred to as the “Assets”).
B. Consideration. In consideration thereof, the Acquiring Fund agrees that the Acquiring Fund at the closing will deliver to the Target Fund, full and fractional Class A and Class S Shares of beneficial interest, par value $0.01 per share, of the Acquiring Fund having net asset values per share calculated as provided in Section 3(A) hereof, in an amount equal to the aggregate dollar value of the Assets determined pursuant to Section 3(A) hereof net of any liabilities of the Target Fund described in Section 3(E) hereof (the “Liabilities”) (collectively, the “Acquiring Fund Shares”). The calculation of full and fractional Acquiring Fund Shares to be exchanged shall be carried out to no less than two (2) decimal places. All Acquiring Fund Shares delivered to the Target Fund in exchange for such Assets shall be delivered at net asset value without sales load, commission or other transactional fees being imposed.
2. | Closing of the Transaction. |
A. Closing Date. The closing shall occur within thirty (30) business days after the later of the receipt of all necessary regulatory approvals and the final adjournment of the meeting of shareholders of the Target Fund at which this Agreement will be considered and approved, or such later date as soon as practicable thereafter, as the parties may mutually agree (the “Closing Date”). On the Closing Date, the Acquiring Fund shall deliver to the Target Fund the Acquiring Fund Shares in the amount determined pursuant to Section 1(B) hereof and the Target Fund thereafter shall, in order to effect the distribution of such shares to the Target Fund shareholders, instruct the Acquiring Fund to register the pro rata interest in the Acquiring Fund Shares (in full and fractional shares) of each of the holders of record of Class A and Class S Shares of the Target Fund in accordance with their holdings of shares of the Target Fund and shall provide as part of such instruction a complete and updated list of such holders (including addresses and taxpayer identification numbers), and the Acquiring Fund agrees promptly to comply with said instruction. The Acquiring Fund shall have no obligation to inquire as to the validity, propriety or correctness of such instruction, but shall assume that such instruction is valid, proper and correct.
3. | Procedure for Reorganization. |
A. Valuation. The value of the Assets and Liabilities of the Target Fund to be transferred and assumed, respectively, by the Acquiring Fund shall be computed as of the Closing Date, in the manner set forth in the most recent Prospectus and Statement of Additional Information of the Acquiring Fund (collectively, the “Acquiring Fund Prospectus”), copies of which have been delivered to the Target Fund.
A - 2
Table of Contents
B. Delivery of Fund Assets. The Assets shall be delivered to State Street Bank and Trust Company as Custodian for the Acquiring Fund or such other custodian as designated by the Acquiring Fund (collectively the “Custodian”) for the benefit of the Acquiring Fund, duly endorsed in proper form for transfer in such condition as to constitute a good delivery thereof, free and clear of all liens, encumbrances and claims whatsoever, in accordance with the custom of brokers, and shall be accompanied by all necessary state stock transfer stamps, if any, the cost of which shall be borne by the Target Fund and the Acquiring Fund, in proportion to their respective declines in total operating expenses, if any.
C. Failure to Deliver Securities. If the Target Fund is unable to make delivery pursuant to Section 3(B) hereof to the Custodian of any of the securities of the Target Fund for the reason that any such securities purchased by the Target Fund have not yet been delivered it by the Target Fund’s broker or brokers, then, in lieu of such delivery, the Target Fund shall deliver to the Custodian, with respect to said securities, executed copies of an agreement of assignment and due bills executed on behalf of such broker or brokers, together with such other documents as may be required by the Acquiring Fund or Custodian, including brokers’ confirmation slips.
D. Shareholder Accounts. The Acquiring Fund, in order to assist the Target Fund in the distribution of the Acquiring Fund Shares to the Target Fund shareholders after delivery of the Acquiring Fund Shares to the Target Fund, will establish pursuant to the request of the Target Fund an open account with the Acquiring Fund for each shareholder of the Target Fund and, upon request by the Target Fund, shall transfer to such accounts, the exact number of Acquiring Fund Shares then held by the Target Fund specified in the instruction provided pursuant to Section 2 hereof.
E. Liabilities. The Liabilities shall include all of the Target Fund’s liabilities, debts, obligations, and duties of whatever kind or nature, whether absolute, accrued, contingent, or otherwise, whether or not arising in the ordinary course of business, whether or not determinable at the Closing Date, and whether or not specifically referred to in this Agreement. The Target Fund will discharge all of its Liabilities prior to or on the Closing Date.
F. Expenses. In the event that the transactions contemplated herein are consummated, Thrivent Financial for Lutherans (or an affiliate thereof) shall pay the expenses of the Reorganization, including the costs of the special meeting of shareholders of the Target Fund. In addition, as part of the Reorganization, the Target Fund will write off its remaining unamortized organizational expenses, if any, which shall be reimbursed by Thrivent Financial for Lutherans (or an affiliate thereof). The Acquiring Fund shall bear expenses associated with the qualification of shares of the Acquiring Fund for sale in the various states. In addition, to the extent that any transition of Fund securities is required in connection with the Reorganization, the respective Fund may incur transaction expenses associated with the sale and purchase of Fund securities. In the event that the transactions contemplated herein are not consummated for any reason, then all reasonable outside expenses incurred to the date of termination of this Agreement shall be borne by Thrivent Financial for Lutherans (or an affiliate thereof).
G. Dissolution. As soon as practicable after the Closing Date but in no event later than one year after the Closing Date, the Target Fund shall voluntarily dissolve and completely liquidate by taking, in accordance with the laws of the Commonwealth of Massachusetts and federal securities laws, all steps as shall be necessary and proper to effect a complete liquidation and dissolution of the Target Fund. Immediately after the Closing Date, the share transfer books relating to the Target Fund shall be closed and no transfer of shares shall thereafter be made on such books.
4. | Representations and Warranties of the Target Fund. |
The Target Fund hereby represents and warrants to the Acquiring Fund, which representations and warranties are true and correct on the date hereof, and agrees with the Acquiring Fund that:
A. Organization. The Trust is a trust, with transferable shares, duly organized, validly existing and in good standing in conformity with the laws of its jurisdiction of organization. The Target Fund is a separate series of the Trust duly organized in accordance with the applicable provisions of the Articles of Incorporation of the Trust, as amended through the date hereof (the “Articles of Incorporation”). The Trust and the Target Fund are qualified to do business in all jurisdictions in which it is required to be so qualified, except jurisdictions in which the failure to so qualify would not have a material adverse effect on the Target Fund. The Trust and the Target Fund have all material federal, state and local authorizations necessary to own all of its properties and assets and to carry on its
A - 3
Table of Contents
business as now being conducted, except authorizations which the failure to so obtain would not have a material adverse effect on the Target Fund.
B. Registration. The Trust is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company and such registration has not been revoked or rescinded. The Target Fund is in compliance in all material respects with the 1940 Act, and the rules and regulations thereunder with respect to its activities. All of the outstanding common shares of beneficial interest of the Target Fund have been duly authorized and are validly issued, fully paid and non-assessable and not subject to pre-emptive or dissenters’ rights.
C. Audited Financial Statements. The statement of assets and liabilities and the portfolio of investments and the related statements of operations and changes in net assets of the Target Fund audited as of and for the year ended December 31, 2017, true and complete copies of which have been heretofore furnished to the Acquiring Fund, fairly represent the financial condition and the results of operations of the Target Fund as of and for their respective dates and periods in conformity with generally accepted accounting principles applied on a consistent basis during the periods involved.
D. Unaudited Financial Statements. The Target Fund shall furnish to the Acquiring Fund within ten (10) business days after the Closing Date, an unaudited statement of assets and liabilities and the portfolio of investments and the related statements of operations and changes in net assets as of and for the interim period ending on the Closing Date; such financial statements will represent fairly the financial position and portfolio of investments and the results of the Target Fund’s operations as of, and for the periods ending on, the dates of such statements in conformity with generally accepted accounting principles applied on a consistent basis during the periods involved and the results of its operations and changes in financial position for the period then ended; and such financial statements shall be certified by the Treasurer of the Target Fund as complying with the requirements hereof.
E. Contingent Liabilities. There are, and as of the Closing Date will be, no contingent liabilities of the Target Fund not discharged pursuant to Section 3(E), and there are no legal, administrative, or other proceedings pending or, to its knowledge, threatened against the Target Fund which would, if adversely determined, materially affect the Target Fund’s financial condition. All liabilities were incurred by the Target Fund in the ordinary course of its business.
F. Material Agreements. The Target Fund is in compliance with all material agreements, rules, laws, statutes, regulations and administrative orders affecting its operations or its assets; and except as referred to in the most recent Prospectus and Statement of Additional Information of the Target Fund (collectively, the “Target Fund Prospectus”), there are no material agreements outstanding relating to the Target Fund to which the Target Fund is a party.
G. Statement of Earnings. As promptly as practicable, but in any case no later than 30 calendar days after the Closing Date, the Target Fund shall furnish the Acquiring Fund with a statement of the earnings and profits of the Target Fund within the meaning of the Code as of the Closing Date.
H. Tax Returns. At the date hereof and on the Closing Date, all federal and other material tax returns and reports of the Target Fund required by law to have been filed by such dates shall have been filed, and all federal and other taxes shown thereon shall have been paid so far as due, or provision shall have been made for the payment thereof, and to the best of the Target Fund’s knowledge no such return is currently under audit and no assessment has been asserted with respect to any such return.
I. Necessary Authority. The Trust on behalf of the Target Fund has the necessary power to enter into this Agreement and to consummate the transactions contemplated herein. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated herein have been duly authorized by the Board on behalf of the Target Fund, and except for obtaining approval of the Target Fund shareholders, no other corporate acts or proceedings by the Trust on behalf of the Target Fund are necessary to authorize this Agreement and the transactions contemplated herein. This Agreement has been duly executed and delivered by the Trust on behalf of the Target Fund and constitutes a valid and binding obligation of the Target Fund enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent
A - 4
Table of Contents
transfer, reorganization, moratorium or similar laws affecting creditors’ rights generally, or by general principles of equity (regardless of whether enforcement is sought in a proceeding at equity or law).
J. No Violation, Consents and Approvals. The execution, delivery and performance of this Agreement by the Trust on behalf of the Target Fund does not and will not (i) result in a material violation of any provision of the Trust’s or the Target Fund’s organizational documents, (ii) violate any statute, law, judgment, writ, decree, order, regulation or rule of any court or governmental authority applicable to the Target Fund, (iii) result in a material violation or breach of, or constitute a default under any material contract, indenture, mortgage, loan agreement, note, lease or other instrument or obligation to which the Target Fund is subject, or (iv) result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Target Fund. Except as have been obtained, (i) no consent, approval, authorization, order or filing with or notice to any court or governmental authority or agency is required for the consummation by the Target Fund of the transactions contemplated by this Agreement and (ii) no consent of or notice to any third party or entity is required for the consummation by the Target Fund of the transactions contemplated by this Agreement.
K. Absence of Changes. From the date of this Agreement through the Closing Date, there shall not have been:
i. | any change in the business, results of operations, assets, or financial condition or the manner of conducting the business of the Target Fund, other than changes in the ordinary course of its business, or any pending or threatened litigation, which has had or may have a material adverse effect on such business, results of operations, assets, financial condition or manner of conducting business; |
ii. | issued by the Target Fund any option to purchase or other right to acquire shares of the Target Fund to any person other than subscriptions to purchase shares at net asset value in accordance with terms in the Target Fund Prospectus; |
iii. | any entering into, amendment or termination of any contract or agreement by the Target Fund, except as otherwise contemplated by this Agreement; |
iv. | any indebtedness incurred, other than in the ordinary course of business, by the Target Fund for borrowed money or any commitment to borrow money entered into by the Target Fund; |
v. | any amendment of the Trust’s or the Target Fund’s organizational documents; or |
vi. | any grant or imposition of any lien, claim, charge or encumbrance (other than encumbrances arising in the ordinary course of business with respect to covered options) upon any asset of the Target Fund other than a lien for taxes not yet due and payable. |
L. Title. On the Closing Date, the Target Fund will have good and marketable title to the Assets, free and clear of all liens, mortgages, pledges, encumbrances, charges, claims and equities whatsoever, other than a lien for taxes not yet due and payable, and full right, power and authority to sell, assign, transfer and deliver such Assets; upon delivery of such Assets, the Acquiring Fund will receive good and marketable title to such Assets, free and clear of all liens, mortgages, pledges, encumbrances, charges, claims and equities whatsoever, other than a lien for taxes not yet due and payable.
M. Prospectus/Proxy Statement. The Registration Statement on Form N-14 of the Trust (the “Registration Statement”) and the Prospectus/Proxy Statement contained therein (the “Prospectus/Proxy Statement”), as of the effective date of the Registration Statement, and at all times subsequent thereto up to and including the Closing Date, as amended or as supplemented if it shall have been amended or supplemented, conform and will conform as they relate to the Target Fund, in all material respects, to the applicable requirements of the applicable federal and state securities laws and the rules and regulations of the Securities and Exchange Commission (the “SEC”) thereunder, and do not and will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except that no representations or warranties in this Section 4(M) apply to statements or omissions made in reliance upon and in conformity with written information concerning the Acquiring Fund furnished to the Target Fund by the Acquiring Fund.
N. Tax Qualification. The Target Fund has qualified as a regulated investment company within the meaning of Section 851 of the Code for each of its taxable years; and has satisfied the distribution requirements imposed by Section 852 of the Code for each of its taxable years.
A - 5
Table of Contents
5. | Representations and Warranties of the Acquiring Fund. |
The Acquiring Fund hereby represents and warrants to the Target Fund, which representations and warranties are true and correct on the date hereof, and agrees with the Target Fund that:
A. Organization. The Trust is duly formed and in good standing under the laws of the state of its organization and is duly authorized to transact business in the state of its organization. The Acquiring Fund is a separate series of the Trust duly organized in accordance with the applicable provisions of the Articles of Incorporation. The Trust and the Acquiring are qualified to do business in all jurisdictions in which it is required to be so qualified, except jurisdictions in which the failure to so qualify would not have a material adverse effect on the Acquiring Fund. The Trust and the Acquiring Fund have all material federal, state and local authorizations necessary to own all of its properties and assets and to carry on its business and the business thereof as now being conducted, except authorizations which the failure to so obtain would not have a material adverse effect on the Acquiring Fund.
B. Registration. The Trust is registered under the 1940 Act as an open-end management investment company and such registration has not been revoked or rescinded. The Acquiring Fund is in compliance in all material respects with the 1940 Act, and the rules and regulations thereunder with respect to its activities. All of the outstanding shares of common stock of the Acquiring Fund have been duly authorized and are validly issued, fully paid and non-assessable and not subject to pre-emptive or dissenters’ rights.
C. Audited Financial Statements. The statement of assets and liabilities and the portfolio of investments and the related statements of operations and changes in net assets of the Acquiring Fund audited as of and for the year ended October 31, 2017, true and complete copies of which have been heretofore furnished to the Target Fund, fairly represent the financial condition and the results of operations of the Acquiring Fund as of and for their respective dates and periods in conformity with generally accepted accounting principles applied on a consistent basis during the periods involved.
D. Unaudited Financial Statements. The Acquiring Fund shall furnish to the Target Fund within ten (10) business days after the Closing Date, an unaudited statement of assets and liabilities and the portfolio of investments and the related statements of operations and changes in net assets as of and for the interim period ending on the Closing Date; such financial statements will represent fairly the financial position and portfolio of investments and the results of its operations as of, and for the period ending on, the dates of such statements in conformity with generally accepted accounting principles applied on a consistent basis during the period involved and the results of its operations and changes in financial position for the periods then ended; and such financial statements shall be certified by the Treasurer of the Acquiring Fund as complying with the requirements hereof.
E. Contingent Liabilities. There are, and as of the Closing Date will be, no contingent liabilities of the Acquiring Fund not disclosed in the financial statements delivered pursuant to Sections 5(C) and 5(D) hereof which would materially affect the Acquiring Fund’s financial condition, and there are no legal, administrative, or other proceedings pending or, to its knowledge, threatened against the Acquiring Fund which would, if adversely determined, materially affect the Acquiring Fund’s financial condition. All liabilities were incurred by the Acquiring Fund in the ordinary course of its business.
F. Material Agreements. The Acquiring Fund is in compliance with all material agreements, rules, laws, statutes, regulations and administrative orders affecting its operations or its assets; and, except as referred to in the Acquiring Fund Prospectus there are no material agreements outstanding relating to the Acquiring Fund to which the Acquiring Fund is a party.
G. Tax Returns. At the date hereof and on the Closing Date, all federal and other material tax returns and reports of the Acquiring Fund required by law to have been filed by such dates shall have been filed, and all federal and other taxes shown thereon shall have been paid so far as due, or provision shall have been made for the payment thereof, and to the best of the Acquiring Fund’s knowledge no such return is currently under audit and no assessment has been asserted with respect to any such return.
H. Necessary Authority. The Trust on behalf of the Acquiring Fund has the necessary power to enter into this Agreement and to consummate the transactions contemplated herein. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated herein have been duly authorized by the Board on behalf of the Acquiring Fund, no other corporate acts or proceedings by the Acquiring Fund are necessary to authorize this Agreement and the transactions contemplated herein. This Agreement has been duly executed and
A - 6
Table of Contents
delivered by the Trust on behalf of the Acquiring Fund and constitutes a valid and binding obligation of the Acquiring Fund enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar laws affecting creditors’ rights generally, or by general principals of equity (regardless of whether enforcement is sought in a proceeding at equity or law).
I. No Violation; Consents and Approvals. The execution, delivery and performance of this Agreement by Trust on behalf of the Acquiring Fund does not and will not (i) result in a material violation of any provision of Trust’s or the Acquiring Fund’s organizational documents, (ii) violate any statute, law, judgment, writ, decree, order, regulation or rule of any court or governmental authority applicable to the Acquiring Fund, (iii) result in a material violation or breach of, or constitute a default under any material contract, indenture, mortgage, loan agreement, note, lease or other instrument or obligation to which the Acquiring Fund is subject, or (iv) result in the creation or imposition or any lien, charge or encumbrance upon any property or assets of the Acquiring Fund. Except as have been obtained, (i) no consent, approval, authorization, order or filing with or notice to any court or governmental authority or agency is required for the consummation by the Acquiring Fund of the transactions contemplated by this Agreement and (ii) no consent of or notice to any third party or entity is required for the consummation by the Acquiring Fund of the transactions contemplated by this Agreement.
J. Absence of Proceedings. There are no legal, administrative or other proceedings pending or, to its knowledge, threatened against the Acquiring Fund which would materially affect its financial condition.
K. Acquiring Fund Shares: Registration. The Acquiring Fund Shares to be issued pursuant to Section 1 hereof will be duly registered under the Securities Act of 1933, as amended (the “Securities Act”), and all applicable state securities laws.
L. Acquiring Fund Shares: Authorization. The Acquiring Fund Shares to be issued pursuant to Section 1 hereof have been duly authorized and, when issued in accordance with this Agreement, will be validly issued, fully paid and non-assessable, will not be subject to pre-emptive or dissenters’ rights and will conform in all material respects to the description thereof contained in the Acquiring Fund’s Prospectus furnished to the Target Fund.
M. Absence of Changes. From the date hereof through the Closing Date, there shall not have been any change in the business, results of operations, assets or financial condition or the manner of conducting the business of the Acquiring Fund, other than changes in the ordinary course of its business, which has had a material adverse effect on such business, results of operations, assets, financial condition or manner of conducting business.
N. Registration Statement. The Registration Statement and the Prospectus/Proxy Statement as of the effective date of the Registration Statement, and at all times subsequent thereto up to and including the Closing Date, as amended or as supplemented if they shall have been amended or supplemented, conforms and will conform, as they relate to the Acquiring Fund, in all material respects, to the applicable requirements of the applicable federal securities laws and the rules and regulations of the SEC thereunder, and do not and will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except that no representations or warranties in this Section 5 apply to statements or omissions made in reliance upon and in conformity with written information concerning the Target Fund furnished to the Acquiring Fund by the Target Fund.
O. Tax Qualification. The Acquiring Fund has qualified as a regulated investment company within the meaning of Section 851 of the Code for each of its taxable years; and has satisfied the distribution requirements imposed by Section 852 of the Code for each of its taxable years.
A - 7
Table of Contents
6. | Covenants. |
During the period from the date of this Agreement and continuing until the Closing Date, the Target Fund and Acquiring Fund agree as follows (except as expressly contemplated or permitted by this Agreement):
A. Other Actions. The Target Fund and Acquiring Fund shall operate only in the ordinary course of business consistent with prior practice. No party shall take any action that would, or reasonably would be expected to, result in any of its representations and warranties set forth in this Agreement being or becoming untrue in any material respect.
B. Government Filings; Consents. The Trust shall file all reports required to be filed by the Target Fund and Acquiring Fund with the SEC between the date of this Agreement and the Closing Date and the Target Fund and Acquiring Fund shall deliver to the other party copies of all such reports promptly after the same are filed. Except where prohibited by applicable statutes and regulations, each party shall promptly provide the other (or its counsel) with copies of all other filings made by such party with any state, local or federal government agency or entity in connection with this Agreement or the transactions contemplated hereby. Each of the Target Fund and the Acquiring Fund shall use all reasonable efforts to obtain all consents, approvals and authorizations required in connection with the consummation of the transactions contemplated by this Agreement and to make all necessary filings with the appropriate federal and state officials.
C. Preparation of the Registration Statement and the Prospectus/Proxy Statement. In connection with the Registration Statement and the Prospectus/Proxy Statement, each party hereto will cooperate with the other and furnish to the other the information relating to the Target Fund or Acquiring Fund, as the case may be, required by the Securities Act or the Securities Exchange Act of 1934 and the rules and regulations thereunder, to be set forth in the Registration Statement or the Prospectus/Proxy Statement. The Target Fund shall promptly prepare the Prospectus/Proxy Statement and the Acquiring Fund shall promptly prepare and file with the SEC the Registration Statement, in which the Prospectus/Proxy Statement will be included as a prospectus. In connection with the Registration Statement, insofar as it relates to the Target Fund and its affiliated persons, the Acquiring Fund shall only include such information as is approved by the Target Fund for use in the Registration Statement. The Acquiring Fund shall not amend or supplement any such information regarding the Target Fund and such affiliates without the prior written consent of the Target Fund which consent shall not be unreasonably withheld or delayed. The Acquiring Fund shall promptly notify and provide the Target Fund with copies of all amendments or supplements filed with respect to the Registration Statement. The Acquiring Fund shall use all reasonable efforts to have the Registration Statement declared effective under the Securities Act as promptly as practicable after such filing. The Acquiring Fund shall also take any action (other than qualifying to do business in any jurisdiction in which it is now not so qualified) required to be taken under any applicable state securities laws in connection with the issuance of the Acquiring Fund Shares in the transactions contemplated by this Agreement, and the Target Fund shall furnish all information concerning the Target Fund and the holders of the Target Fund’s shares as may be reasonably requested in connection with any such action.
D. Access to Information. During the period prior to the Closing Date, the Target Fund shall make available to the Acquiring Fund a copy of each report, schedule, registration statement and other document (the “Documents”) filed or received by it during such period pursuant to the requirements of federal or state securities laws (other than Documents which such party is not permitted to disclose under applicable law). During the period prior to the Closing Date, the Acquiring Fund shall make available to the Target Fund each Document pertaining to the transactions contemplated hereby filed or received by it during such period pursuant to federal or state securities laws (other than Documents which such party is not permitted to disclose under applicable law).
E. Shareholder Meetings. The Target Fund shall call a meeting of the Target Fund shareholders to be held as promptly as practicable for the purpose of voting upon the approval of this Agreement and the transactions contemplated herein, and shall furnish a copy of the Prospectus/Proxy Statement and proxy card to each shareholder of the Target Fund as of the record date for such meeting of shareholders. The Board shall recommend to the Target Fund shareholders approval of this Agreement and the transactions contemplated herein, subject to fiduciary obligations under applicable law.
F. Portfolios. The Target Fund and Acquiring Fund covenant and agree to dispose of certain assets prior to the Closing Date, but only if and to the extent necessary, so that at Closing, when the Assets are added to the Acquiring Fund’s portfolio, the resulting portfolio will meet the Acquiring Fund’s investment objective, policies and
A - 8
Table of Contents
restrictions, as set forth in the Acquiring Fund’s Prospectus, a copy of which has been delivered to the Target Fund. Notwithstanding the foregoing, nothing herein will require the Target Fund to dispose of any portion of the Assets if, in the reasonable judgment of the Target Fund’s Directors or investment adviser, such disposition would create more than an insignificant risk that the Reorganization would not be treated as a “reorganization” described in Section 368(a) of the Code.
G. Distribution of Shares. The Target Fund covenants that at closing it shall cause to be distributed the Acquiring Fund Shares in the proper pro rata amount for the benefit of Target Fund’s shareholders and that the Target Fund shall not continue to hold amounts of said shares so as to cause a violation of Section 12(d)(1) of the 1940 Act. The Target Fund covenants to use all reasonable efforts to cooperate with the Acquiring Fund and the Acquiring Fund’s transfer agent in the distribution of said shares. The Target Fund covenants further that, pursuant to Section 3(G) hereof, it shall liquidate and dissolve as promptly as practicable after the Closing Date.
H. Brokers or Finders. Except as disclosed in writing to the other party prior to the date hereof, each of the Target Fund and the Acquiring Fund represents that no agent, broker, investment banker, financial advisor or other firm or person is or will be entitled to any broker’s or finder’s fee or any other commission or similar fee in connection with any of the transactions contemplated by this Agreement, and each party shall hold the other harmless from and against any and all claims, liabilities or obligations with respect to any such fees, commissions or expenses asserted by any person to be due or payable in connection with any of the transactions contemplated by this Agreement on the basis of any act or statement alleged to have been made by such first party or its affiliate.
I. Additional Agreements. In case at any time after the Closing Date any further action is necessary or desirable in order to carry out the purposes of this Agreement, the proper directors and officers of each party to this Agreement shall take all such necessary action.
J. Public Announcements. For a period of time from the date of this Agreement to the Closing Date, the Target Fund and the Acquiring Fund will consult with each other before issuing any press releases or otherwise making any public statements with respect to this Agreement or the transactions contemplated herein and shall not issue any press release or make any public statement prior to such consultation, except as may be required by law.
K. Tax Status of Reorganization. The intention of the parties is that the transactions contemplated by this Agreement will qualify as a reorganization within the meaning of Section 368(a) of the Code. Neither the Acquiring Fund nor the Target Fund shall take any action, or cause any action to be taken (including, without limitation, the filing of any tax return) that is inconsistent with such treatment or results in the failure of the transaction to qualify as a reorganization within the meaning of Section 368(a) of the Code. At or prior to the Closing Date, the Acquiring Fund and the Target Fund will take such action, or cause such action to be taken, as is reasonably necessary to enable Reed Smith LLP (“Reed Smith”), special counsel to the Acquiring Fund and the Target Fund, to render the tax opinion required herein (including, without limitation, each party’s execution of representations reasonably requested by Reed Smith).
L. Declaration of Dividend. At or immediately prior to the Closing Date, the Target Fund shall declare and pay to its stockholders a dividend or other distribution in an amount large enough so that it will have distributed substantially all (and in any event not less than 98%) of its investment company taxable income (computed without regard to any deduction for dividends paid) and realized net capital gain, if any, for the current taxable year through the Closing Date.
7. | Conditions to Obligations of the Target Fund. |
The obligations of the Target Fund hereunder with respect to the consummation of the Reorganization are subject to the satisfaction of the following conditions, unless waived in writing by the Target Fund:
A. Shareholder Approval. This Agreement and the transactions contemplated herein shall have been approved by the affirmative vote of a “Majority of the Outstanding Voting Securities” (as defined in the Articles of Incorporation) of the Target Fund.
B. Representations, Warranties and Agreements. Each of the representations and warranties of the Acquiring Fund contained herein shall be true in all material respects as of the Closing Date, there shall have been no material adverse change in the financial condition, results of operations, business properties or assets of the Acquiring Fund
A - 9
Table of Contents
as of the Closing Date, and the Target Fund shall have received a certificate of an authorized officer of the Acquiring Fund satisfactory in form and substance to the Target Fund so stating. The Acquiring Fund shall have performed and complied in all material respects with all agreements, obligations and covenants required by this Agreement to be so performed or complied with by it on or prior to the Closing Date.
C. Registration Statement Effective. The Registration Statement shall have become effective and no stop orders under the Securities Act pertaining thereto shall have been issued.
D. Regulatory Approval. All necessary approvals, registrations, and exemptions under federal and state securities laws shall have been obtained.
E. No Injunctions or Restraints; Illegality. No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition (an “Injunction”) preventing the consummation of the transactions contemplated by this Agreement shall be in effect, nor shall any proceeding by any state, local or federal government agency or entity seeking any of the foregoing be pending. There shall not have been any action taken or any statute, rule, regulation or order enacted, entered, enforced or deemed applicable to the transactions contemplated by this Agreement, which makes the consummation of the transactions contemplated by this Agreement illegal or which has a material adverse effect on business operations of the Acquiring Fund.
F. Tax Opinion. The Target Fund shall have obtained an opinion from Reed Smith, special counsel for the Target Fund, dated as of the Closing Date, addressed to the Target Fund, that the consummation of the transactions set forth in this Agreement comply with the requirements of a reorganization as described in Section 368(a) of the Code. Such opinion shall be based on customary assumptions and such representations as Reed Smith may reasonably request and the Target Fund and the Acquiring Fund will cooperate to make and certify the accuracy of such representations.
G. Officer Certificates. The Target Fund shall have received a certificate of an authorized officer of the Acquiring Fund, dated as of the Closing Date, certifying that the representations and warranties set forth in Section 5 are true and correct on the Closing Date, together with certified copies of the resolutions adopted by the Board on behalf of the Acquiring Fund.
8. | Conditions to Obligations of the Acquiring Fund. |
The obligations of the Acquiring Fund hereunder with respect to the consummation of the Reorganization are subject to the satisfaction of the following conditions, unless waived in writing by the Acquiring Fund:
A. Representations, Warranties, and Agreements. Each of the representations and warranties of the Target Fund contained herein shall be true in all material respects as of the Closing Date, there shall have been no material adverse change in the financial condition, results of operations, business, properties or assets of the Target Fund as of the Closing Date, and the Acquiring Fund shall have received a certificate of an authorized officer of the Target Fund satisfactory in form and substance to the Acquiring Fund so stating. The Target Fund shall have performed and complied in all material respects with all agreements, obligations and covenants required by this Agreement to be so performed or complied with by them on or prior to the Closing Date.
B. Registration Statement Effective. The Registration Statement shall have become effective and no stop orders under the Securities Act pertaining thereto shall have been issued.
C. Regulatory Approval. All necessary approvals, registrations, and exemptions under federal and state securities laws shall have been obtained.
D. No Injunctions or Restrains; Illegality. No Injunction preventing the consummation of the transactions contemplated by this Agreement shall be in effect, nor shall any proceeding by any state, local or federal government agency or entity seeking any of the foregoing be pending. There shall not have been any action taken, or any statute, rule, regulation or order enacted, entered, enforced or deemed applicable to the transactions contemplated by this Agreement, which makes the consummation of the transactions contemplated by this Agreement illegal.
A - 10
Table of Contents
E. Tax Opinion. The Acquiring Fund shall have obtained an opinion from Reed Smith, special counsel for the Acquiring Fund, dated as of the Closing Date, addressed to the Acquiring Fund, that the consummation of the transactions set forth in this Agreement comply with the requirements of a reorganization as described in Section 368(a) of the Code. Such opinion shall be based on customary assumptions and such representations as Reed Smith may reasonably request and the Target Fund and the Acquiring Fund will cooperate to make and certify the accuracy of such representations.
F. Shareholder List. The Target Fund shall have delivered to the Acquiring Fund an updated list of all shareholders of the Target Fund, as reported by the Target Fund’s transfer agent, as of one (1) business day prior to the Closing Date with each shareholder’s respective holdings in the Target Fund, taxpayer identification numbers, Form W9 and last known address.
G. Officer Certificates. The Acquiring Fund shall have received a certificate of an authorized officer of the Target Fund, dated as of the Closing Date, certifying that the representations and warranties set forth in Section 4 hereof are true and correct on the Closing Date, together with certified copies of the resolutions adopted by the Board on behalf of the Target Fund and by Target Fund shareholders.
9. | Amendment, Waiver and Termination. |
A. The parties hereto may, by agreement in writing authorized by the Board on behalf of each of the Target Fund and the Acquiring Fund, amend this Agreement at any time before or after approval thereof by the shareholders of the Target Fund; provided, however, that after receipt of Target Fund shareholder approval, no amendment shall be made by the parties hereto which substantially changes the terms of Sections 1, 2 and 3 hereof without obtaining Target Fund’s shareholder approval thereof.
B. At any time prior to the Closing Date, either of the parties may by written instrument signed by it (i) waive any inaccuracies in the representations and warranties made to it contained herein and (ii) waive compliance with any of the covenants or conditions made for its benefit contained herein. No delay on the part of either party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any such right, power or privilege, or any single or partial exercise of any such right, power or privilege, preclude any further exercise thereof or the exercise of any other such right, power or privilege.
C. This Agreement may be terminated, and the transactions contemplated herein may be abandoned at any time prior to the Closing Date:
i. | by the consent of the Board on behalf of each of the Target Fund and the Acquiring Fund; |
ii. | by the Target Fund, if the Acquiring Fund breaches in any material respect any of its representations, warranties, covenants or agreements contained in this Agreement; |
iii. | by the Acquiring Fund, if the Target Fund breaches in any material respect any of its representations, warranties, covenants or agreements contained in this Agreement; |
iv. | by either the Target Fund or the Acquiring Fund, if the Closing has not occurred on or prior to December 31, 2018 (provided that the rights to terminate this Agreement pursuant to this subsection (C)(iv) shall not be available to any party whose failure to fulfill any of its obligations under this Agreement has been the cause of or resulted in the failure of the closing to occur on or before such date); |
v. | by the Acquiring Fund in the event that: (a) all the conditions precedent to the Target Fund’s obligation to close, as set forth in Section 7 hereof, have been fully satisfied (or can be fully satisfied at the Closing); (b) the Acquiring Fund gives the Target Fund written assurance of its intent to close irrespective of the satisfaction or non-satisfaction of all conditions precedent to the Acquiring Fund’s obligation to close, as set forth in Section 8 hereof; and (c) the Target Fund then fails or refuses to close within the earlier of ten (10) business days or December 31, 2018; or |
vi. | by the Target Fund in the event that: (a) all the conditions precedent to the Acquiring Fund’s obligation to close, as set forth in Section 8 hereof have been fully satisfied (or can be fully satisfied at the Closing); (b) the Target Fund gives the Acquiring Fund written assurance of its intent to close irrespective of the satisfaction or non-satisfaction of all the conditions precedent to the Target Fund’s |
A - 11
Table of Contents
obligation to close, as set forth in Section 7 hereof; and (c) the Acquiring Fund then fails or refuses to close within the earlier of ten (10) business days or December 31, 2018. |
10. | Remedies. |
In the event of termination of this Agreement by either or both of the Target Fund and Acquiring Fund pursuant to Section 9(C) hereof, written notice thereof shall forthwith be given by the terminating party to the other party hereto, and this Agreement shall therefore terminate and become void and have no effect, and the transactions contemplated herein and thereby shall be abandoned, without further action by the parties hereto.
11. | Survival of Warranties and Indemnification. |
A. Survival. The representations and warranties included or provided for herein, or in the schedules or other instruments delivered or to be delivered pursuant hereto, shall survive the Closing Date for a three (3) year period except that any representation or warranty with respect to taxes shall survive for the expiration of the statutory period of limitations for assessments of tax deficiencies as the same may be extended from time to time by the taxpayer. The covenants and agreements included or provided for herein shall survive and be continuing obligations in accordance with their terms. The period for which a representation, warranty, covenant or agreement survives shall be referred to hereinafter as the “Survival Period.” Notwithstanding anything set forth in the immediately preceding sentence, the right of the Acquiring Fund and the Target Fund to seek indemnity pursuant to this Agreement shall survive for a period of ninety (90) days beyond the expiration of the Survival Period of the representation, warranty, covenant or agreement upon which indemnity is sought. In no event shall the Acquiring Fund or the Target Fund be obligated to indemnify the other if indemnity is not sought within ninety (90) days of the expiration of the applicable Survival Period.
B. Indemnification. Each party (an “Indemnitor”) shall indemnify and hold the other and its directors, officers, agents and persons controlled by or controlling any of them (each an “Indemnified Party”) harmless from and against any and all losses, damages, liabilities, claims, demands, judgments, settlements, deficiencies, taxes, assessments, charges, costs and expenses of any nature whatsoever (including reasonable attorneys’ fees), including amounts paid in satisfaction of judgments, in compromise or as fines and penalties, and counsel fees reasonably incurred by such Indemnified Party in connection with the defense or disposition of any claim, action, suit or other proceeding, whether civil or criminal, before any court or administrative or investigative body in which such Indemnified Party may be or may have been involved as a party or otherwise or with which such Indemnified Party may be or may have been threatened (collectively, the “Losses”) arising out of or related to any claim of a breach of any representation, warranty or covenant made herein by the Indemnitor, provided, however, that no Indemnified Party shall be indemnified hereunder against any Losses arising directly from such Indemnified Party’s (i) willful misfeasance, (ii) bad faith, (iii) gross negligence or (iv) reckless disregard of the duties involved in the conduct of such Indemnified Party’s position.
C. Indemnification Procedure. The Indemnified Party shall use its best efforts to minimize any liabilities, damages, deficiencies, claims, judgments, assessments, costs and expenses in respect of which indemnity may be sought hereunder. The Indemnified Party shall give written notice to the Indemnitor within the earlier of ten (10) days of receipt of written notice to the Indemnified Party or thirty (30) days from discovery by the Indemnified Party of any matters which may give rise to a claim for indemnification or reimbursement under this Agreement. The failure to give such notice shall not affect the right of the Indemnified Party to indemnity hereunder unless such failure has materially and adversely affected the rights of the Indemnitor; provided that in any event such notice shall have been given prior to the expiration of the Survival Period. At any time after ten (10) days from the giving of such notice, the Indemnified Party may, at its option, resist, settle or otherwise compromise, or pay such claim unless it shall have received notice from the Indemnitor that the Indemnitor intends, at the Indemnitor’s sole cost and expense, to assume the defense of any such matter, in which case the Indemnified Party shall have the right, at no cost or expense to the Indemnitor, to participate in such defense. If the Indemnitor does not assume the defense of such matter, and in any event until the Indemnitor states in writing that it will assume the defense, the Indemnitor shall pay all costs of the Indemnified Party arising out of the defense until the defense is assumed; provided, however, that the Indemnified Party shall consult with the Indemnitor and obtain the Indemnitor’s prior written consent to any payment or settlement of any such claim. The Indemnitor shall keep the Indemnified Party fully apprised at all times as to the status of the defense. If the Indemnitor does not assume the defense, the Indemnified Party shall keep Indemnitor apprised at all times as to the status of the defense. Following indemnification as
A - 12
Table of Contents
provided for hereunder, the Indemnitor shall be subrogated to all rights of the Indemnified Party with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made.
12. | Survival. |
The provisions set forth in Sections 10, 11 and 16 hereof shall survive the termination of this Agreement for any cause whatsoever.
13. | Notices. |
All notices hereunder shall be sufficiently given for all purposes hereunder if in writing and delivered personally or sent by registered mail or certified mail, postage prepaid. Notice to the Target Fund shall be addressed to the Target Fund c/o Thrivent Mutual Funds, 625 Fourth Avenue South, Minneapolis, Minnesota 55415, Attention: Chief Legal Officer, or at such other address as the Target Fund may designate by written notice to the Acquiring Fund. Notice to the Acquiring Fund shall be addressed to the Acquiring Fund c/o Thrivent Mutual Funds, 625 Fourth Avenue South, Minneapolis, Minnesota 55415, Attention: Chief Legal Officer, or at such other address and to the attention of such other person as the Acquiring Fund may designate by written notice to the Target Fund. Any notice shall be deemed to have been served or given as of the date such notice is delivered personally or mailed.
14. | Successors and Assigns. |
This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors and assigns. This Agreement shall not be assigned by any party without the prior written consent of the other party hereto.
15. | Books and Records. |
All books and records of the Target Fund, including all books and records required to be maintained under the Investment Company Act of 1940, as amended (the “1940 Act”), and the rules and regulations thereunder, shall be available to the Acquiring Fund from and after the Closing Date and shall be turned over to the Acquiring Fund as soon as practicable following the Closing Date.
16. | General. |
This Agreement supersedes all prior agreements between the parties (written or oral), is intended as a complete and exclusive statement of the terms of the Agreement between the parties and may not be amended, modified or changed, or terminated orally. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been executed by the Trust on behalf of the Target Fund and by the Trust on behalf of the Acquiring Fund and delivered to each of the parties hereto. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. This Agreement is for the sole benefit of the parties hereto, and nothing in this Agreement, expressed or implied, is intended to confer upon any other person any rights or remedies under or by reason of this Agreement. This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota without regard to principles of conflicts or choice of law.
17. | Limitation of Liability. |
It is expressly agreed that the obligations of the Trust hereunder shall not be binding upon any of the Directors, shareholders, nominees, officers, agents or employees of the Trust personally, but shall bind only the property of the Trust, as provided in the Articles of Incorporation. The execution and delivery of this Agreement have been authorized by the Directors and signed by an authorized officer of the Trust, acting as such, and neither such authorization by such Directors nor such execution and delivery by such officer shall be deemed to have been made by any of them personally, but shall bind only the property of the Trust as provided in the Articles of Incorporation. The obligations of any series of the Trust hereunder shall be the exclusive obligation of that series and the parties hereto can only look to the assets of that series to satisfy any debt or obligation incurred by that series hereunder.
A - 13
Table of Contents
IN WITNESS WHEREOF, the parties have hereunto caused this Agreement to be executed and delivered by their duly authorized officers as of the day and year first written above.
Thrivent Mutual Funds On Behalf of Its Series, Thrivent Growth and Income Plus Fund
| ||
Name: Title: | David S. Royal President |
Attest:
| ||
Name: Title: | Michael W. Kremenak Secretary |
Thrivent Mutual Funds On Behalf of Its Series, Thrivent Moderately Aggressive Allocation Fund
| ||
Name: Title: | David S. Royal President |
Attest:
| ||
Name: Title: | Michael W. Kremenak Secretary |
A - 14
Table of Contents
STATEMENT OF ADDITIONAL INFORMATION OF THE TRUST
B - 1
Table of Contents
Thrivent Mutual Funds
Supplement to the Statement of Additional Information
dated February 28, 2018
In the “Investment Policies and Restrictions” section, the fourth paragraph under “Other Securities” is replaced with the following:
Thrivent High Income Municipal Bond Fund and Thrivent Municipal Bond Fund do not generally intend to purchase any securities that would cause 25% or more of the value of its total assets to be invested in the securities of governmental subdivisions located in any one state, territory or possession of the United States. Each of these Funds may invest 25% or more of the value of its total assets in industrial development bonds. Each of these Funds also may invest up to 25% of its total assets in securities issued in connection with the financing of projects with similar characteristics, such as toll road revenue bonds, housing revenue bonds or electric power project revenue bonds, or in industrial development revenue bonds which are based, directly or indirectly, on the credit of private entities in any one industry. Thrivent Municipal Bond Fund may invest up to 5% of its assets in high yield securities.
The date of this Supplement is March 5, 2018.
Please include this Supplement with your Statement of Additional Information.
29809
Table of Contents
Fund | Class A | Class S | ||
Thrivent Aggressive Allocation Fund | TAAAX | TAAIX | ||
Thrivent Balanced Income Plus Fund | AABFX | IBBFX | ||
Thrivent Diversified Income Plus Fund | AAHYX | THYFX | ||
Thrivent Government Bond Fund | TBFAX | TBFIX | ||
Thrivent Growth and Income Plus Fund | TEIAX | TEIIX | ||
Thrivent High Income Municipal Bond Fund | -- | THMBX | ||
Thrivent High Yield Fund | LBHYX | LBHIX | ||
Thrivent Income Fund | LUBIX | LBIIX | ||
Thrivent Large Cap Growth Fund | AAAGX | THLCX | ||
Thrivent Large Cap Stock Fund | AALGX | IILGX | ||
Thrivent Large Cap Value Fund | AAUTX | TLVIX | ||
Thrivent Limited Maturity Bond Fund | LBLAX | THLIX | ||
Thrivent Low Volatility Equity Fund | -- | TLVOX | ||
Thrivent Mid Cap Stock Fund | AASCX | TMSIX | ||
Thrivent Moderate Allocation Fund | THMAX | TMAIX | ||
Thrivent Moderately Aggressive Allocation Fund | TMAAX | TMAFX | ||
Thrivent Moderately Conservative Allocation Fund | TCAAX | TCAIX | ||
Thrivent Money Market Fund | AMMXX | AALXX | ||
Thrivent Multidimensional Income Fund | -- | TMLDX | ||
Thrivent Municipal Bond Fund | AAMBX | TMBIX | ||
Thrivent Opportunity Income Plus Fund | AAINX | IIINX | ||
Thrivent Partner Emerging Markets Equity Fund | TPEAX | TPEIX | ||
Thrivent Partner Worldwide Allocation Fund | TWAAX | TWAIX | ||
Thrivent Small Cap Growth Fund | -- | TSCGX | ||
Thrivent Small Cap Stock Fund | AASMX | TSCSX |
Dated February 28, 2018
Fund Name | Class A Inception Date | Class S Inception Date | ||
Thrivent Aggressive Allocation Fund | 6/30/2005 | 6/30/2005 | ||
Thrivent Balanced Income Plus Fund | 12/29/1997 | 12/29/1997 | ||
Thrivent Diversified Income Plus Fund | 1/08/1997 | 12/29/1997 | ||
Thrivent Government Bond Fund | 2/26/2010 | 2/26/2010 | ||
Thrivent Growth and Income Plus Fund | 2/29/2008 | 2/29/2008 | ||
Thrivent High Income Municipal Bond Fund | N/A | 2/28/2018 | ||
Thrivent High Yield Fund | 4/3/1987 | 10/31/1997 | ||
Thrivent Income Fund | 6/1/1972 | 10/31/1997 | ||
Thrivent Large Cap Growth Fund | 10/29/1999 | 10/29/1999 | ||
Thrivent Large Cap Stock Fund | 7/16/1987 | 12/29/1997 | ||
Thrivent Large Cap Value Fund | 10/29/1999 | 10/29/1999 | ||
Thrivent Limited Maturity Bond Fund | 10/29/1999 | 10/29/1999 | ||
Thrivent Low Volatility Equity Fund | N/A | 2/28/2017 | ||
Thrivent Mid Cap Stock Fund | 6/30/1993 | 12/29/1997 | ||
Thrivent Moderate Allocation Fund | 6/30/2005 | 6/30/2005 | ||
Thrivent Moderately Aggressive Allocation Fund | 6/30/2005 | 6/30/2005 | ||
Thrivent Moderately Conservative Allocation Fund | 6/30/2005 | 6/30/2005 | ||
Thrivent Money Market Fund | 3/10/1988 | 12/29/1997 | ||
Thrivent Multidimensional Income Fund | N/A | 2/28/2017 | ||
Thrivent Municipal Bond Fund | 12/3/1976 | 10/31/1997 | ||
Thrivent Opportunity Income Plus Fund | 7/16/1987 | 12/29/1997 | ||
Thrivent Partner Emerging Markets Equity Fund | 8/31/2012 | 8/31/2012 | ||
Thrivent Partner Worldwide Allocation Fund | 2/29/2008 | 2/29/2008 | ||
Thrivent Small Cap Growth Fund | N/A | 2/28/2018 | ||
Thrivent Small Cap Stock Fund | 7/01/1996 | 12/29/1997 |
1. | when required otherwise by the 1940 Act; or |
2. | when the Trustees determine that the matter does not affect all Funds; then, only the shareholders of the affected Funds may vote. |
• | Aggregate initial margin and premiums required to establish its futures, options on futures and swap positions do not exceed 5% of the liquidation value of the Fund’s portfolio, after taking into account unrealized profits and losses on such positions; or |
• | Aggregate net notional value of its futures, options on futures and swap positions does not exceed 100% of the liquidation value of the Fund’s portfolio, after taking into account unrealized profits and losses on such positions. |
• | When the Fund enters into a contract for the purchase or sale of a security denominated in a foreign currency, it may desire to “lock in” the U.S. dollar price of the security. By entering into a forward contract for the purchase or sale, for a fixed amount of dollars, of the amount of foreign currency involved in the underlying security transactions, the Fund will be able to protect itself against a possible loss resulting from an adverse change in the relationship between the U.S. dollar and the subject foreign currency during the period between the date the security is purchased or sold and the date on which payment is made or received. |
• | When a Fund determines that one currency may experience a substantial movement against another currency, including the U.S. dollar, a Fund may enter into a forward contract to sell or buy the amount of the former foreign currency, approximating the value of some or all of a Fund’s portfolio securities denominated in such foreign currency. |
Service Provider | Service | Frequency | |||
Bloomberg | Trading System & Data Vendor | Daily | |||
BNP Paribas Security Services | Middle Office / Settlements Vendor | Daily | |||
Callan Associates | Consultant | Quarterly; one day lag | |||
Confluence | Regulatory Reporting Vendor | Quarterly; monthly for Thrivent Money Market Fund | |||
Donnelley Financial Solutions | Printer | Quarterly |
Service Provider | Service | Frequency | |||
Electra Information Services | Electra Data – Back Office Service | Daily | |||
FactSet Research Systems Inc. | Systems Vendor | Daily | |||
Fidelity National Information Services, Inc. | Mutual Fund Accounting System Vendor | Daily | |||
Fidelity National Information Services, Inc. | Personal Trading System Vendor | Daily | |||
Goldman Sachs Bank USA | Securities Lending Agent | Daily | |||
ICE Data Services | Pricing Service | Daily | |||
IHS Markit | Pricing Service | Daily | |||
IHS Markit | Bank Debt Reconciliation Vendor | Daily | |||
Institutional Shareholder Services | Proxy Voting & Class Action Services Vendor | Daily | |||
ITG Inc. | Systems Vendor | Daily | |||
Lipper | Data Vendor | Monthly; one day lag | |||
Merrill Corporation | Printer | Quarterly | |||
Morningstar | Data Vendor | Monthly; 60 day lag | |||
Omgeo LLC | Systems Vendor | Daily | |||
PricewaterhouseCoopers LLP | Independent Registered Public Accounting Firm | Annually | |||
PricingDirect Inc. | Pricing Service | Daily | |||
Razorfish | Website Consultant | Monthly | |||
Securities Evaluations, Inc. | Pricing Service | Daily | |||
State Street Bank | Custodian | Daily | |||
Wolters Kluwer | Systems Vendor | Monthly; three day lag |
1. | None of the Funds may borrow money, except that a Fund may borrow money (through the issuance of debt securities or otherwise) in an amount not exceeding one-third of the Fund’s total assets immediately after the time of such borrowing. |
2. | None of the Funds may issue senior securities, except as permitted under the 1940 Act or any exemptive order or rule issued by the SEC. |
3. | None of the Funds will, with respect to 75% of its total assets, purchase securities of an issuer (other than the U.S. Government, its agencies, instrumentalities or authorities or repurchase agreements fully collateralized by U.S. Government securities, and other investment companies) if (a) such purchase would, at the time, cause more than 5% of the Fund’s total assets taken at market value to be invested in the securities of such issuer; or (b) such purchase would, at the time, result in more than 10% of the outstanding voting securities of such issuer being held by the Fund. This restriction does not apply to the Thrivent Asset Allocation Funds, which are “non-diversified” within the meaning of the 1940 Act. |
4. | None of the Funds may buy or sell real estate, except that any Fund may (i) acquire or lease office space for its own use, (ii) invest in securities of issuers that invest in real estate or interests therein, (iii) invest in mortgage-related securities and other securities that are secured by real estate or interests therein, and (iv) hold and sell real estate acquired by the Fund as a result of the ownership of securities. |
5. | None of the Funds may purchase or sell commodities or commodity contracts, except that any Fund may purchase and sell derivatives (including but not limited to options, futures contracts and options on futures contracts) whose value is tied to the value of a financial index or a financial instrument or other asset (including, but not limited to, securities indexes, interest rates, securities, currencies and physical commodities). |
6. | None of the Funds may make loans, except that any Fund may (i) lend portfolio securities, (ii) enter into repurchase agreements, (iii) purchase all or a portion of an issue of debt securities, bank loan participation interests, bank certificates of deposit, bankers’ acceptances, debentures or other securities, whether or not the purchase is made upon the original issuance of the securities, and (iv) participate in an interfund lending program with other registered investment companies. |
7. | None of the Funds will underwrite the securities of other issuers, except where the Fund may be deemed to be an underwriter for purposes of certain federal securities laws in connection with the disposition of portfolio securities; with investments in other investment companies; and with loans that a Fund may make pursuant to its fundamental investment restriction on lending. |
8. | None of the Funds will purchase a security if, after giving effect to the purchase, more than 25% of its total assets would be invested in the securities of one or more issuers conducting their principal business activities in the same industry, except that this restriction does not apply to Government Securities (as such term is defined in the 1940 Act). This restriction does not apply to the Thrivent Asset Allocation Funds, which primarily invest in other Funds of the Trust that could be considered to be in the same industry. In addition, with respect to the Thrivent Money Market Fund, this restriction does not apply to instruments issued by domestic banks. |
1. | None of the Funds will purchase any security while borrowings, including reverse repurchase agreements, representing more than 5% of the Fund’s total assets are outstanding. The Funds intend to limit borrowings to amounts borrowed from a bank, reverse repurchase agreements (insofar as they are considered borrowings), or an interfund lending agreement. |
2. | The fundamental investment restriction with respect to industry concentration (number 8 above) will be applied pursuant to SEC policy at 25% (instead of “more than 25%”) of a Fund’s total assets. |
3. | None of the Funds currently intend to purchase securities on margin, except that a Fund may obtain such short-term credits as are necessary for the clearance of transactions, and provided that margin payments in connection with futures contracts and options on futures contracts shall not constitute purchasing securities on margin. |
4. | The fundamental investment restriction with respect to diversification (number 3 above) will be applied so securities issued by U.S. Government agencies, instrumentalities, or authorities will be eligible for the exception only if those securities qualify as a “Government Security” under the 1940 Act. |
5. | The exception for exemptive orders in the fundamental investment restriction with respect to senior securities (number 2 above) will be applied only for exemptive orders issued to the Funds. |
• | Director of Thrivent Series Fund, Inc., a registered investment company consisting of 29 funds that serve as underlying funds for variable contracts issued by Thrivent Financial and Thrivent Life Insurance Company (“TLIC”). |
• | Trustee of Thrivent Cash Management Trust, a registered investment company consisting of one fund that serves as a cash collateral fund for a securities lending program sponsored by Thrivent Financial. |
• | Trustee of Thrivent Core Funds, a registered investment company consisting of four funds that only offers its shares to the Trust, Thrivent Series Fund, Inc., and other Thrivent entities. |
Name, Address and Year of Birth | Position with Trust and Length of Service (2) | Number of Portfolios in Fund Complex Overseen by Trustee | Principal Occupation During Past 5 Years | Other Directorships Held Currently and within Past Five Years | ||||
Russell W. Swansen 625 Fourth Avenue South Minneapolis, MN (1957) | Trustee since 2009 | 59 | Retired; Chief Investment Officer, Thrivent Financial from 2003 to 2017 | Currently, Director of Twin Bridge Capital Partners, Invenshure LLC, and Intellectual Takeout; Director of Children’s Cancer Research Fund until 2017 | ||||
David S. Royal 625 Fourth Avenue South Minneapolis, MN (1971) | Chief Investment Officer since 2017; Trustee and President since 2015 | 59 | Chief Investment Officer, Thrivent Financial since 2017; VP, President Mutual Funds, Thrivent Financial from 2015 to 2017; Vice President and Deputy General Counsel from 2006 to 2015 | Currently, Fairview Hospital Foundation, Children’s Cancer Research Foundation, and Twin Bridge Capital Partners |
Name, Address and Year of Birth | Position with Trust and Length of Service (2) | Number of Portfolios in Fund Complex Overseen by Trustee | Principal Occupation During the Past 5 Years | Other Directorships Held Currently and within Past Five Years | ||||
Janice B. Case 625 Fourth Avenue South Minneapolis, MN (1952) | Trustee since 2011 | 59 | Retired | Independent Trustee of North American Electric Reliability Corporation (the electric reliability organization (“ERD”) for North America) since 2008 | ||||
Robert J. Chersi 625 Fourth Avenue South Minneapolis, MN (1961) | Trustee since 2017 | 59 | Founder of Chersi Services LLC (consulting firm) since 2012; Executive Director of Center for Global Governance, Reporting & Regulation and Adjunct Professor of Finance and Economics at Pace University since 2013; Helpful Executive in Research (counseling) in the Department of Accounting & Information Systems at Rutgers University since 2013 | Director and Chairman of the Audit Committee of Old Mutual Asset Management PLC since 2016; Advisory Board member of the Pace University Lubin School of Business |
Name, Address and Year of Birth | Position with Trust and Length of Service (2) | Number of Portfolios in Fund Complex Overseen by Trustee | Principal Occupation During the Past 5 Years | Other Directorships Held Currently and within Past Five Years | ||||
Richard A. Hauser 625 Fourth Avenue South Minneapolis, MN (1943) | Trustee since 2004 | 59 | Retired; Member, PowerHaus Advisors LLC since 2016; Vice President and Assistant General Counsel, The Boeing Company from 2007 to 2016 | None | ||||
Marc S. Joseph 625 Fourth Avenue South Minneapolis, MN (1960) | Trustee since 2011 | 59 | Managing Director of Granite Ridge LLP (consulting and advisory firm) since 2009; Managing Director of Triangle Crest (private investing and consulting firm) since 2004 | None | ||||
Paul R. Laubscher 625 Fourth Avenue South Minneapolis, MN (1956) | Trustee since 2009 | 59 | Portfolio Manager for U.S. private real estate portfolios of IBM Retirement Funds | None | ||||
James A. Nussle 625 Fourth Avenue South Minneapolis, MN (1960) | Trustee since 2011 | 59 | President and Chief Executive Officer of Credit Union National Association since September 2014; President and Chief Operating Officer of Growth Energy (trade association) from 2010 through August 2014; Advisory Board member of AVISTA Capital Partners (private equity firm) from 2010 to 2015; CEO of The Nussle Group LLC (consulting firm) since 2009 | Advisory Board member of AVISTA Capital Partners and Director of Portfolio Recovery Associates (PRAA) since 2010 | ||||
Verne O. Sedlacek 625 Fourth Avenue South Minneapolis, MN (1954) | Trustee since 2017 | 59 | Chief Executive Officer of E&F Advisors LLC (consulting) since 2015; President & Chief Executive Officer of the Commonfund from 2003 to 2015 | Director of Association of Governing Boards of Universities and Colleges since 2007; Trustee of Valparaiso University since 2015; Trustee of Museum of American Finance since 2015; Chairman of the Board of Directors of AGB Institutional Strategies since 2016 | ||||
Constance L. Souders 625 Fourth Avenue South Minneapolis, MN (1950) | Trustee since 2007 | 59 | Retired | None |
Name, Address and Year of Birth | Position with Trust and Length of Service (2) | Principal Occupation During the Past 5 Years | ||
David S. Royal 625 Fourth Avenue South Minneapolis, MN (1971) | Chief Investment Officer since 2017; Trustee and President since 2015 | Chief Investment Officer, Thrivent Financial since 2017; VP, President, Mutual Funds, Thrivent Financial from 2015 to 2017; Vice President and Deputy General Counsel from 2006 to 2015 | ||
Gerard V. Vaillancourt 625 Fourth Avenue South Minneapolis, MN (1967) | Treasurer and Principal Accounting Officer since 2005 | Vice President, Mutual Fund Accounting since 2006 | ||
Michael W. Kremenak 625 Fourth Avenue South Minneapolis, MN (1978) | Secretary and Chief Legal Officer since 2015 | Vice President, Thrivent Financial since 2015; Senior Counsel, Thrivent Financial from 2013 to 2015; Vice President and Assistant General Counsel at Nuveen Investments from 2011 to 2013 | ||
Ted S. Dryden 625 Fourth Avenue South Minneapolis, MN (1965) | Chief Compliance Officer since 2010 | Chief Compliance Officer – Director, Compliance, Thrivent Financial since 2014; Chief Compliance Officer – Mutual Funds and Investment Adviser, Thrivent Financial from 2010 to 2013 | ||
Janice M. Guimond 625 Fourth Avenue South Minneapolis, MN (1964) | Vice President since 2005 | Vice President, Investment Operations, Thrivent Financial since 2004 | ||
Kathleen M. Koelling 4321 North Ballard Road Appleton, WI (1977) | Privacy and Identity Theft and Anti-Money Laundering Officer since 2011 | Vice President, Managing Counsel, Thrivent Financial since 2016; Privacy and Identity Theft and Anti-Money Laundering Officer, Thrivent Financial since 2011; Senior Counsel, Thrivent Financial from 2002 to 2016 | ||
Kathryn A. Stelter 625 Fourth Avenue South Minneapolis, MN (1962) | Vice President since 2015 | Vice President, Mutual Funds Chief Operations Officer, Thrivent Financial since 2017; Director, Mutual Fund Operations, Thrivent Financial from 2014 to 2017; Director, Mutual Fund Operations at Hartford Funds from 2006 to 2014 | ||
Troy A. Beaver 625 Fourth Avenue South Minneapolis, MN (1967) | Vice President since 2016 | Vice President, Mutual Funds Marketing & Distribution, Thrivent Financial since 2015; Vice President, Marketing, American Century Investments from 2006 to 2015 | ||
James M. Odland 625 Fourth Avenue South Minneapolis, MN (1955) | Assistant Secretary since 2006 | Vice President, Managing Counsel, Thrivent Financial since 2005 | ||
Jill M. Forte 625 Fourth Avenue South Minneapolis, MN (1974) | Assistant Secretary since 2016 | Senior Counsel, Thrivent Financial since 2017; Counsel, Thrivent Financial from 2015 to 2017; Associate Counsel, Ameriprise Financial, Inc. from 2013 to 2015; Manager—Legal Affairs, Ameriprise Financial, Inc. from 2010 to 2013 |
Name, Address and Year of Birth | Position with Trust and Length of Service (2) | Principal Occupation During the Past 5 Years | ||
John D. Jackson 625 Fourth Avenue South Minneapolis, MN (1977) | Assistant Secretary since 2018 | Senior Counsel, Thrivent Financial since 2017; Associate General Counsel, RBC Global Asset Management (US) Inc. from 2011 to 2017 | ||
Sarah L. Bergstrom 625 Fourth Avenue South Minneapolis, MN (1977) | Assistant Treasurer since 2007 | Head of Mutual Fund Accounting, Thrivent Financial since 2017; Director, Fund Accounting Administration, Thrivent Financial from 2007 to 2017 |
(1) | “Interested person” of the Trust as defined in the 1940 Act by virtue of a position with Thrivent Financial. Mr. Royal is considered an interested person because of his principal occupation with Thrivent Financial. Mr. Swansen is considered an interested person because of his past occupation with Thrivent Financial. |
(2) | Each Trustee generally serves an indefinite term until her or his successor is duly elected and qualified. Officers generally serve at the discretion of the board until their successors are duly appointed and qualified. |
(3) | The Trustees, other than Mr. Swansen or Mr. Royal, are not “interested persons” of the Trust and are referred to as “Independent Trustees.” |
Committee | Members (1) | Function | Meetings Held During Last Fiscal Year | |||
Audit | Janice B. Case Robert J. Chersi Richard A. Hauser Marc S. Joseph Paul R. Laubscher James A. Nussle Verne O. Sedlacek Constance L. Souders | The 1940 Act requires that the Trust’s independent auditors be selected by a majority of those Trustees who are not “interested persons” (as defined in the 1940 Act) of the Trust. The Audit Committee is responsible for recommending the engagement or retention of the Trust’s independent accountants, reviewing with the independent accountants the plan and the results of the auditing engagement, approving professional services, including permitted non-audit services, provided by the independent accountants prior to the performance of such services, considering the range of audit and non-audit fees, reviewing the independence of the independent accountants, reviewing the scope and results of procedures of internal auditing, and reviewing the system of internal accounting control. | 6 | |||
Contracts | Janice B. Case Robert J. Chersi Richard A. Hauser Marc S. Joseph Paul R. Laubscher James A. Nussle Verne O. Sedlacek Constance L. Souders | The function of the Contracts Committee is to assist the Board in fulfilling its duties with respect to the review and approval of contracts between the Trust and other entities, including entering into new contracts and the renewal of existing contracts. The Contracts Committee considers investment advisory, distribution, transfer agency, administrative service and custodial contracts, and such other contracts as the Board deems necessary or appropriate for the continuation of operations of each Fund. | 6 |
Committee | Members (1) | Function | Meetings Held During Last Fiscal Year | |||
Ethics and Compliance | Janice B. Case Robert J. Chersi Richard A. Hauser Marc S. Joseph Paul R. Laubscher James A. Nussle Verne O. Sedlacek Constance L. Souders | The function of the Ethics and Compliance Committee is to monitor the ethics of the Adviser and oversee the legal and regulatory compliance matters of the Funds. | 4 | |||
Governance and Nominating | Janice B. Case Robert J. Chersi Richard A. Hauser Marc S. Joseph Paul R. Laubscher James A. Nussle Verne O. Sedlacek Constance L. Souders | The Governance and Nominating Committee assists the Board in fulfilling its duties with respect to the governance of the Trust, including recommendations regarding evaluation of the Board, compensation of the Trustees and composition of the committees and the Board’s membership. The Governance and Nominating Committee makes recommendations regarding nominations for Trustees and will consider nominees suggested by shareholders sent to the attention of the President of the Trust. | 4 | |||
Investments | Janice B. Case Robert J. Chersi Richard A. Hauser Marc S. Joseph Paul R. Laubscher James A. Nussle Verne O. Sedlacek Constance L. Souders | The Investment Committee assists the Board in its oversight of the investment performance of the Funds; the Funds’ consistency with their investment objectives and styles; management’s selection of benchmarks, peer groups and other performance measures for the Funds; and the range of investment options offered to investors in the Funds. In addition, the Committee assists the Board in its review of investment-related aspects of management’s proposals such as new Funds or Fund reorganizations. | 4 |
(1) | All of the Independent Trustees serve as members of each Committee. |
Name of Trustee | Dollar Range of Beneficial Ownership in the Funds | Aggregate Dollar Range of Beneficial Ownership in All Registered Investment Companies Overseen by the Trustee in the Family of Investment Companies | |||
David S. Royal | Thrivent Aggressive Allocation Fund | Over $100,000 | Over $100,000 |
Name of Trustee | Dollar Range of Beneficial Ownership in the Funds | Aggregate Dollar Range of Beneficial Ownership in All Registered Investment Companies Overseen by the Trustee in the Family of Investment Companies | |||
Thrivent Balanced Income Plus Fund | None | ||||
Thrivent Diversified Income Plus Fund | $10,001-$50,000 | ||||
Thrivent Government Bond Fund | None | ||||
Thrivent Growth and Income Plus Fund | None | ||||
Thrivent High Yield Fund | $10,001-$50,000 | ||||
Thrivent Income Fund | Over $100,000 | ||||
Thrivent Large Cap Growth Fund | None | ||||
Thrivent Large Cap Stock Fund | $10,001-$50,000 | ||||
Thrivent Large Cap Value Fund | $10,001-$50,000 | ||||
Thrivent Limited Maturity Bond Fund | $10,001-$50,000 | ||||
Thrivent Low Volatility Equity Fund | $10,001-$50,000 | ||||
Thrivent Mid Cap Stock Fund | $10,001-$50,000 | ||||
Thrivent Moderate Allocation Fund | Over $100,000 | ||||
Thrivent Moderately Aggressive Allocation Fund | Over $100,000 | ||||
Thrivent Moderately Conservative Allocation Fund | Over $100,000 | ||||
Thrivent Money Market Fund | None | ||||
Thrivent Multidimensional Income Fund | $10,001-$50,000 | ||||
Thrivent Municipal Bond Fund | $10,001-$50,000 | ||||
Thrivent Opportunity Income Plus Fund | Over $100,000 | ||||
Thrivent Partner Emerging Markets Equity Fund | $1-$10,000 | ||||
Thrivent Partner Worldwide Allocation Fund | $10,001-$50,000 | ||||
Thrivent Small Cap Stock Fund | $10,001-$50,000 | ||||
Russell W. Swansen | Thrivent Aggressive Allocation Fund | Over $100,000 | Over $100,000 | ||
Thrivent Balanced Income Plus Fund | None | ||||
Thrivent Diversified Income Plus Fund | None | ||||
Thrivent Government Bond Fund | None | ||||
Thrivent Growth and Income Plus Fund | None | ||||
Thrivent High Yield Fund | None | ||||
Thrivent Income Fund | None | ||||
Thrivent Large Cap Growth Fund | None | ||||
Thrivent Large Cap Stock Fund | None | ||||
Thrivent Large Cap Value Fund | None | ||||
Thrivent Limited Maturity Bond Fund | None | ||||
Thrivent Low Volatility Equity Fund | None | ||||
Thrivent Mid Cap Stock Fund | None | ||||
Thrivent Moderate Allocation Fund | None | ||||
Thrivent Moderately Aggressive Allocation Fund | None | ||||
Thrivent Moderately Conservative Allocation Fund | None | ||||
Thrivent Money Market Fund | None | ||||
Thrivent Multidimensional Income Fund | None |
Name of Trustee | Dollar Range of Beneficial Ownership in the Funds | Aggregate Dollar Range of Beneficial Ownership in All Registered Investment Companies Overseen by the Trustee in the Family of Investment Companies | |||
Thrivent Municipal Bond Fund | None | ||||
Thrivent Opportunity Income Plus Fund | None | ||||
Thrivent Partner Emerging Markets Equity Fund | None | ||||
Thrivent Partner Worldwide Allocation Fund | None | ||||
Thrivent Small Cap Stock Fund | None |
Name of Trustee | Dollar Range of Beneficial Ownership in the Funds | Aggregate Dollar Range of Beneficial Ownership in All Registered Investment Companies Overseen by the Trustee in the Family of Investment Companies | Dollar Range through Deferred Compensation | ||||
Janice B. Case | Thrivent Aggressive Allocation Fund | $50,001-$100,000 | Over $100,000 | None | |||
Thrivent Balanced Income Plus Fund | None | None | |||||
Thrivent Diversified Income Plus Fund | $10,001-$50,000 | None | |||||
Thrivent Government Bond Fund | None | None | |||||
Thrivent Growth and Income Plus Fund | None | None | |||||
Thrivent High Yield Fund | $10,001-$50,000 | None | |||||
Thrivent Income Fund | None | None | |||||
Thrivent Large Cap Growth Fund | None | None | |||||
Thrivent Large Cap Stock Fund | None | None | |||||
Thrivent Large Cap Value Fund | None | None | |||||
Thrivent Limited Maturity Bond Fund | None | None | |||||
Thrivent Low Volatility Equity Fund | None | None | |||||
Thrivent Mid Cap Stock Fund | None | None | |||||
Thrivent Moderate Allocation Fund | $10,001-$50,000 | None | |||||
Thrivent Moderately Aggressive Allocation Fund | None | None | |||||
Thrivent Moderately Conservative Allocation Fund | None | None | |||||
Thrivent Money Market Fund | None | None | |||||
Thrivent Multidimensional Income Fund | None | None | |||||
Thrivent Municipal Bond Fund | $10,001-$50,000 | None | |||||
Thrivent Opportunity Income Plus Fund | None | None | |||||
Thrivent Partner Emerging Markets Equity Fund | $1-$10,000 | None | |||||
Thrivent Partner Worldwide Allocation Fund | None | None | |||||
Thrivent Small Cap Stock Fund | None | None | |||||
Robert J. Chersi | Thrivent Aggressive Allocation Fund | $10,001-$50,000 | Over $100,000 | None | |||
Thrivent Balanced Income Plus Fund | None | None |
Name of Trustee | Dollar Range of Beneficial Ownership in the Funds | Aggregate Dollar Range of Beneficial Ownership in All Registered Investment Companies Overseen by the Trustee in the Family of Investment Companies | Dollar Range through Deferred Compensation | ||||
Thrivent Diversified Income Plus Fund | $10,001-$50,000 | None | |||||
Thrivent Government Bond Fund | None | None | |||||
Thrivent Growth and Income Plus Fund | None | None | |||||
Thrivent High Yield Fund | None | None | |||||
Thrivent Income Fund | None | None | |||||
Thrivent Large Cap Growth Fund | None | None | |||||
Thrivent Large Cap Stock Fund | None | None | |||||
Thrivent Large Cap Value Fund | None | None | |||||
Thrivent Limited Maturity Bond Fund | None | None | |||||
Thrivent Low Volatility Equity Fund | None | None | |||||
Thrivent Mid Cap Stock Fund | None | None | |||||
Thrivent Moderate Allocation Fund | None | None | |||||
Thrivent Moderately Aggressive Allocation Fund | $10,001-$50,000 | None | |||||
Thrivent Moderately Conservative Allocation Fund | None | None | |||||
Thrivent Money Market Fund | None | None | |||||
Thrivent Multidimensional Income Fund | None | None | |||||
Thrivent Municipal Bond Fund | None | None | |||||
Thrivent Opportunity Income Plus Fund | None | None | |||||
Thrivent Partner Emerging Markets Equity Fund | None | None | |||||
Thrivent Partner Worldwide Allocation Fund | None | None | |||||
Thrivent Small Cap Stock Fund | None | None | |||||
Richard A. Hauser | Thrivent Aggressive Allocation Fund | None | Over $100,000 | None | |||
Thrivent Balanced Income Plus Fund | None | None | |||||
Thrivent Diversified Income Plus Fund | $50,001-$100,000 | Over $100,000 | |||||
Thrivent Government Bond Fund | None | None | |||||
Thrivent Growth and Income Plus Fund | None | None | |||||
Thrivent High Yield Fund | None | None | |||||
Thrivent Income Fund | None | None | |||||
Thrivent Large Cap Growth Fund | None | None | |||||
Thrivent Large Cap Stock Fund | None | None | |||||
Thrivent Large Cap Value Fund | None | None | |||||
Thrivent Limited Maturity Bond Fund | None | None | |||||
Thrivent Low Volatility Equity Fund | None | None | |||||
Thrivent Mid Cap Stock Fund | None | None | |||||
Thrivent Moderate Allocation Fund | Over $100,000 | None | |||||
Thrivent Moderately Aggressive Allocation Fund | Over $100,000 | None |
Name of Trustee | Dollar Range of Beneficial Ownership in the Funds | Aggregate Dollar Range of Beneficial Ownership in All Registered Investment Companies Overseen by the Trustee in the Family of Investment Companies | Dollar Range through Deferred Compensation | ||||
Thrivent Moderately Conservative Allocation Fund | None | None | |||||
Thrivent Money Market Fund | None | None | |||||
Thrivent Multidimensional Income Fund | $50,001-$100,000 | None | |||||
Thrivent Municipal Bond Fund | Over $100,000 | None | |||||
Thrivent Opportunity Income Plus Fund | $50,001-$100,000 | None | |||||
Thrivent Partner Emerging Markets Equity Fund | None | None | |||||
Thrivent Partner Worldwide Allocation Fund | None | None | |||||
Thrivent Small Cap Stock Fund | None | None | |||||
Marc S. Joseph | Thrivent Aggressive Allocation Fund | None | $10,001-$50,000 | Over $100,000 | |||
Thrivent Balanced Income Plus Fund | None | None | |||||
Thrivent Diversified Income Plus Fund | None | Over $100,000 | |||||
Thrivent Government Bond Fund | None | None | |||||
Thrivent Growth and Income Plus Fund | $1-$10,000 | None | |||||
Thrivent High Yield Fund | $1-$10,000 | None | |||||
Thrivent Income Fund | None | None | |||||
Thrivent Large Cap Growth Fund | $1-$10,000 | None | |||||
Thrivent Large Cap Stock Fund | None | None | |||||
Thrivent Large Cap Value Fund | $1-$10,000 | None | |||||
Thrivent Limited Maturity Bond Fund | None | None | |||||
Thrivent Low Volatility Equity Fund | None | None | |||||
Thrivent Mid Cap Stock Fund | $1-$10,000 | None | |||||
Thrivent Moderate Allocation Fund | None | None | |||||
Thrivent Moderately Aggressive Allocation Fund | None | Over $100,000 | |||||
Thrivent Moderately Conservative Allocation Fund | None | None | |||||
Thrivent Money Market Fund | None | None | |||||
Thrivent Multidimensional Income Fund | None | None | |||||
Thrivent Municipal Bond Fund | None | None | |||||
Thrivent Opportunity Income Plus Fund | None | None | |||||
Thrivent Partner Emerging Markets Equity Fund | None | None | |||||
Thrivent Partner Worldwide Allocation Fund | $1-$10,000 | None | |||||
Thrivent Small Cap Stock Fund | $1-$10,000 | Over $100,000 |
Name of Trustee | Dollar Range of Beneficial Ownership in the Funds | Aggregate Dollar Range of Beneficial Ownership in All Registered Investment Companies Overseen by the Trustee in the Family of Investment Companies | Dollar Range through Deferred Compensation | ||||
Paul R. Laubscher | Thrivent Aggressive Allocation Fund | None | $1-$10,000 | None | |||
Thrivent Balanced Income Plus Fund | None | None | |||||
Thrivent Diversified Income Plus Fund | None | None | |||||
Thrivent Government Bond Fund | None | None | |||||
Thrivent Growth and Income Plus Fund | None | None | |||||
Thrivent High Yield Fund | None | None | |||||
Thrivent Income Fund | None | None | |||||
Thrivent Large Cap Growth Fund | None | None | |||||
Thrivent Large Cap Stock Fund | None | None | |||||
Thrivent Large Cap Value Fund | None | None | |||||
Thrivent Limited Maturity Bond Fund | None | None | |||||
Thrivent Low Volatility Equity Fund | None | None | |||||
Thrivent Mid Cap Stock Fund | None | None | |||||
Thrivent Moderate Allocation Fund | None | None | |||||
Thrivent Moderately Aggressive Allocation Fund | $1-$10,000 | Over $100,000 | |||||
Thrivent Moderately Conservative Allocation Fund | None | None | |||||
Thrivent Money Market Fund | None | None | |||||
Thrivent Multidimensional Income Fund | None | None | |||||
Thrivent Municipal Bond Fund | None | None | |||||
Thrivent Opportunity Income Plus Fund | None | None | |||||
Thrivent Partner Emerging Markets Equity Fund | None | None | |||||
Thrivent Partner Worldwide Allocation Fund | None | None | |||||
Thrivent Small Cap Stock Fund | None | None | |||||
James A. Nussle | Thrivent Aggressive Allocation Fund | None | Over $100,000 | None | |||
Thrivent Balanced Income Plus Fund | None | None | |||||
Thrivent Diversified Income Plus Fund | $10,001-$50,000 | None | |||||
Thrivent Government Bond Fund | None | None | |||||
Thrivent Growth and Income Plus Fund | None | None | |||||
Thrivent High Yield Fund | None | None | |||||
Thrivent Income Fund | None | None | |||||
Thrivent Large Cap Growth Fund | None | None | |||||
Thrivent Large Cap Stock Fund | None | None | |||||
Thrivent Large Cap Value Fund | $50,001-$100,000 | None | |||||
Thrivent Limited Maturity Bond Fund | None | None | |||||
Thrivent Low Volatility Equity Fund | None | None | |||||
Thrivent Mid Cap Stock Fund | Over $100,000 | None | |||||
Thrivent Moderate Allocation Fund | None | None |
Name of Trustee | Dollar Range of Beneficial Ownership in the Funds | Aggregate Dollar Range of Beneficial Ownership in All Registered Investment Companies Overseen by the Trustee in the Family of Investment Companies | Dollar Range through Deferred Compensation | ||||
Thrivent Moderately Aggressive Allocation Fund | None | None | |||||
Thrivent Moderately Conservative Allocation Fund | None | None | |||||
Thrivent Money Market Fund | None | None | |||||
Thrivent Multidimensional Income Fund | None | None | |||||
Thrivent Municipal Bond Fund | None | None | |||||
Thrivent Opportunity Income Plus Fund | None | None | |||||
Thrivent Partner Emerging Markets Equity Fund | $10,001-$50,000 | None | |||||
Thrivent Partner Worldwide Allocation Fund | None | None | |||||
Thrivent Small Cap Stock Fund | $10,001-$50,000 | None | |||||
Verne O. Sedlacek | Thrivent Aggressive Allocation Fund | None | None | None | |||
Thrivent Balanced Income Plus Fund | None | None | |||||
Thrivent Diversified Income Plus Fund | None | None | |||||
Thrivent Government Bond Fund | None | None | |||||
Thrivent Growth and Income Plus Fund | None | None | |||||
Thrivent High Yield Fund | None | None | |||||
Thrivent Income Fund | None | None | |||||
Thrivent Large Cap Growth Fund | None | None | |||||
Thrivent Large Cap Stock Fund | None | None | |||||
Thrivent Large Cap Value Fund | None | None | |||||
Thrivent Limited Maturity Bond Fund | None | None | |||||
Thrivent Low Volatility Equity Fund | None | None | |||||
Thrivent Mid Cap Stock Fund | None | None | |||||
Thrivent Moderate Allocation Fund | None | None | |||||
Thrivent Moderately Aggressive Allocation Fund | None | None | |||||
Thrivent Moderately Conservative Allocation Fund | None | None | |||||
Thrivent Money Market Fund | None | None | |||||
Thrivent Multidimensional Income Fund | None | None | |||||
Thrivent Municipal Bond Fund | None | None | |||||
Thrivent Opportunity Income Plus Fund | None | None | |||||
Thrivent Partner Emerging Markets Equity Fund | None | None | |||||
Thrivent Partner Worldwide Allocation Fund | None | None | |||||
Thrivent Small Cap Stock Fund | None | None | |||||
Constance L. Souders | Thrivent Aggressive Allocation Fund | None | None | None | |||
Thrivent Balanced Income Plus Fund | None | None | |||||
Thrivent Diversified Income Plus Fund | None | None |
Name of Trustee | Dollar Range of Beneficial Ownership in the Funds | Aggregate Dollar Range of Beneficial Ownership in All Registered Investment Companies Overseen by the Trustee in the Family of Investment Companies | Dollar Range through Deferred Compensation | ||||
Thrivent Government Bond Fund | None | None | |||||
Thrivent Growth and Income Plus Fund | None | None | |||||
Thrivent High Yield Fund | None | None | |||||
Thrivent Income Fund | None | None | |||||
Thrivent Large Cap Growth Fund | None | None | |||||
Thrivent Large Cap Stock Fund | None | None | |||||
Thrivent Large Cap Value Fund | None | None | |||||
Thrivent Limited Maturity Bond Fund | None | None | |||||
Thrivent Low Volatility Equity Fund | None | None | |||||
Thrivent Mid Cap Stock Fund | None | None | |||||
Thrivent Moderate Allocation Fund | None | None | |||||
Thrivent Moderately Aggressive Allocation Fund | None | Over $100,000 | |||||
Thrivent Moderately Conservative Allocation Fund | None | None | |||||
Thrivent Money Market Fund | None | None | |||||
Thrivent Multidimensional Income Fund | None | None | |||||
Thrivent Municipal Bond Fund | None | None | |||||
Thrivent Opportunity Income Plus Fund | None | None | |||||
Thrivent Partner Emerging Markets Equity Fund | None | None | |||||
Thrivent Partner Worldwide Allocation Fund | None | None | |||||
Thrivent Small Cap Stock Fund | None | None |
Name, Position (1) | Aggregate Compensation from Trust for One Year Ending October 31, 2017 | Total Compensation Paid by Trust and Fund Complex for One Year Ending October 31, 2017 | ||
Janice B. Case | $77,706 | $200,000 | ||
Trustee | ||||
Robert J. Chersi | $83,529 | $215,000 | ||
Trustee | ||||
Richard A. Hauser | $96,554 | $250,000 | ||
Trustee | ||||
Marc S. Joseph | $77,706 | $200,000 | ||
Trustee | ||||
Paul R. Laubscher | $77,706 | $200,000 | ||
Trustee | ||||
James A. Nussle | $69,935 | $180,000 | ||
Trustee | ||||
Verne O. Sedlacek | $67,987 | $175,000 | ||
Trustee | ||||
Constance L. Souders | $77,706 | $200,000 | ||
Trustee |
(1) | The Trust has adopted a deferred compensation plan for the benefit of the Independent Trustees of the Trust who wish to defer receipt of a percentage of eligible compensation which they otherwise are entitled to receive from the Trust. Compensation deferred is effectively invested in the Thrivent Mutual Funds, the allocation of which is determined by the individual Trustee. The Trustees participating in the deferred compensation plan do not actually own shares of the Thrivent Mutual Funds through the plan, since deferred compensation is a general liability of the Thrivent Mutual Funds. However, a Trustee’s return on compensation deferred is economically equivalent to an investment in the applicable Thrivent Mutual Funds. For compensation paid during the fiscal year ended October 31, 2017, no Trustee deferred any compensation. |
Fund | Shareholder | Percent Owned | ||
Thrivent Mid Cap Stock Fund - Class S | National Financial Services Corp for Exclusive Benefit of our Customers 499 Washington Blvd, Fl 5 Jersey City, NJ 07310-2010 | 5.09% | ||
Thrivent Moderate Allocation Fund | 5.32% | |||
Thrivent Moderately Aggressive Allocation Fund | 8.17% | |||
Thrivent Balanced Income Plus Fund - Class S | National Financial Services Corp for Exclusive Benefit of our Customers 499 Washington Blvd, Fl 5 Jersey City, NJ 07310-2010 | 12.03% | ||
Thrivent Large Cap Growth Fund - Class S | Thrivent Aggressive Allocation Fund | 8.78% | ||
Thrivent Moderate Allocation Fund | 15.38% | |||
Thrivent Moderately Aggressive Allocation Fund | 19.53% | |||
National Financial Services Corp for Exclusive Benefit of our Customers 499 Washington Blvd, Fl 5 Jersey City, NJ 07310-2010 | 20.34% | |||
Thrivent Partner Worldwide Allocation Fund - Class S | Thrivent Aggressive Allocation Fund | 14.06% | ||
Thrivent Financial for Lutherans 4321 N Ballard Rd Appleton, WI 54919-8697 | 14.26% | |||
Thrivent Moderate Allocation Fund | 14.51% | |||
Thrivent Moderately Aggressive Allocation Fund | 27.06% | |||
Thrivent Municipal Bond Fund - Class S | National Financial Services Corp for Exclusive Benefit of our Customers 499 Washington Blvd, Fl 5 Jersey City, NJ 07310-2010 | 7.60% | ||
Thrivent Opportunity Income Plus Fd - Class S | Fox Cities Performing Arts Center % Capital Fund 400 W College Ave Appleton, WI 54911-5831 | 5.29% | ||
National Financial Services Corp for Exclusive Benefit of our Customers 499 Washington Blvd, Fl 5 Jersey City, NJ 07310-2010 | 24.61% | |||
Thrivent Large Cap Stock Fund - Class S | Thrivent Moderately Aggressive Allocation Fund | 6.78% | ||
Thrivent Large Cap Value Fund - Class S | Thrivent Moderately Conservative Allocation Fund | 6.04% | ||
Thrivent Aggressive Allocation Fund | 6.43% | |||
Thrivent Moderate Allocation Fund | 17.89% |
Fund | Shareholder | Percent Owned | ||
National Financial Services Corp for Exclusive Benefit of our Customers 499 Washington Blvd, Fl 5 Jersey City, NJ 07310-2010 | 20.22% | |||
Thrivent Moderately Aggressive Allocation Fund | 21.01% | |||
Thrivent Small Cap Stock Fund - Class S | Thrivent Moderately Aggressive Allocation Fund | 6.55% | ||
Thrivent Diversified Income Plus Fund - Class S | National Financial Services Corp for Exclusive Benefit of our Customers 499 Washington Blvd, Fl 5 Jersey City, NJ 07310-2010 | 9.58% | ||
Thrivent Multidimensional Income Fund - Class S | Thrivent Financial for Lutherans %Joe Barnes Ms 1330 625 4th Ave S Minneapolis, MN 5514-1665 | 54.46% | ||
Thrivent Income Fund - Class S | Thrivent Moderately Aggressive Allocation Fund | 7.11% | ||
Thrivent Moderately Conservative Allocation Fund | 7.85% | |||
Thrivent Moderate Allocation Fund | 12.86% | |||
National Financial Services Corp for Exclusive Benefit of our Customers 499 Washington Blvd, Fl 5 Jersey City, NJ 07310-2010 | 23.14% | |||
Thrivent Government Bond Fund - Class S | Infaith Community Foundation Gift Annuity Reserve 625 Fourth Ave S Ste 1500 Minneapolis, MN 55415-1624 | 6.04% | ||
National Financial Services Corp for Exclusive Benefit of our Customers 499 Washington Blvd, Fl 5 Jersey City, NJ 07310-2010 | 10.38% | |||
Infaith Community Foundation 625 Fourth Ave S Ste 1500 Minneapolis, MN 55415-1624 | 68.86% | |||
Thrivent High Yield Fund - Class S | National Financial Services Corp for Exclusive Benefit of our Customers 499 Washington Blvd, Fl 5 Jersey City, NJ 07310-2010 | 14.21% | ||
Thrivent Limited Maturity Bond Fund - Class S | Thrivent Moderate Allocation Fund | 6.87% | ||
National Financial Services Corp for Exclusive Benefit of our Customers 499 Washington Blvd, Fl 5 Jersey City, NJ 07310-2010 | 29.39% |
Fund Name and Share Class | Percent Owned by Officers and Trustees | |
Thrivent Aggressive Allocation Fund – Class S | 2.31% | |
Other Registered Investment Companies (1) | Other Accounts | |||||||
Portfolio Manager | # of Accounts Managed | Assets Managed | # of Accounts Managed | Assets Managed | ||||
David C. Francis | 5 | $22,438,517,110 | 3 | $ 463,628,573 | ||||
Mark L. Simenstad ( 2) | 8 | $23,596,109,300 | 0 | $ 0 | ||||
Darren M. Bagwell | 6 | $24,663,419,037 | 2 | $ 302,829,245 | ||||
Kurt J. Lauber | 2 | $ 2,556,646,278 | 2 | $ 304,866,988 | ||||
Brian J. Flanagan | 1 | $ 1,666,930,110 | 2 | $ 206,507,649 | ||||
David J. Lettenberger | 0 | $ 0 | 1 | $ 21,980,484 | ||||
Matthew D. Finn | 1 | $ 592,454,032 | 2 | $ 152,207,923 | ||||
James M. Tinnuci | 1 | $ 592,454,032 | 2 | $ 152,207,923 | ||||
Michael G. Landreville | 3 | $ 1,279,724,002 | 3 | $ 360,319,689 | ||||
Gregory R. Anderson (3) | 4 | $ 1,299,680,205 | 3 | $7,653,916,970 | ||||
Paul J. Ocenasek (4) | 3 | $ 1,041,335,275 | 0 | $ 0 | ||||
Conrad E. Smith (5) | 2 | $ 191,746,096 | 2 | $ 510,518,435 | ||||
Stephen D. Lowe (6) | 8 | $25,087,226,600 | 3 | $1,927,363,401 | ||||
Janet I. Grangaard | 0 | $ 0 | 0 | $ 0 | ||||
Johan A. Akesson | 0 | $ 0 | 0 | $ 0 | ||||
William D. Stouten (7) | 3 | $ 5,897,774,009 | 3 | $2,055,986,395 | ||||
Noah J. Monsen (8) | 5 | $ 1,753,841,960 | 3 | $ 339,269,850 | ||||
Brian W. Bomgren | 2 | $ 603,501,043 | 3 | $ 339,269,850 | ||||
Reginald L. Pfiefer (9) | 4 | $ 1,331,414,289 | 1 | $ 104,317,833 |
Other Registered Investment Companies (1) | Other Accounts | |||||||
Portfolio Manager | # of Accounts Managed | Assets Managed | # of Accounts Managed | Assets Managed | ||||
John T. Groton (10) | 3 | $ 1,150,340,916 | 1 | $ 203,163,253 | ||||
Kent L. White (11,12) | 4 | $ 2,124,574,094 | 2 | $ 155,470,367 |
(1) | The “Other Registered Investment Companies” represent series of Thrivent Series Fund, Inc., which have substantially similar investment objectives and policies as the Fund(s) managed by the portfolio manager listed. |
(2) | As of December 31, 2017, the Assets Managed totaled $24,027,577,871. |
(3) | As of December 31, 2017, the Assets Managed totaled $8,930,844,219. |
(4) | As of December 31, 2017, the Assets Managed totaled $1,044,824,563. |
(5) | As of December 31, 2017, the Assets Managed totaled $694,716,448. |
(6) | As of December 31, 2017, the Assets Managed totaled $27,523,863,299. |
(7) | In addition to series of Thrivent Series Fund, Inc., the “Other Registered Investment Companies” represent series of Thrivent Cash Management Trust and Thrivent Core Funds. |
(8) | As of December 31, 2017, the Assets Managed totaled $3,078,098,609. |
(9) | As of December 31, 2017, the Assets Managed totaled $1,467,692,348. |
(10) | As of December 31, 2017, the Assets Managed totaled $1,391,104,644. |
(11) | In addition to series of Thrivent Series Fund, Inc., the “Other Registered Investment Companies” represent series of Thrivent Core Funds. |
(12) | As of December 31, 2017, the Assets Managed totaled $2,374,364,642. |
Portfolio Manager | Fund | Fund Ownership | Portfolio (1) | Portfolio Ownership | Ownership in Fund Complex (2) | |||||
Russell W. Swansen | Thrivent Aggressive Allocation Fund | Over $1,000,000 | Thrivent Aggressive Allocation Portfolio | $10,001-$50,000 | Over $1,000,000 | |||||
Thrivent Moderate Allocation Fund | $0 | Thrivent Moderate Allocation Portfolio | $0 | |||||||
Thrivent Moderately Aggressive Allocation Fund | $0 | Thrivent Moderately Aggressive Allocation Portfolio | $0 | |||||||
Thrivent Moderately Conservative Allocation Fund | $0 | Thrivent Moderately Conservative Allocation Portfolio | $0 | |||||||
David C. Francis | Thrivent Aggressive Allocation Fund | $100,001-$500,000 | Thrivent Aggressive Allocation Portfolio | $0 | $500,001-$1,000,000 | |||||
Thrivent Moderate Allocation Fund | $0 | Thrivent Moderate Allocation Portfolio | $0 | |||||||
Thrivent Moderately Aggressive Allocation Fund | $100,001-$500,000 | Thrivent Moderately Aggressive Allocation Portfolio | $0 | |||||||
Thrivent Moderately Conservative Allocation Fund | $0 | Thrivent Moderately Conservative Allocation Portfolio | $0 | |||||||
Thrivent Partner Worldwide Allocation Fund | $0 | Thrivent Partner Worldwide Allocation Portfolio | $0 | |||||||
Mark L. Simenstad | Thrivent Aggressive Allocation Fund | $500,001-$1,000,000 | Thrivent Aggressive Allocation Portfolio | $0 | $500,001-$1,000,000 | |||||
Thrivent Balanced Income Plus Fund | $0 | Thrivent Balanced Income Portfolio | $0 | |||||||
Thrivent Diversified Income Plus Fund | $0 | Thrivent Diversified Income Plus Portfolio | $1-$10,000 | |||||||
Thrivent Growth and Income Plus Fund | $0 | Thrivent Growth and Income Plus Portfolio | $0 | |||||||
Thrivent Moderate Allocation Fund | $0 | Thrivent Moderate Allocation Portfolio | $0 | |||||||
Thrivent Moderately Aggressive Allocation Fund | $0 | Thrivent Moderately Aggressive Allocation Portfolio | $0 | |||||||
Thrivent Moderately Conservative Allocation Fund | $0 | Thrivent Moderately Conservative Allocation Portfolio | $0 | |||||||
Thrivent Multidimensional Income Fund | $100,001-$500,000 | Thrivent Multidimensional Income Portfolio | $0 | |||||||
Darren M. Bagwell | Thrivent Aggressive Allocation Fund | $500,001-$1,000,000 | Thrivent Aggressive Allocation Portfolio | $0 | $500,001-$1,000,000 | |||||
Thrivent Large Cap Growth Fund | $0 | Thrivent Large Cap Growth Portfolio | $0 | |||||||
Thrivent Large Cap Stock Fund | $0 | Thrivent Large Cap Stock Portfolio | $0 | |||||||
Thrivent Moderate Allocation Fund | $0 | Thrivent Moderate Allocation Portfolio | $0 | |||||||
Thrivent Moderately Aggressive Allocation Fund | $0 | Thrivent Moderately Aggressive Allocation Portfolio | $0 | |||||||
Thrivent Moderately Conservative Allocation Fund | $0 | Thrivent Moderately Conservative Allocation Portfolio | $0 | |||||||
Brian J. Flanagan | Thrivent Mid Cap Stock Fund | $100,001-$500,000 | Thrivent Mid Cap Stock Portfolio | $1-$10,000 | $100,001-$500,000 | |||||
John T. Groton, Jr. | Thrivent Balanced Income Plus Fund | $0 | Thrivent Balanced Income Plus Portfolio | $0 | $100,001-$500,000 | |||||
Thrivent Diversified Income Plus Fund | $0 | Thrivent Diversified Income Plus Portfolio | $0 |
Portfolio Manager | Fund | Fund Ownership | Portfolio (1) | Portfolio Ownership | Ownership in Fund Complex (2) | |||||
Thrivent Growth and Income Plus Fund | $0 | Thrivent Growth and Income Plus Portfolio | $0 | |||||||
Matthew D. Finn | Thrivent Small Cap Stock Fund | $500,001-$1,000,000 | Thrivent Small Cap Stock Portfolio | $0 | $500,001-$1,000,000 | |||||
James M. Tinucci | Thrivent Small Cap Stock Fund | $0 | Thrivent Small Cap Stock Portfolio | $0 | $1-$10,000 | |||||
Michael G. Landreville | Thrivent Government Bond Fund | $0 | Thrivent Opportunity Income Plus Portfolio | $0 | $100,001-$500,000 | |||||
Thrivent Limited Maturity Bond Fund | $50,001-$100,000 | Thrivent Limited Maturity Bond Portfolio | $0 | |||||||
Thrivent Opportunity Income Plus Fund | $0 | Thrivent Bond Index Portfolio | $0 | |||||||
Gregory R. Anderson | Thrivent Government Bond Fund | $0 | Thrivent Government Bond Portfolio | $0 | $500,001-$1,000,000 | |||||
Thrivent Limited Maturity Bond Fund | $100,001-$500,000 | Thrivent Limited Maturity Bond Portfolio | $0 | |||||||
Thrivent Multidimensional Income Fund | $0 | Thrivent Multidimensional Income Portfolio | $0 | |||||||
Thrivent Opportunity Income Plus Fund | $0 | Thrivent Opportunity Income Plus Portfolio | $0 | |||||||
Brian W. Bomgren | Thrivent Partner Worldwide Allocation Fund | $0 | Thrivent Partner Worldwide Allocation Portfolio | $0 | $50,001-$100,000 | |||||
Paul J. Ocenasek | Thrivent High Yield Fund | $0 | Thrivent High Yield Portfolio | $0 | $50,001-$100,000 | |||||
Thrivent Multidimensional Income Fund | $0 | Thrivent Multidimensional Income Portfolio | $0 | |||||||
Thrivent Opportunity Income Plus Fund | $0 | Thrivent Opportunity Income Plus Portfolio | $0 | |||||||
Stephen D. Lowe | Thrivent Aggressive Allocation Fund | $100,001-$500,000 | Thrivent Aggressive Allocation Portfolio | $0 | Over $1,000,000 | |||||
Thrivent Balanced Income Plus Fund | $0 | Thrivent Balanced Income Plus Portfolio | $0 | |||||||
Thrivent Diversified Income Plus Fund | $0 | Thrivent Diversified Income Plus Portfolio | $0 | |||||||
Thrivent Growth and Income Plus Fund | $0 | Thrivent Growth and Income Plus Portfolio | $0 | |||||||
Thrivent Income Fund | $100,001-$500,000 | Thrivent Income Portfolio | $0 | |||||||
Thrivent Moderate Allocation Fund | $100,000-$500,000 | Thrivent Moderate Allocation Portfolio | $100,000-$500,000 | |||||||
Thrivent Moderately Aggressive Allocation Fund | $100,000-$500,000 | Thrivent Moderately Aggressive Allocation Portfolio | $0 | |||||||
Thrivent Moderately Conservative Allocation Fund | $0 | Thrivent Moderately Conservative Allocation Portfolio | $0 | |||||||
Janet I. Grangaard | Thrivent Municipal Bond Fund | Over $1,000,000 | Over $1,000,000 | |||||||
William D. Stouten | Thrivent Money Market Fund | $0 | Thrivent Money Market Portfolio | $0 | $100,001-$500,000 | |||||
Conrad E. Smith | Thrivent Multidimensional Income Fund | $0 | Thrivent Multidimensional Income Portfolio | $0 | $100,001-$500,000 | |||||
Thrivent Opportunity Income Plus Fund | $0 | Thrivent Opportunity Income Plus Portfolio | $0 | |||||||
Kurt J. Lauber | Thrivent Large Cap Stock Fund | $0 | Thrivent Large Cap Stock Portfolio | $0 | $0 | |||||
Thrivent Large Cap Value Fund | $0 | Thrivent Large Cap Value Portfolio | $0 | |||||||
Noah J. Monson | Thrivent Balanced Income Plus Fund | $0 | Thrivent Balanced Income Plus Portfolio | $0 | $100,001-$500,000 | |||||
Thrivent Diversified Income Plus Fund | $0 | Thrivent Diversified Income Plus Portfolio | $0 |
Portfolio Manager | Fund | Fund Ownership | Portfolio (1) | Portfolio Ownership | Ownership in Fund Complex (2) | |||||
Thrivent Growth and Income Plus Fund | $0 | Thrivent Growth and Income Plus Portfolio | $0 | |||||||
Thrivent Low Volatility Equity Fund | $0 | Thrivent Low Volatility Equity Portfolio | $0 | |||||||
Thrivent Partner Worldwide Allocation Fund | $0 | Thrivent Partner World Allocation Portfolio | $0 | |||||||
Reginald L. Pfiefer | Thrivent Balanced Income Plus Fund | $0 | Thrivent Balanced Income Plus Portfolio | $0 | $100,001-$500,000 | |||||
Thrivent Diversified Income Plus Fund | $0 | Thrivent Diversified Income Plus Portfolio | $0 | |||||||
Thrivent Growth and Income Plus Fund | $0 | Thrivent Growth and Income Plus Portfolio | $0 | |||||||
Thrivent Real Estate Securities Portfolio | $0 | |||||||||
Kent L. White | Thrivent Multidimensional Income Fund | $0 | Thrivent Multidimensional Income Portfolio | $0 | $100,001-$500,000 | |||||
Thrivent Opportunity Income Plus Fund | $0 | Thrivent Opportunity Income Plus Portfolio | $0 |
(1) | Each Portfolio listed is a series of Thrivent Series Fund, Inc., is managed by the same portfolio manager(s) and has substantially similar investment objectives and policies to the corresponding Fund listed. |
(2) | Ownership in Fund Complex includes investments in Thrivent Mutual Funds and Thrivent Series Fund, Inc. |
Portfolio Manager | Type of Accounts | Total # of Accounts Managed | Total Assets in the Accounts (in millions) | # of Accounts Managed with Advisory Fee Based on Performance | Total Assets with Advisory Fee Based on Performance (in millions) | |||||
Hugh Young | Registered Investment Companies: | 23 | $10,319.45 | 0 | $0 |
Portfolio Manager | Type of Accounts | Total # of Accounts Managed | Total Assets in the Accounts (in millions) | # of Accounts Managed with Advisory Fee Based on Performance | Total Assets with Advisory Fee Based on Performance (in millions) | |||||
Other Pooled Investment Vehicles: | 82 | $32,301.95 | 0 | $0 | ||||||
Other Accounts: | 116 | $24,428.62 | 0 | $0 | ||||||
Devan Kaloo | Registered Investment Companies: | 13 | $ 9,155.24 | 0 | $0 | |||||
Other Pooled Investment Vehicles: | 25 | $14,520.82 | 0 | $0 | ||||||
Other Accounts: | 59 | $13,735.62 | 0 | $0 | ||||||
Joanna Irvine | Registered Investment Companies: | 13 | $ 9,155.24 | 0 | $0 | |||||
Other Pooled Investment Vehicles: | 25 | $14,520.82 | 0 | $0 | ||||||
Other Accounts: | 59 | $13,735.62 | 0 | $0 | ||||||
Mark Gordon James | Registered Investment Companies: | 13 | $ 9,155.24 | 0 | $0 | |||||
Other Pooled Investment Vehicles: | 25 | $14,520.82 | 0 | $0 | ||||||
Other Accounts: | 59 | $13,735.62 | 0 | $0 | ||||||
Flavia Cheong | Registered Investment Companies: | 23 | $10,319.45 | 0 | $0 | |||||
Other Pooled Investment Vehicles: | 82 | $32,301.95 | 0 | $0 | ||||||
Other Accounts: | 116 | $24,428.62 | 0 | $0 |
Portfolio Manager | Type of Accounts | Total # of Accounts Managed | Total Assets in the Accounts (in millions) | # of Accounts Managed with Advisory Fee Based on Performance | Total Assets with Advisory Fee Based on Performance (in millions) | |||||
Paul Blankenhagen | Registered Investment Companies: | 2 | $12,703.0 | 0 | $ 0 | |||||
Other Pooled Investment Vehicles: | 5 | $ 3,805.1 | 0 | $ 0 | ||||||
Other Accounts: | 7 | $ 820.8 | 1 | $244.6 | ||||||
Juliet Cohn | Registered Investment Companies: | 2 | $12,703.0 | 0 | $ 0 | |||||
Other Pooled Investment Vehicles: | 5 | $ 3,805.1 | 0 | $ 0 | ||||||
Other Accounts: | 7 | $ 820.8 | 1 | $244.6 | ||||||
John Pihlblad | Registered Investment Companies: | 1 | $ 597.2 | 0 | $ 0 | |||||
Other Pooled Investment Vehicles: | 1 | $ 120.4 | 0 | $ 0 | ||||||
Other Accounts: | 4 | $ 565.2 | 0 | $ 0 | ||||||
Mark Nebelung | Registered Investment Companies: | 1 | $ 1,385.1 | 0 | $ 0 | |||||
Other Pooled Investment Vehicles: | 1 | $ 120.4 | 0 | $ 0 | ||||||
Other Accounts: | 5 | $ 679.4 | 0 | $ 0 |
Portfolio Manager | Type of Accounts | Total # of Accounts Managed | Total Assets in the Accounts (in millions) | # of Accounts Managed with Advisory Fee Based on Performance | Total Assets with Advisory Fee Based on Performance (in millions) | |||||
Hugh Young | Registered Investment Companies: | 23 | $10,229.37 | 0 | $0 | |||||
Other Pooled Investment Vehicles: | 82 | $32,301.95 | 0 | $0 | ||||||
Other Accounts: | 116 | $24,428.62 | 0 | $0 |
Portfolio Manager | Type of Accounts | Total # of Accounts Managed | Total Assets in the Accounts (in millions) | # of Accounts Managed with Advisory Fee Based on Performance | Total Assets with Advisory Fee Based on Performance (in millions) | |||||
Devan Kaloo | Registered Investment Companies: | 13 | $ 9,065.17 | 0 | $0 | |||||
Other Pooled Investment Vehicles: | 25 | $14,520.82 | 0 | $0 | ||||||
Other Accounts: | 59 | $13,735.62 | 0 | $0 | ||||||
Joanna Irvine | Registered Investment Companies: | 13 | $ 9,065.17 | 0 | $0 | |||||
Other Pooled Investment Vehicles: | 25 | $14,520.82 | 0 | $0 | ||||||
Other Accounts: | 59 | $13,735.62 | 0 | $0 | ||||||
Mark Gordon James | Registered Investment Companies: | 13 | $ 9,065.17 | 0 | $0 | |||||
Other Pooled Investment Vehicles: | 25 | $14,520.82 | 0 | $0 | ||||||
Other Accounts: | 59 | $13,735.62 | 0 | $0 | ||||||
Flavia Cheong | Registered Investment Companies: | 23 | $10,229.37 | 0 | $0 | |||||
Other Pooled Investment Vehicles: | 82 | $32,301.95 | 0 | $0 | ||||||
Other Accounts: | 116 | $24,428.62 | 0 | $0 |
Portfolio Manager | Type of Accounts | Total # of Accounts Managed | Total Assets (in millions) | # of Accounts Managed with Advisory Fee Based on Performance | Total Assets with Advisory Fee Based on Performance (in millions) | |||||
Samuel Finkelstein | Registered Investment Companies: | 57 | $204,170 | 0 | $ 0 |
Portfolio Manager | Type of Accounts | Total # of Accounts Managed | Total Assets (in millions) | # of Accounts Managed with Advisory Fee Based on Performance | Total Assets with Advisory Fee Based on Performance (in millions) | |||||
Other Pooled Investment Vehicles: | 399 | $244,161 | 12 | $ 7,629 | ||||||
Other Accounts: | 3,916 | $367,419 | 59 | $25,068 | ||||||
Ricardo Penfold | Registered Investment Companies: | 31 | $ 22,008 | 0 | $ 0 | |||||
Other Pooled Investment Vehicles: | 177 | $ 64,769 | 10 | $ 7,480 | ||||||
Other Accounts: | 1,189 | $209,231 | 31 | $18,780 | ||||||
Len Ioffe | Registered Investment Companies: | 20 | $ 13,223 | 0 | $ 0 | |||||
Other Pooled Investment Vehicles: | 35 | $ 10,726 | 0 | $ 0 | ||||||
Other Accounts: | 23 | $ 6,481 | 6 | $ 2,522 | ||||||
Osman Ali | Registered Investment Companies: | 20 | $ 13,223 | 0 | $ 0 | |||||
Other Pooled Investment Vehicles: | 35 | $ 10,726 | 0 | $ 0 | ||||||
Other Accounts: | 23 | $ 6,481 | 6 | $ 2,522 | ||||||
Takashi Suwabe | Registered Investment Companies: | 7 | $ 5,099 | 0 | $ 0 | |||||
Other Pooled Investment Vehicles: | 26 | $ 7,660 | 0 | $ 0 | ||||||
Other Accounts: | 17 | $ 5,519 | 0 | $ 0 |
Affiliated Person | Position with Trust | Position with Thrivent Asset Mgt. | ||
David S. Royal | Trustee, President and Chief Investment Officer | Elected Manager and President | ||
Gerard V. Vaillancourt | Treasurer and Principal Accounting Officer | Vice President, Chief Financial Officer and Treasurer | ||
Edward S. Dryden | Chief Compliance Officer | Chief Compliance Officer | ||
Janice M. Guimond | Vice President | Elected Manager and Vice President and Chief Operating Officer | ||
Troy A. Beaver | Vice President | Vice President | ||
Kathleen M. Koelling | Privacy, Identity Theft and Anti-Money Laundering Officer | Privacy and Anti-Money Laundering Officer | ||
Michael W. Kremenak | Secretary and Chief Legal Officer | Assistant Secretary |
Thrivent Aggressive Allocation Fund | |
First $500 million: | 0.750% |
Next $1.5 billion: | 0.725% |
Next $3 billion: | 0.700% |
Next $5 billion: | 0.675% |
Over $10 billion: | 0.650% |
Thrivent Balanced Income Plus Fund | |
First $500 million: | 0.550% |
Next $500 million: | 0.500% |
Next $1.5 billion: | 0.475% |
Next $2.5 billion: | 0.450% |
Over $5 billion: | 0.425% |
Thrivent Diversified Income Plus Fund | |
All assets: | 0.550% |
Thrivent Government Bond Fund | |
First $500 million: | 0.400% |
Over $500 million: | 0.350% |
Thrivent Growth and Income Plus Fund | |
First $250 million: | 0.650% |
Over $250 million: | 0.600% |
Thrivent High Income Municipal Bond Fund | |
First $500 million: | 0.500% |
Over $500 million: | 0.450% |
Thrivent High Yield Fund | |
First $500 million: | 0.400% |
Next $500 million: | 0.350% |
Over $1 billion: | 0.300% |
Thrivent Income Fund | |
First $500 million: | 0.350% |
Next $500 million: | 0.325% |
Over $1 billion: | 0.300% |
Thrivent Large Cap Growth Fund | |
First $500 million: | 0.750% |
Next $500 million: | 0.700% |
Next $1.5 billion: | 0.650% |
Next $2.5 billion: | 0.600% |
Over $5 billion: | 0.575% |
Thrivent Large Cap Stock Fund | |
First $500 million: | 0.650% |
Next $500 million: | 0.575% |
Next $1 billion: | 0.500% |
Next $500 million: | 0.475% |
Next $2.5 billion: | 0.450% |
Over $5 billion: | 0.425% |
Thrivent Large Cap Value Fund | |
All assets: | 0.450% |
Thrivent Limited Maturity Bond Fund | |
First $500 million: | 0.300% |
Next $500 million: | 0.275% |
Over $1 billion: | 0.250% |
Thrivent Low Volatility Equity Fund | |
First $100 million: | 0.600% |
Over $100 million: | 0.500% |
Thrivent Mid Cap Stock Fund | |
First $200 million: | 0.700% |
Next $800 million: | 0.650% |
Next $1.5 billion: | 0.600% |
Next $2.5 billion: | 0.550% |
Over $5 billion: | 0.525% |
Thrivent Moderate Allocation Fund | |
First $500 million: | 0.650% |
Next $1.5 billion: | 0.625% |
Next $3 billion: | 0.600% |
Next $5 billion: | 0.575% |
Over $10 billion: | 0.550% |
Thrivent Moderately Aggressive Allocation Fund | |
First $500 million: | 0.700% |
Next $1.5 billion: | 0.675% |
Next $3 billion: | 0.650% |
Next $5 billion: | 0.625% |
Over $10 billion: | 0.600% |
Thrivent Moderately Conservative Allocation Fund | |
First $500 million: | 0.600% |
Next $1.5 billion: | 0.575% |
Next $3 billion: | 0.550% |
Next $5 billion: | 0.525% |
Over $10 billion: | 0.500% |
Thrivent Money Market Fund | |
All assets: | 0.350% |
Thrivent Multidimensional Income Fund | |
First $100 million: | 0.550% |
Over $100 million: | 0.500% |
Thrivent Municipal Bond Fund | |
First $500 million: | 0.450% |
Next $500 million: | 0.400% |
Next $1.5 billion: | 0.350% |
Next $2.5 billion: | 0.325% |
Over $5 billion: | 0.300% |
Thrivent Opportunity Income Plus Fund | |
First $500 million: | 0.450% |
Next $500 million: | 0.400% |
Next $1.5 billion: | 0.375% |
Next $2.5 billion: | 0.350% |
Over $5 billion: | 0.325% |
Thrivent Partner Emerging Markets Equity Fund | |
First $50 million: | 1.200% |
Over $50 million: | 1.070% |
Thrivent Partner Worldwide Allocation Fund | |
First $250 million: | 0.850% |
Next $750 million: | 0.800% |
Next $500 million: | 0.775% |
Over $1.5 billion: | 0.750% |
Thrivent Small Cap Growth Fund | |
First $200 million: | 0.800% |
Over $200 million: | 0.750% |
Thrivent Small Cap Stock Fund | |
First $200 million: | 0.700% |
Next $800 million: | 0.650% |
Next $1.5 billion: | 0.600% |
Next $2.5 billion: | 0.550% |
Over $5 billion: | 0.525% |
Fund | Class A | Class S | Expiration Date | |||
Thrivent Money Market Fund | 0.10% | 0.10% | 2/28/2019 |
Fund | Class A | Class S | Expiration Date | |||
Thrivent Government Bond Fund | 0.85% | 0.75% | 2/28/2019 | |||
Thrivent Growth and Income Plus Fund | 1.10% | 0.90% | 2/28/2019 | |||
Thrivent Large Cap Growth Fund | 1.15% | — | 2/28/2019 | |||
Thrivent Low Volatility Equity Fund | — | 1.20% | 2/28/2019 | |||
Thrivent Multidimensional Income Fund | — | 1.15% | 2/28/2019 |
Fund | Class A | Class S | Expiration Date | |||
Thrivent Partner Emerging Markets Equity Fund | 1.65% | 1.32% | 2/28/2019 | |||
Thrivent Partner Worldwide Allocation Fund | 1.35% | — | 2/28/2019 |
Fund | 10/31/2017 | 10/31/2016 | 10/31/2015 | |||
Thrivent Aggressive Allocation Fund | $ 7,365,475 | $ 6,228,603 | $4,005,489 | |||
Thrivent Balanced Income Plus Fund | $ 1,771,527 | $ 1,560,973 | $1,573,461 | |||
Thrivent Diversified Income Plus Fund (1) | $ 4,478,142 | $ 3,905,322 | $3,915,689 | |||
Thrivent Government Bond Fund | $ 241,256 | $ 227,220 | $ 436,824 | |||
Thrivent Growth and Income Plus Fund (1) | $ 541,361 | $ 485,574 | $ 501,921 | |||
Thrivent High Yield Fund | $ 2,746,543 | $ 2,604,073 | $2,910,371 | |||
Thrivent Income Fund | $ 2,794,572 | $ 2,675,694 | $2,834,714 | |||
Thrivent Large Cap Growth Fund | $ 5,655,944 | $ 5,015,770 | $4,760,227 | |||
Thrivent Large Cap Stock Fund | $ 9,834,219 | $ 9,226,625 | $9,932,084 | |||
Thrivent Large Cap Value Fund | $ 4,159,461 | $ 3,525,394 | $3,680,964 | |||
Thrivent Limited Maturity Bond Fund | $ 2,445,891 | $ 2,178,587 | $2,379,199 | |||
Thrivent Low Volatility Equity Fund | $ 22,471 | $ N/A | $ N/A | |||
Thrivent Mid Cap Stock Fund | $10,056,226 | $ 8,087,080 | $6,562,603 | |||
Thrivent Moderate Allocation Fund | $12,869,078 | $11,343,133 | $7,344,024 | |||
Thrivent Moderately Aggressive Allocation Fund | $15,289,493 | $13,087,765 | $8,201,650 | |||
Thrivent Moderately Conservative Allocation Fund | $ 4,807,948 | $ 4,419,551 | $3,255,872 | |||
Thrivent Money Market Fund | $ 1,507,916 | $ 1,660,921 | $2,104,350 | |||
Thrivent Multidimensional Income Fund (1) | $ 93,043 | $ N/A | $ N/A | |||
Thrivent Municipal Bond Fund | $ 6,354,276 | $ 6,433,095 | $6,229,579 | |||
Thrivent Opportunity Income Plus Fund | $ 2,147,166 | $ 1,842,557 | $1,812,389 | |||
Thrivent Partner Emerging Markets Equity Fund | $ 152,630 | $ 117,765 | $ 139,476 | |||
Thrivent Partner Worldwide Allocation Fund | $ 7,119,813 | $ 6,381,469 | $7,180,797 | |||
Thrivent Small Cap Stock Fund | $ 3,583,014 | $ 2,924,580 | $2,501,265 |
(1) | For fiscal years ended December 31, 2017, December 31, 2016 and December 31, 2015. |
The next table shows the total expenses reimbursed with respect to the Funds for the last three fiscal years. |
Fund | 10/31/2017 | 10/31/2016 | 10/31/2015 | |||
Thrivent Aggressive Allocation Fund | $2,644,653 | $2,275,656 | $ 373,991 | |||
Thrivent Balanced Income Plus Fund | $ — | $ — | $ — | |||
Thrivent Diversified Income Plus Fund (1) | $ — | $ — | $ — | |||
Thrivent Government Bond Fund | $ 26,618 | $ 17,915 | $ 34,078 | |||
Thrivent Growth and Income Plus Fund (1) | $ 266,618 | $ 258,239 | $ 224,739 | |||
Thrivent High Yield Fund | $ — | $ — | $ — | |||
Thrivent Income Fund | $ — | $ — | $ — | |||
Thrivent Large Cap Growth Fund | $ 107,581 | $ 141,747 | $ 196,131 | |||
Thrivent Large Cap Stock Fund | $ — | $ — | $ 14,000 | |||
Thrivent Large Cap Value Fund | $ — | $ — | $ — | |||
Thrivent Limited Maturity Bond Fund | $ — | $ — | $ — |
Fund | 10/31/2017 | 10/31/2016 | 10/31/2015 | |||
Thrivent Low Volatility Equity Fund | $ 113,019 | $ N/A | $ N/A | |||
Thrivent Mid Cap Stock Fund | $ — | $ — | $ 126,900 | |||
Thrivent Moderate Allocation Fund | $4,388,632 | $3,838,322 | $ 761,250 | |||
Thrivent Moderately Aggressive Allocation Fund | $6,165,460 | $5,315,090 | $ 901,229 | |||
Thrivent Moderately Conservative Allocation Fund | $1,292,891 | $1,153,100 | $ 222,168 | |||
Thrivent Money Market Fund | $ — | $1,770,183 | $3,125,225 | |||
Thrivent Multidimensional Income Fund (1) | $ 71,291 | $ N/A | $ N/A | |||
Thrivent Municipal Bond Fund | $ — | $ — | $ — | |||
Thrivent Opportunity Income Plus Fund | $ 28,730 | $ 81,622 | $ 231,253 | |||
Thrivent Partner Emerging Markets Equity Fund | $ 227,952 | $ 189,514 | $ 209,605 | |||
Thrivent Partner Worldwide Allocation Fund | $ 586,750 | $ 268,628 | $ 375,814 | |||
Thrivent Small Cap Stock Fund | $ — | $ — | $ — |
(1) | For fiscal years ended December 31, 2016, December 31, 2015 and December 31, 2014. |
1 | For purposes of determining breakpoints, assets invested in Thrivent Partner Worldwide Allocation Portfolio and Thrivent Partner Emerging Markets Portfolio, both series of Thrivent Series Fund, Inc. and managed by the subadviser, will be included in determining average daily net assets. Aberdeen began managing the Thrivent Partner Emerging Markets Equity Fund on February 26, 2015. |
2 | For purposes of determining breakpoints, assets invested in Thrivent Partner Worldwide Allocation Portfolio, a series of Thrivent Series Fund, Inc. and managed by subadviser, will be included in determining average daily net assets. GSAM began managing the international small- and mid-cap equities portion of the Thrivent Partner Worldwide Allocation Fund on September 25, 2013. |
Fund | 10/31/2017 | 10/31/2016 | 10/31/2015 | |||
Thrivent Aggressive Allocation Fund | $1,305,054 | $1,625,826 | $2,815,603 | |||
Thrivent Balanced Income Plus Fund | $ 227,859 | $ 259,948 | $ 805,573 | |||
Thrivent Diversified Income Plus Fund (1) | $ 704,190 | $ 737,853 | $2,373,271 | |||
Thrivent Government Bond Fund | $ — | $ 6,271 | $ 26,953 | |||
Thrivent Growth and Income Plus Fund (1) | $ 64,466 | $ 80,692 | $ 279,852 | |||
Thrivent High Yield Fund | $ 346,039 | $ 385,576 | $ 836,135 | |||
Thrivent Income Fund | $ 195,036 | $ 242,043 | $ 509,014 | |||
Thrivent Large Cap Growth Fund | $ 151,175 | $ 220,164 | $ 467,907 | |||
Thrivent Large Cap Stock Fund | $ 632,669 | $ 684,508 | $1,028,898 | |||
Thrivent Large Cap Value Fund | $ 100,430 | $ 105,128 | $ 222,208 | |||
Thrivent Limited Maturity Bond Fund | $ — | $ — | $ 219 | |||
Thrivent Mid Cap Stock Fund | $ 568,903 | $ 516,826 | $ 640,490 | |||
Thrivent Moderate Allocation Fund | $1,766,204 | $2,072,618 | $4,824,194 | |||
Thrivent Moderately Aggressive Allocation Fund | $2,684,713 | $3,236,487 | $6,371,873 | |||
Thrivent Moderately Conservative Allocation Fund | $ 572,925 | $ 669,594 | $1,758,829 | |||
Thrivent Money Market Fund | $ — | $ — | $ 3,809 | |||
Thrivent Municipal Bond Fund | $1,021,074 | $1,586,246 | $3,384,464 | |||
Thrivent Opportunity Income Plus Fund | $ 263,568 | $ 290,664 | $ 726,668 | |||
Thrivent Partner Emerging Markets Equity Fund | $ 17,943 | $ 15,355 | $ 35,827 | |||
Thrivent Partner Worldwide Allocation Fund | $ 93,767 | $ 93,236 | $ 217,312 | |||
Thrivent Small Cap Stock Fund | $ 212,263 | $ 207,420 | $ 261,735 |
(1) | For fiscal years ended December 31, 2017, December 31, 2016 and December 31, 2015. |
Affiliated Person | Position with Trust | Position with Thrivent Distributors | ||
David S. Royal | Trustee, President and Chief Investment Officer | Elected Manager | ||
Troy A. Beaver | Vice President | Elected Manager and Chief Executive Officer | ||
Edward S. Dryden | Chief Compliance Officer | Chief Compliance Officer | ||
Gerard V. Vaillancourt | Treasurer and Principal Accounting Officer | Elected Manager and Chief Financial Officer | ||
Kathryn A. Stelter | Vice President | Chief Operations Officer |
Affiliated Person | Position with Trust | Position with Thrivent Distributors | ||
John D. Jackson | Assistant Secretary | Chief Legal Officer and Secretary | ||
Michael W. Kremenak | Chief Legal Officer and Secretary | Assistant Secretary |
Fund | 10/31/2017 | 10/31/2016 | 10/31/2015 | |||
Thrivent Aggressive Allocation Fund | $258,245 | $221,538 | $220,917 | |||
Thrivent Balanced Income Plus Fund | $130,697 | $121,086 | $121,728 | |||
Thrivent Diversified Income Plus Fund (1) | $224,700 | $197,811 | $198,150 | |||
Thrivent Government Bond Fund | $ 81,365 | $ 80,225 | $ 89,743 | |||
Thrivent Growth and Income Plus Fund (1) | $ 85,824 | $ 83,447 | $ 83,899 | |||
Thrivent High Yield Fund | $204,368 | $191,067 | $207,464 | |||
Thrivent Income Fund | $224,727 | $211,269 | $220,769 | |||
Thrivent Large Cap Growth Fund | $215,577 | $192,548 | $186,453 | |||
Thrivent Large Cap Stock Fund | $398,232 | $361,659 | $388,526 | |||
Thrivent Large Cap Value Fund | $244,166 | $211,016 | $217,915 | |||
Thrivent Limited Maturity Bond Fund | $229,010 | $204,417 | $218,237 | |||
Thrivent Low Volatility Equity Fund | $ 47,378 | $ N/A | $ N/A | |||
Thrivent Mid Cap Stock Fund | $367,017 | $294,612 | $250,253 | |||
Thrivent Moderate Allocation Fund | $454,750 | $393,082 | $397,792 | |||
Thrivent Moderately Aggressive Allocation Fund | $495,216 | $415,705 | $418,613 | |||
Thrivent Moderately Conservative Allocation Fund | $223,444 | $204,438 | $208,460 | |||
Thrivent Money Market Fund | $151,112 | $147,202 | $146,113 | |||
Thrivent Multidimensional Income Fund (1) | $ 61,548 | $ N/A | $ N/A | |||
Thrivent Municipal Bond Fund | $371,529 | $362,273 | $353,098 | |||
Thrivent Opportunity Income Plus Fund | $159,998 | $143,702 | $142,816 | |||
Thrivent Partner Emerging Markets Equity Fund | $ 72,398 | $ 71,767 | $ 72,103 | |||
Thrivent Partner Worldwide Allocation Fund | $225,117 | $202,490 | $220,103 | |||
Thrivent Small Cap Stock Fund | $170,985 | $148,219 | $136,789 |
(1) | For fiscal years ended December 31, 2017, December 31, 2016 and December 31, 2015. |
Gross Income from Securities Lending Activities | Fees Paid to Securities Lending Agent from a Revenue Split | Fees Paid for any Cash Collateral Management Service (Including Fees Deducted from a Pooled Cash Collateral Reinvestment Vehicle) that are not Included in the Revenue Split | Administrative Fees not Iincluded in the Revenue Split | Indemnification Fee not Included in the Revenue Split | Rebates (Paid to Borrower) | Other Fees not Included in the Revenue Split | Aggregate Fees/ Compensation for Securities Lending Activities | Net Income from Securities Lending Activities | ||||||||
Thrivent Aggressive Allocation Fund | ||||||||||||||||
$ 1,004 | $ 150 | $- | $- | $- | $ 4 | $- | $ 154 | $ 850 | ||||||||
Thrivent Balanced Income Plus Fund | ||||||||||||||||
$ 48,408 | $ 4,691 | $- | $- | $- | $ 17,152 | $- | $ 21,843 | $ 26,565 | ||||||||
Thrivent Diversified Income Plus Fund | ||||||||||||||||
$ 45,859 | $ 6,576 | $- | $- | $- | $ 2,058 | $- | $ 8,634 | $ 37,225 | ||||||||
Thrivent Growth and Income Plus Fund | ||||||||||||||||
$ 190 | $ 2 | $- | $- | $- | $ 172 | $- | $ 174 | $ 16 | ||||||||
Thrivent High Yield Fund | ||||||||||||||||
$855,727 | $87,632 | $- | $- | $- | $276,603 | $- | $364,235 | $491,492 | ||||||||
Thrivent Income Fund | ||||||||||||||||
$168,501 | $15,840 | $- | $- | $- | $ 62,865 | $- | $ 78,705 | $ 89,796 | ||||||||
Thrivent Large Cap Growth Fund | ||||||||||||||||
$ 977 | $ 114 | $- | $- | $- | $ 216 | $- | $ 330 | $ 647 | ||||||||
Thrivent Large Cap Stock Fund | ||||||||||||||||
$357,612 | $50,123 | $- | $- | $- | $ 22,425 | $- | $ 72,548 | $285,064 |
Gross Income from Securities Lending Activities | Fees Paid to Securities Lending Agent from a Revenue Split | Fees Paid for any Cash Collateral Management Service (Including Fees Deducted from a Pooled Cash Collateral Reinvestment Vehicle) that are not Included in the Revenue Split | Administrative Fees not Iincluded in the Revenue Split | Indemnification Fee not Included in the Revenue Split | Rebates (Paid to Borrower) | Other Fees not Included in the Revenue Split | Aggregate Fees/ Compensation for Securities Lending Activities | Net Income from Securities Lending Activities | ||||||||
Thrivent Large Cap Value Fund | ||||||||||||||||
$ 57,535 | $ 1,886 | $- | $- | $- | $ 45,019 | $- | $ 46,905 | $ 10,630 | ||||||||
Thrivent Limited Maturity Bond Fund | ||||||||||||||||
$ 74,697 | $ 8,383 | $- | $- | $- | $ 18,827 | $- | $ 27,210 | $ 47,487 | ||||||||
Thrivent Mid Cap Stock Fund | ||||||||||||||||
$119,932 | $11,830 | $- | $- | $- | $ 41,247 | $- | $ 53,077 | $ 66,855 | ||||||||
Thrivent Moderate Allocation Fund | ||||||||||||||||
$ 76,161 | $ 9,260 | $- | $- | $- | $ 14,412 | $- | $ 23,672 | $ 52,489 | ||||||||
Thrivent Moderately Aggressive Allocation Fund | ||||||||||||||||
$ 36,982 | $ 4,486 | $- | $- | $- | $ 7,068 | $- | $ 11,554 | $ 25,428 | ||||||||
Thrivent Moderately Conservative Allocation Fund | ||||||||||||||||
$ 35,736 | $ 4,480 | $- | $- | $- | $ 5,868 | $- | $ 10,348 | $ 25,388 | ||||||||
Thrivent Opportunity Income Plus Fund | ||||||||||||||||
$ 96,278 | $ 9,650 | $- | $- | $- | $ 31,990 | $- | $ 41,640 | $ 54,638 | ||||||||
Thrivent Partner Worldwide Allocation Fund | ||||||||||||||||
$ 3,464 | $ 401 | $- | $- | $- | $ 653 | $- | $ 1,054 | $ 2,410 | ||||||||
Thrivent Small Cap Stock Fund | ||||||||||||||||
$268,040 | $26,431 | $- | $- | $- | $ 92,094 | $- | $118,525 | $149,515 |
(1) | the breadth of the market in and the price of the security, |
(2) | the financial condition and execution capability of the broker or dealer, and |
(3) | the reasonableness of the commission, if any (for the specific transaction and on a continuing basis). |
Fund | 10/31/2017 | 10/31/2016 | 10/31/2015 | |||
Thrivent Aggressive Allocation Fund | $ 549,500 | $ 526,357 | $ 474,716 | |||
Thrivent Balanced Income Plus Fund | $ 227,099 | $ 203,125 | $ 309,932 | |||
Thrivent Diversified Income Plus Fund (1) | $ 307,295 | $ 375,796 | $ 646,572 | |||
Thrivent Government Bond Fund | $ 3,402 | $ 3,232 | $ 1,286 | |||
Thrivent Growth and Income Plus Fund (1) | $ 67,009 | $ 74,483 | $ 151,914 | |||
Thrivent High Income Municipal Bond Fund | $ — | $ — | $ — | |||
Thrivent High Yield Fund | $ 488 | $ 2,300 | $ 6 | |||
Thrivent Income Fund | $ 27,768 | $ 31,864 | $ 30,626 | |||
Thrivent Large Cap Growth Fund | $ 401,743 | $ 399,729 | $ 433,166 | |||
Thrivent Large Cap Stock Fund | $1,861,331 | $1,648,978 | $1,846,584 | |||
Thrivent Large Cap Value Fund | $ 191,504 | $ 223,393 | $ 320,647 | |||
Thrivent Limited Maturity Bond Fund | $ 39,438 | $ 37,058 | $ 28,493 | |||
Thrivent Low Volatility Equity Fund | $ 6,023 | $ — | $ — | |||
Thrivent Mid Cap Stock Fund | $ 618,530 | $ 572,812 | $ 693,124 | |||
Thrivent Moderate Allocation Fund | $ 791,306 | $ 734,492 | $ 691,517 | |||
Thrivent Moderately Aggressive Allocation Fund | $1,022,319 | $ 959,807 | $ 867,914 | |||
Thrivent Moderately Conservative Allocation Fund | $ 200,637 | $ 197,706 | $ 208,855 | |||
Thrivent Money Market Fund | $ — | $ — | $ — | |||
Thrivent Multidimensional Income Fund (1) | $ 21,230 | $ — | $ — | |||
Thrivent Municipal Bond Fund | $ — | $ — | $ — | |||
Thrivent Opportunity Income Plus Fund | $ 54,270 | $ 78,638 | $ 58,494 | |||
Thrivent Partner Emerging Markets Equity Fund | $ 6,061 | $ 2,095 | $ 17,716 | |||
Thrivent Partner Worldwide Allocation Fund | $1,688,357 | $1,169,246 | $ 643,513 | |||
Thrivent Small Cap Growth Fund | $ — | $ — | $ — | |||
Thrivent Small Cap Stock Fund | $ 383,677 | $ 386,853 | $ 422,658 |
(1) | For the fiscal year ended December 31, 2017, December 31, 2016 and December 31, 2015. |
Fund Name | Commissions | Aggregrate Transactions | ||
Thrivent Aggressive Allocation Fund | $ 549,500 | $ 679,926,888 | ||
Thrivent Balanced Income Plus Fund | $ 227,099 | $ 313,169,910 | ||
Thrivent Diversified Income Plus Fund (1) | $ 307,295 | $ 412,925,219 | ||
Thrivent Government Bond Fund | $ 3,402 | $ 11,805 | ||
Thrivent Growth and Income Plus Fund (1) | $ 67,009 | $ 89,597,965 | ||
Thrivent High Income Municipal Bond Fund | $ — | $ — | ||
Thrivent High Yield Fund | $ 488 | $ 1,813,652 | ||
Thrivent Income Fund | $ 27,768 | $ 670,468 | ||
Thrivent Large Cap Growth Fund | $ 401,743 | $ 967,741,247 | ||
Thrivent Large Cap Stock Fund | $1,861,331 | $2,242,101,916 | ||
Thrivent Large Cap Value Fund | $ 191,504 | $ 322,085,258 | ||
Thrivent Limited Maturity Bond Fund | $ 39,438 | $ 564,847 | ||
Thrivent Low Volatility Equity Fund | $ 6,023 | $ 9,793,859 | ||
Thrivent Mid Cap Stock Fund | $ 618,530 | $ 858,212,780 | ||
Thrivent Moderate Allocation Fund | $ 791,306 | $ 894,620,121 | ||
Thrivent Moderately Aggressive Allocation Fund | $1,022,319 | $1,165,905,675 | ||
Thrivent Moderately Conservative Allocation Fund | $ 200,637 | $ 251,542,670 | ||
Thrivent Money Market Fund | $ — | $ — | ||
Thrivent Multidimensional Income Fund (1) | $ 21,230 | $ 23,662,766 | ||
Thrivent Municipal Bond Fund | $ — | $ — | ||
Thrivent Opportunity Income Plus Fund | $ 54,270 | $ 62,125,643 | ||
Thrivent Partner Emerging Markets Equity Fund | $ 2,280 | $ 1,327,689 | ||
Thrivent Partner Worldwide Allocation Fund | $1,502,388 | $1,466,472,148 | ||
Thrivent Small Cap Growth Fund | $ — | $ — | ||
Thrivent Small Cap Stock Fund | $ 383,677 | $ 481,213,576 |
(1) | For the fiscal year ended December 31, 2017 |
Fund | 10/31/2017 | 10/31/2016 | 10/31/2015 | |||
Thrivent Aggressive Allocation Fund | 59% | 58% | 51% |
Fund | 10/31/2017 | 10/31/2016 | 10/31/2015 | |||
Thrivent Balanced Income Plus Fund | 145% | 125% | 148% | |||
Thrivent Diversified Income Plus Fund (1) | 133% | 91% | 108% | |||
Thrivent Government Bond Fund | 193% | 152% | 145% | |||
Thrivent Growth and Income Plus Fund (1) | 121% | 114% | 181% | |||
Thrivent High Yield Fund | 48% | 43% | 38% | |||
Thrivent Income Fund | 100% | 107% | 92% | |||
Thrivent Large Cap Growth Fund | 65% | 68% | 64% | |||
Thrivent Large Cap Stock Fund | 73% | 64% | 52% | |||
Thrivent Large Cap Value Fund | 17% | 22% | 31% | |||
Thrivent Limited Maturity Bond Fund | 79% | 83% | 89% | |||
Thrivent Low Volatility Equity Fund (2) | 77% | N/A | N/A | |||
Thrivent Mid Cap Stock Fund | 29% | 22% | 56% | |||
Thrivent Moderate Allocation Fund | 158% | 147% | 107% | |||
Thrivent Moderately Aggressive Allocation Fund | 103% | 94% | 66% | |||
Thrivent Moderately Conservative Allocation Fund | 208% | 196% | 187% | |||
Thrivent Multidimensional Income Fund (1,2) | 180% | N/A | N/A | |||
Thrivent Municipal Bond Fund | 18% | 10% | 8% | |||
Thrivent Opportunity Income Plus Fund | 186% | 156% | 165% | |||
Thrivent Partner Emerging Markets Equity Fund | 42% | 11% | 117% | |||
Thrivent Partner Worldwide Allocation Fund | 94% | 108% | 68% | |||
Thrivent Small Cap Stock Fund | 47% | 58% | 70% |
(1) | For fiscal years ended December 31, 2017, December 31, 2016 and December 31, 2015. |
(2) | From inception on February 28, 2017 through fiscal year end. |
Funds | Regular Broker or Dealer (or Parent) | Aggregate Holdings | ||
Thrivent Aggressive Allocation Fund | Citigroup, Inc. | $ 4,357,889 | ||
Goldman, Sachs & Company | $ 1,735,672 | |||
Bank of America Corporation | $ 204,220 | |||
Thrivent Balanced Income Plus Fund | Citigroup, Inc. | $ 2,165,926 | ||
State Street Bank | $ 1,804,843 | |||
Bank of America Corporation | $ 1,169,613 | |||
Credit Suisse Group AG | $ 653,088 | |||
Wells Fargo | $ 652,032 | |||
J.P. Morgan | $ 613,889 | |||
Morgan Stanley Dean Witter & Company | $ 468,982 | |||
Deutsche Bank | $ 156,466 | |||
Barclays | $ 76,990 | |||
Nomura Securities International, Inc. | $ 48,438 |
Funds | Regular Broker or Dealer (or Parent) | Aggregate Holdings | ||
Thrivent Diversified Income Plus Fund | Goldman, Sachs & Company | $10,938,407 | ||
Bank of America Corporation | $ 5,781,488 | |||
Citigroup, Inc. | $ 4,592,982 | |||
HSBC Securities | $ 3,934,699 | |||
Wells Fargo | $ 3,674,332 | |||
J.P. Morgan | $ 3,211,418 | |||
Morgan Stanley Dean Witter & Company | $ 2,185,587 | |||
Credit Suisse Group AG | $ 1,737,498 | |||
Deutsche Bank | $ 584,584 | |||
Nomura Securities International, Inc. | $ 142,044 | |||
Thrivent Growth and Income Plus Fund | Goldman, Sachs & Company | $ 1,180,299 | ||
HSBC Securities | $ 646,640 | |||
Citigroup, Inc. | $ 579,334 | |||
State Street Bank | $ 523,903 | |||
Bank of America Corporation | $ 238,271 | |||
J.P. Morgan | $ 95,041 | |||
Credit Suisse Group AG | $ 61,270 | |||
Morgan Stanley Dean Witter & Company | $ 50,928 | |||
Deutsche Bank | $ 18,773 | |||
Nomura Securities International, Inc. | $ 6,044 | |||
Thrivent High Yield Fund | Goldman, Sachs & Company | $ 2,013,186 | ||
Wells Fargo | $ 1,886,400 | |||
Bank of America Corporation | $ 1,815,744 | |||
Thrivent Income Fund | Bank of America Corporation | $21,172,244 | ||
Goldman, Sachs & Company | $18,909,247 | |||
Morgan Stanley Dean Witter & Company | $15,940,172 | |||
Citigroup, Inc. | $15,518,180 | |||
J.P. Morgan | $10,469,906 | |||
Wells Fargo | $ 9,172,905 | |||
Credit Suisse Group AG | $ 6,356,852 | |||
Barclays | $ 3,567,587 | |||
Deutsche Bank | $ 1,444,773 | |||
Thrivent Large Cap Growth Fund | Citigroup, Inc. | $24,887,027 | ||
Goldman, Sachs & Company | $16,264,346 | |||
Thrivent Large Cap Stock Fund | Citigroup, Inc. | $34,269,228 | ||
Goldman, Sachs & Company | $30,793,505 | |||
State Street Bank | $12,588,820 | |||
Thrivent Limited Maturity Bond Fund | Bank of America Corporation | $12,201,583 | ||
Morgan Stanley Dean Witter & Company | $ 8,972,473 | |||
Goldman, Sachs & Company | $ 8,060,623 | |||
Citigroup, Inc. | $ 7,354,974 | |||
J.P. Morgan | $ 7,187,974 |
Funds | Regular Broker or Dealer (or Parent) | Aggregate Holdings | ||
Wells Fargo | $ 5,931,940 | |||
UBS AG | $ 3,789,168 | |||
Barclays | $ 2,042,634 | |||
Thrivent Moderate Allocation Fund | Citigroup, Inc. | $ 9,390,004 | ||
Bank of America Corporation | $ 7,983,905 | |||
Goldman, Sachs & Company | $ 6,702,412 | |||
Morgan Stanley Dean Witter & Company | $ 4,630,377 | |||
J.P. Morgan | $ 3,669,778 | |||
Wells Fargo | $ 3,466,409 | |||
HSBC Securities | $ 2,609,010 | |||
Credit Suisse Group AG | $ 2,124,739 | |||
Barclays | $ 1,084,088 | |||
Thrivent Moderately Aggressive Allocation Fund | Citigroup, Inc. | $ 8,397,497 | ||
Goldman, Sachs & Company | $ 5,081,999 | |||
Bank of America Corporation | $ 4,886,240 | |||
Morgan Stanley Dean Witter & Company | $ 2,719,013 | |||
J.P. Morgan | $ 1,911,759 | |||
HSBC Securities | $ 1,858,486 | |||
Credit Suisse Group AG | $ 1,220,748 | |||
Deutsche Bank | $ 622,221 | |||
Barclays | $ 576,891 | |||
Thrivent Moderately Conservative Allocation Fund | Citigroup, Inc. | $ 4,376,205 | ||
Bank of America Corporation | $ 4,225,996 | |||
Goldman, Sachs & Company | $ 3,822,353 | |||
Morgan Stanley Dean Witter & Company | $ 3,328,874 | |||
Wells Fargo | $ 2,216,450 | |||
J.P. Morgan | $ 2,007,952 | |||
HSBC Securities | $ 1,256,701 | |||
Credit Suisse Group AG | $ 1,169,612 | |||
Barclays | $ 700,444 | |||
Thrivent Multidimensional Income Fund | Bank of America Corporation | $ 241,288 | ||
Goldman, Sachs & Company | $ 133,289 | |||
BNP Paribas | $ 110,000 | |||
J.P. Morgan | $ 105,776 | |||
HSBC Securities | $ 88,051 | |||
Credit Suisse Group AG | $ 68,259 | |||
Morgan Stanley Dean Witter & Company | $ 63,751 | |||
UBS AG | $ 6,042 | |||
Thrivent Opportunity Income Plus Fund | Bank of America Corporation | $ 2,960,726 | ||
Citigroup, Inc. | $ 1,911,573 | |||
Wells Fargo | $ 1,846,408 | |||
Goldman, Sachs & Company | $ 1,775,077 | |||
Credit Suisse Group AG | $ 1,478,928 |
Funds | Regular Broker or Dealer (or Parent) | Aggregate Holdings | ||
Morgan Stanley Dean Witter & Company | $ 1,420,827 | |||
J.P. Morgan | $ 1,142,532 | |||
HSBC Securities | $ 779,717 | |||
Barclays | $ 237,047 | |||
Nomura Securities International, Inc. | $ 136,231 | |||
Thrivent Partner Worldwide Allocation Fund | HSBC Securities | $18,593,416 | ||
BNP Paribas | $ 2,690,210 | |||
Citigroup, Inc. | $ 677,400 |
• | Through a financial representative; |
• | By mail; |
• | By telephone; |
• | By Internet; |
• | By wire/ACH transfer; or |
• | Through an Automatic Investment Plan. |
• | directors and regular full-time and regular part-time employees of Thrivent Financial and its subsidiaries and affiliates or others that reside at the same mailing address as the director or employee; |
• | members of Thrivent Financial’s sales force and others that reside at the same mailing address as the sales force member; and |
• | any trust, pension, profit-sharing or other benefit plan for such persons. |
• | Through a financial representative; |
• | By mail or fax; |
• | By telephone; |
• | By the Internet; |
• | By wire/ACH transfer; or |
• | Through the Automatic Redemption Plan. |
• | Equity securities that are traded on U.S. exchanges, including options, shall be valued at the last sale price on the principle exchange as of the close of regular trading on such exchange. If there have been no sales, the latest bid quotation is used. |
• | Over-the-Counter Securities. NASDAQ National Market® securities shall be valued at the NASDAQ Official Closing Price. All other over-the-counter securities for which reliable quotations are available shall be valued at the latest bid quotation. |
• | Fixed income securities traded on a national securities exchange will be valued at the last sale price on such securities exchange that day. If there have been no sales, the latest bid quotation is used. |
• | Because market quotations are generally not “readily available” for many debt securities, foreign and domestic debt securities held by the Funds may be valued by an Approved Pricing Service (“APS”), using the evaluation or other valuation methodologies used by the APS. If quotations are not available from the APS, the Adviser’s Valuation Committee shall obtain a manual price from a broker or make a fair value determination. |
• | All Funds may value debt securities with a remaining maturity of 60 days or less at amortized cost. |
• | derive at least 90% of its gross income from dividends, interest, gains from the sale of securities, and certain other investments; |
• | comply with applicable asset diversification requirements; and |
• | distribute at least 90% of its ordinary income to shareholders. |
Aaa: | Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk. |
Aa: | Obligations rated Aa are judged to be of high quality and are subject to very low credit risk. |
A: | Obligations rated A are considered upper-medium grade and are subject to low credit risk. |
Baa: | Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics. |
Ba: | Obligations rated Ba are judged to be speculative and are subject to substantial credit risk. |
B: | Obligations rated B are considered speculative and are subject to high credit risk. |
Caa: | Obligations rated Caa are judged to be speculative of poor standing and are subject to very high credit risk. |
Ca: | Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest. |
C: | Obligations rated C are the lowest rated and are typically in default, with little prospect for recovery of principal or interest. |
P-1: | Issuers (or supporting institutions) rated Prime-1 have a superior ability to repay short-term debt obligations. |
P-2: | Issuers (or supporting institutions) rated Prime-2 have a strong ability to repay short-term debt obligations. |
P-3: | Issuers (or supporting institutions) rated Prime-3 have an acceptable ability to repay short-term obligations. |
NP: | Issuers (or supporting institutions) rated Not Prime do not fall within any of the Prime rating categories. |
MIG 1: | This designation denotes superior credit quality. Excellent protection is afforded by established cash flows, highly reliable liquidity support, or demonstrated broad-based access to the market for refinancing. |
MIG 2: | This designation denotes strong credit quality. Margins of protection are ample, although not as large as in the preceding group. |
MIG 3: | This designation denotes acceptable credit quality. Liquidity and cash-flow protection may be narrow, and market access for refinancing is likely to be less well-established. |
SG: | This designation denotes speculative-grade credit quality. Debt instruments in this category may lack sufficient margins of protection. |
VMIG 1: | This designation denotes superior credit quality. Excellent protection is afforded by the superior short-term credit strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price upon demand. |
VMIG 2: | This designation denotes strong credit quality. Good protection is afforded by the strong short-term credit strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price upon demand. |
VMIG 3: | This designation denotes acceptable credit quality. Adequate protection is afforded by the satisfactory short-term credit strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price upon demand. |
SG: | This designation denotes speculative-grade credit quality. Demand features rated in this category may be supported by a liquidity provider that does not have an investment grade short-term rating or may lack the structural and/or legal protections necessary to ensure the timely payment of purchase price upon demand. |
• | Likelihood of payment — capacity and willingness of the obligor to meet its financial commitment on an obligation in accordance with the terms of the obligation; |
• | Nature of and provisions of the obligation; |
• | Protection afforded by, and relative position of, the obligation in the event of bankruptcy, reorganization, or other arrangement under the laws of bankruptcy and other laws affecting creditors’ rights. |
AAA: | An obligation rated ‘AAA’ has the highest rating assigned by Standard & Poor’s. The obligor’s capacity to meet its financial commitment on the obligation is extremely strong. |
AA: | An obligation rated ‘AA’ differs from the highest-rated obligations only to a small degree. The obligor’s capacity to meet its financial commitment on the obligation is very strong. |
A: | An obligation rated ‘A’ is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligor’s capacity to meet its financial commitment on the obligation is still strong. |
BBB: | An obligation rated ‘BBB’ exhibits adequate protection parameters. However, 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. |
BB: | An obligation rated ‘BB’ is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to the obligor’s inadequate capacity to meet its financial commitment on the obligation. |
B: | An obligation rated ‘B’ is more vulnerable to nonpayment than obligations rated ‘BB’, but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor’s capacity or willingness to meet its financial commitment on the obligation. |
CCC: | An obligation rated ‘CCC’ is currently vulnerable to nonpayment, and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation. |
CC: | An obligation rated ‘CC’ is currently highly vulnerable to nonpayment. The ‘CC’ rating is used when a default has not yet occurred, but Standard & Poor’s expects default to be a virtual certainty, regardless of the anticipated time to default. |
C: | An obligation rated ‘C’ is currently highly vulnerable to nonpayment, and the obligation is expected to have lower relative seniority or lower ultimate recovery compared to obligations that are rated higher. |
D: | An obligation rated ‘D’ is in default or in breach of an imputed promise. For non-hybrid capital instruments, the ‘D’ rating category is used when payments on an obligation are not made on the date due, unless Standard & Poor’s believes that such payments will be made within five business days in the absence of a stated grace period or within the earlier of the stated grace period or 30 calendar days. The ‘D’ rating also will be used upon the filing of a bankruptcy petition or the taking of similar action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions. An obligation’s rating is lowered to ‘D’ if it is subject to a distressed exchange offer. |
NR: | This indicates that no rating has been requested, that there is insufficient information on which to base a rating, or that Standard & Poor’s does not rate a particular obligation as a matter of policy. |
Plus (+) or minus (-): | The ratings from ‘AA’ to ‘CCC’ may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories. |
A-1: | A short-term obligation rated ‘A-1’ is rated in the highest category by Standard & Poor’s. The obligor’s capacity to meet its financial commitment on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor’s capacity to meet its financial commitment on these obligations is extremely strong. |
A-2: | A short-term obligation rated ‘A-2’ is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligor’s capacity to meet its financial commitment on the obligation is satisfactory. |
A-3: | A short-term obligation rated ‘A-3’ exhibits adequate protection parameters. However, 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. |
B: | A short-term obligation rated ‘B’ is regarded as vulnerable and has significant speculative characteristics. The obligor currently has the capacity to meet its financial commitments; however, it faces major ongoing uncertainties which could lead to the obligor’s inadequate capacity to meet its financial commitments. |
C: | A short-term obligation rated ‘C’ is currently vulnerable to nonpayment and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation. |
D: | A short-term obligation rated ‘D’ is in default or in breach of an imputed promise. For non-hybrid capital instruments, the ‘D’ rating category is used when payments on an obligation are not made on the date due, unless Standard & Poor’s believes that such payments will be made within any stated grace period. However, any stated grace period longer than five business days will be treated as five business days. The ‘D’ rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions. An obligation’s rating is lowered to ‘D’ if it is subject to a distressed exchange offer. |
Investment Grade | |
AAA: | Highest credit quality. ‘AAA’ ratings denote the lowest expectation of credit risk. They are assigned only in case of exceptionally strong capacity for payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events. |
AA: | Very high credit quality. “AA” ratings denote expectations of very low credit risk. They indicate very strong capacity for timely payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events. |
A: | High credit quality. “A” ratings denote low expectation of credit risk. The capacity for timely payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to adverse business or economic conditions than is the case for higher ratings. |
BBB: | Good credit quality. “BBB” ratings indicate that expectations of credit risk are currently low. The capacity for payment of financial commitments is considered adequate, but adverse business or economic conditions are more likely to impair this capacity. |
Speculative Grade | |
BB: | Speculative. ‘BB’ ratings indicate an elevated vulnerability to credit risk, particularly in the event of adverse changes in business or economic conditions over time; however, business or financial alternatives may be available to allow financial commitments to be met. |
B: | Highly speculative. ‘B’ ratings indicate that material credit risk is present. |
CCC: | Substantial credit risk. ‘CCC’ ratings indicate that substantial credit risk is present. |
CC: | Very high levels of credit risk. ‘CC’ ratings indicate very high levels of credit risk. |
C: | Exceptionally high levels of credit risk. ‘C’ indicates exceptionally high levels of credit risk. |
F1: | Highest short-term credit quality. Indicates the strongest intrinsic capacity for timely payment of financial commitments; may have an added “+” to denote any exceptionally strong credit feature. |
F2: | Good short-term credit quality. Good intrinsic capacity for timely payment of financial commitments. |
F3: | Fair short-term credit quality. The intrinsic capacity for timely payment of financial commitments is adequate. |
B: | Speculative short-term credit quality. Minimal capacity for timely payment of financial commitments, plus heightened vulnerability to near term adverse changes in financial and economic conditions. |
C: | High short-term default risk. Default is a real possibility. |
RD: | Restricted default. Indicates an entity that has defaulted on one or more of its financial commitments, although it continues to meet other financial obligations. Applicable to entity ratings only. |
D: | Default. Indicates a broad-based default event for an entity, or the default of a specific short-term obligation. |
Table of Contents
PROXY VOTING POLICY & PROCEDURES
|
VOTING PROCESS AND POLICY SUMMARY | PAGE | |
2 | ||
2 | ||
2 | ||
5 | ||
PROXY VOTING POLICIES | ||
6 | ||
10 | ||
16 | ||
17 | ||
19 | ||
22 | ||
25 | ||
27 | ||
28 | ||
34 |
Table of Contents
THRIVENT FINANCIAL FOR LUTHERANS and THRIVENT ASSET MANAGEMENT, LLC PROXY VOTING PROCESS AND POLICIES SUMMARY
|
Ø |
Overview. Thrivent Financial for Lutherans and Thrivent Asset Management, LLC (“Thrivent Financial”) recognize and adhere to the principle that one of the privileges of owning stock in a company is the right to vote in the election of the company’s directors and on matters affecting certain important aspects of the company’s structure and operations that are submitted to shareholder vote. As an investment adviser with a fiduciary responsibility to its clients, Thrivent Financial analyzes the proxy statements of issuers whose stock is owned by the investment companies which it sponsors and serves as investment adviser (“Thrivent Funds”) and by institutional accounts who have requested that Thrivent Financial be involved in the proxy process.
Thrivent Financial has adopted Proxy Voting Policies and Procedures (“Policies and Procedures”) for the purpose of establishing formal policies and procedures for performing and documenting its fiduciary duty with regard to the voting of client proxies.
Fiduciary Considerations. It is the policy of Thrivent Financial that decisions with respect to proxy issues will be made in light of the anticipated impact of the issue on the desirability of investing in the portfolio company from the viewpoint of the particular client or Thrivent Fund. Proxies are voted solely in the interests of the client, Thrivent Fund shareholders or, where employee benefit plan assets are involved, in the interests of plan participants and beneficiaries. Thrivent Financial votes proxies, where possible to do so, in a manner consistent with its fiduciary obligations and responsibilities. Logistics involved may make it impossible at times, and at other times disadvantageous, to vote proxies in every instance.
Consideration Given Management Recommendations. One of the primary factors Thrivent Financial considers when determining the desirability of investing in a particular company is the quality and depth of its management. The Policies and Procedures were developed with the recognition that a company’s management is entrusted with the day-to-day operations of the company, as well as its long-term direction and strategic planning, subject to the oversight of the company’s board of directors. Accordingly, Thrivent Financial believes that the recommendation of management on most issues should be given weight in determining how proxy issues should be voted. However, the position of the company’s management will not be supported in any situation where it is found to be not in the best interests of the client, and Thrivent Financial reserves the right to vote contrary to management when it believes a particular proxy proposal may adversely affect the investment merits of owning stock in a portfolio company.
Ø |
Thrivent Financial’s Compliance and Governance Committee (“Committee”) is responsible for establishing positions with respect to corporate governance and other proxy issues, including those involving social responsibility issues. Annually, the Committee reviews the proxy voting policies and procedures. As discussed below, Thrivent Financial portfolio management may, with the approval of the Committee, vote proxies other than in accordance with the proxy voting policies and procedures.
Ø |
In order to facilitate the proxy voting process, Thrivent Financial has retained Institutional Shareholder Services Inc. (“ISS”), an expert in the proxy voting area. ISS specializes in providing a variety of fiduciary-level proxy advisory and voting services. These services include in-depth research, analysis, and voting recommendations as well as vote execution, reporting, auditing and consulting assistance for the handling of proxy voting responsibilities. While the Committee relies upon ISS research in helping to establish Thrivent Financial’s proxy voting guidelines, Thrivent Financial may deviate from ISS recommendations on general policy issues or specific proxy proposals.
2
Table of Contents
Summary | of Thrivent Financial’s Voting Policies |
Voting guidelines have been adopted by the Committee for routine anti-takeover, executive compensation and corporate governance proposals, as well as other common shareholder proposals. The voting guidelines are available to shareholders upon request. The following is a summary of the significant Thrivent Financial policies:
Board Structure and Composition Issues – Thrivent Financial believes boards are expected to have a majority of directors independent of management. The independent directors are expected to organize much of the board’s work, even if the chief executive officer also serves as chairman of the board. Key committees (audit, compensation, and nominating/corporate governance) of the board are expected to be entirely independent of management. It is expected that boards will engage in critical self-evaluation of themselves and of individual members. Individual directors, in turn, are expected to devote significant amounts of time to their duties, to limit the number of directorships they accept, and to own a meaningful amount of stock in companies on whose boards they serve. As such, Thrivent Financial withholds votes for directors who miss more than one-fourth of the scheduled board meetings. Thrivent Financial votes against management efforts to stagger board member terms because a staggered board may act as a deterrent to takeover proposals. For the same reasons, Thrivent Financial votes for proposals that seek to fix the size of the board.
Executive and Director Compensation – Non-salary compensation remains one of the most sensitive and visible corporate governance issues. Although shareholders have little say about how much the CEO is paid in salary and bonus, they do have a major voice in approving stock option and incentive plans. Stock option plans transfer significant amounts of wealth from shareholders to employees, and in particular to executives and directors. Rightly, the cost of these plans must be in line with the anticipated benefits to shareholders. Clearly, reasonable limits must be set on dilution as well as administrative authority. In addition, shareholders must consider the necessity of the various pay programs and examine the appropriateness of award types. Consequently, the pros and cons of these proposals necessitate a case-by-case evaluation. Generally, Thrivent Financial opposes compensation packages that provide what we view as excessive awards to a few senior executives or that contain excessively dilutive stock option grants based on a number of criteria such as the costs associated with the plan, plan features, and dilution to shareholders.
Ratification of Auditors - Annual election of the outside accountants is standard practice. While it is recognized that the company is in the best position to evaluate the competence of the outside accountants, we believe that outside accountants must ultimately be accountable to shareholders. Given the rash of accounting irregularities that were not detected by audit panels or auditors, shareholder ratification is an essential step in restoring investor confidence. In line with this, Thrivent Financial votes for proposals to ratify auditors, unless an auditor has a financial interest in or association with the company, and is therefore not independent; or there is reason to believe that the independent auditor has rendered an opinion that is neither accurate nor indicative of the company’s financial position.
Mergers and Acquisitions, Anti-Takeover and Corporate Governance Issues - Thrivent Financial votes on mergers and acquisitions on a case-by-case basis, taking the following into account: anticipated financial and operating benefits; offer price (cost vs. premium); prospects of the combined companies; how the deal was negotiated; the opinion of the financial advisor; potential conflicts of interest between management’s interests and shareholders’ interests; and changes in corporate governance and their impact on shareholder rights. Thrivent Financial generally opposes anti-takeover measures since they adversely impact shareholder rights. Also, Thrivent Financial will consider the dilutive impact to shareholders and the effect on shareholder rights when voting on corporate governance proposals.
Social, Environmental and Corporate Responsibility Issues - In addition to moral and ethical considerations intrinsic to many of these proposals, Thrivent Financial recognizes their potential for impact on the economic performance of the company. Thrivent Financial balances these considerations carefully. On proposals which are primarily social, moral or ethical, Thrivent Financial believes it is impossible to vote in a manner that would accurately reflect the views of the beneficial owners of the portfolios that it manages. As such, on these items Thrivent Financial abstains. When voting on matters with apparent economic or operational impacts on the company, Thrivent Financial realizes that the precise economic effect of such proposals is often unclear. Where this is the case, Thrivent Financial relies on management’s assessment, and generally votes with company management.
3
Table of Contents
Shareblocking - Shareblocking is the practice in certain foreign countries of “freezing” shares for trading purposes in order to vote proxies relating to those shares. In markets where shareblocking applies, the custodian or sub-custodian automatically freezes shares prior to a shareholder meeting once a proxy has been voted. Shareblocking typically takes place between one and fifteen (15) days before the shareholder meeting, depending on the market. In markets where shareblocking applies, there is a potential for a pending trade to fail if trade settlement takes place during the blocking period. Thrivent Financial generally abstains from voting shares in shareblocking countries unless the matter has compelling economic consequences that outweigh the loss of liquidity in the blocked shares.
Applying Proxy Voting Policies Foreign Companies – Thrivent Financial applies a two-tier approach to determining and applying global proxy voting policies. The first tier establishes baseline policy guidelines for the most fundamental issues, which apply without regard to a company’s domicile. The second tier takes into account various idiosyncrasies of different countries, making allowances for standard market practices, as long as they do not violate the fundamental goals of good corporate governance. The goal is to enhance shareholder value through effective use of the shareholder franchise, recognizing that applying policies developed for U.S. corporate governance is not appropriate for all markets.
Meeting Notification
Thrivent Financial utilizes ISS’ voting agent services to notify us of upcoming shareholder meetings for portfolio companies held in client accounts and to transmit votes on behalf of our clients. ISS tracks and reconciles Thrivent Financial holdings against incoming proxy ballots. If ballots do not arrive on time, ISS procures them from the appropriate custodian or proxy distribution agent. Meeting and record date information is updated daily in ProxyExchange, ISS’ web-based application. ISS is also responsible for maintaining copies of all proxy statements received by issuers and to promptly provide such materials to Thrivent Financial upon request.
Vote Determination
ISS provides comprehensive summaries of proxy proposals, publications discussing key proxy voting issues, and specific vote recommendations regarding portfolio company proxies to assist in the proxy research process. Upon request, portfolio managers may receive any or all of the above-mentioned research materials to assist in the vote determination process. The final authority and responsibility for proxy voting decisions remains with Thrivent Financial. Decisions with respect to proxy matters are made primarily in light of the anticipated impact of the issue on the desirability of investing in the company from the viewpoint of our clients.
Portfolio managers, executive officers, and directors (or persons holding equivalent positions) of Thrivent Financial and its affiliates may on any particular proxy vote request to diverge from Policies and Procedures. In such cases, the person requesting to diverge from the Policies and Procedures is required to document in writing the rationale for their vote and submit all written documentation to the Committee for review and approval. In determining whether to approve any particular request, the Committee will determine that the request is not influenced by any conflict of interest and is in the best interests of its clients.
Monitoring | and Resolving Conflicts of Interest |
The Committee is responsible for monitoring and resolving possible material conflicts between the interests of Thrivent Financial and those of its clients with respect to proxy voting.
Application of the Thrivent Financial guidelines to vote client proxies should in most instances adequately address any possible conflicts of interest since the voting guidelines are pre-determined by the Committee using recommendations from ISS.
However, for proxy votes inconsistent with Thrivent Financial guidelines, Investment Operations gathers the documentation with respect to the portfolio manager’s voting rationale and brings it to the Committee for review for possible conflicts of interest. The Committee assesses whether any business or other relationships between Thrivent Financial and a portfolio company could have influenced an inconsistent vote on that company’s proxy.
4
Table of Contents
Securities Lending
Thrivent Financial will generally not vote nor seek to recall in order to vote shares on loan, unless it determines that a vote would have a material effect on an investment in such loaned security. Seeking to recall securities in order to vote them even in these limited circumstances may nevertheless not result in Thrivent Financial voting the shares because the securities are unable to be recalled in time from the party with custody of the securities, or for other reasons beyond Thrivent Financial’s control.
Ø |
Proxy statements and solicitation materials received from issuers (other than those which are available on the SEC’s EDGAR database) are kept by ISS in its capacity as voting agent and are available upon request. Thrivent Financial retains documentation on shares voted differently than the Thrivent Financial voting guidelines, and any document which is material to a proxy voting decision such as the Thrivent Financial voting guidelines and the Committee meeting materials. In addition, all SEC filings with regard to proxy voting, such as Form N-PX, will be kept. All proxy voting materials and supporting documentation are retained for five years
ISS provides Vote Summary Reports for each Thrivent Fund. The report specifies the company, ticker, cusip, meeting dates, proxy proposals, and votes which have been cast for the Thrivent Fund during the period, the position taken with respect to each issue and whether the fund voted with or against company management. Information on how each Thrivent Fund voted proxies during the most recent 12-month period ending June 30 is available at the Thrivent Financial web site or the SEC web site.
5
Table of Contents
THRIVENT FINANCIAL FOR LUTHERANS and THRIVENT ASSET MANAGEMENT, LLC PROXY VOTING POLICIES
|
1. BOARD STRUCTURE AND COMPOSITION ISSUES
Although a company’s board of directors normally delegates responsibility for the management of the business to the senior executives they select and oversee, directors bear ultimate responsibility for the conduct of the corporation’s business. The role of directors in publicly held corporations has undergone considerable scrutiny and been the subject of legislative and regulatory reform in recent years. Once derided as rubber stamps for management, directors are today expected to serve as guardians of shareholders’ interests.
Boards are expected to have a majority of directors independent of management. The independent directors are expected to organize much of the board’s work, even if the chief executive officer also serves as chairman of the board. Key committees (audit, compensation, and nominating/corporate governance) of the board are expected to be entirely independent of management. It is expected that boards will engage in critical self-evaluation of themselves and of individual members. Individual directors, in turn, are expected to devote significant amounts of time to their duties, to limit the number of directorships they accept, and to own a meaningful amount of stock in companies on whose boards they serve. Directors are ultimately responsible to the corporation’s shareholders. The most direct expression of this responsibility is the requirement that directors be elected to their positions by the shareholders. Shareholders are also asked to vote on a number of other matters regarding the role, structure and composition of the board.
Thrivent Financial for Lutherans and Thrivent Asset Management, LLC (“TFL”) classifies directors as either inside directors, affiliated outside directors, or independent outside directors. The following chart outlines the requirements for the various classifications:
DIRECTOR CATEGORIZATION CHART
| ||||
Inside Director: | ☐ | employee of the company or one of its affiliates | ||
☐ | director named in the Summary Compensation Table (excluding former interim officer) | |||
☐ | beneficial ownership of more than 50% of the company’s voting power (this may be aggregated if voting power is distributed among more than one member of a defined group; e.g. members of a family beneficially own less than 50% individually, but combined own more than 50%) | |||
Affiliated Outside Director: | ☐ | board attestation that an outside director is not independent | ||
☐ | former employee of company or its affiliates | |||
☐ | relative of current or former employee of company or its affiliates | |||
☐ | provided professional services to company or its affiliates or to its officers either currently or within the past year* | |||
☐ | has any material transactional relationship with company or its affiliates excluding investments in the company through a private placement* | |||
☐ | interlocking relationships as defined by the SEC involving members of the board of directors of its Compensation Committee | |||
☐ | founder of a company but not currently an employee | |||
☐ | employed by a significant customer or supplier* | |||
☐ | employed by a charitable or non-profit organization that received grants or endowments from the company or its affiliates* | |||
☐ | any material relationship with the company | |||
Independent Outside Director: | ☐ | no connection to company other than board seat | ||
☐ | even if a director has served on the board for over ten years, he/she is still considered to be independent; however, the analysis will make note of independent and affiliated directors who have served on the board for over ten years. |
* if significant enough to be disclosed in the proxy circular
6
Table of Contents
1a. Uncontested Election of Directors
TFL will withhold support from individual nominees or entire slates if we believe that such action is in the best interests of shareholders. In addition to independence, we monitor attendance, stock ownership, conflicts of interest, and the number of boards on which a director serves.
· | Votes on individual director nominees are made on a case-by-case basis. |
· | Votes should be withheld from directors who: |
· | attend less than 75 percent of the board and committee meetings without a valid excuse for the absences |
· | implement or renew a dead-hand or modified dead-hand poison pill |
· | ignore a shareholder proposal that is approved by a majority of the votes outstanding |
· | ignore a shareholder proposal that is approved by a majority of the votes cast for two consecutive years |
· | adopt or amend the company’s bylaws or charter in a manner that materially diminishes shareholders’ rights or that could adversely impact shareholders |
· | have failed to act on takeover offers where the majority of the shareholders have tendered their shares |
· | are inside directors and sit on the audit, compensation, or nominating committees |
· | are inside directors and the full board serves as the audit, compensation, or nominating committee or the company does not have one of these committees |
· |
· | are governance committee members and the company’s charter imposes undue restrictions on the shareholders’ ability to amend the bylaws |
· | for newly public companies, if prior to or in connection with the company’s public offering, the company or its board adopted bylaw or charter provisions materially adverse to shareholder rights, or implemented a multi-class capital structure in which the classes have unequal voting rights |
· | are inside directors or affiliated outside directors and the full board is less than majority independent |
· | sit on more than five public company boards |
· | are CEOs and sit on more than two public company boards besides their own |
Vote CASE-BY-CASE on Compensation Committee members (or, in exceptional cases, the full board) and the Management Say-on-Pay proposal if the company’s previous say-on-pay proposal received the support of less than 70 percent of votes cast, taking into account:
· | The company’s response, including disclosure of engagement efforts with major institutional investors regarding the issues that contributed to the low level of support, specific actions taken to address the issues that contributed to the low level of support, other recent compensation actions taken by the company; |
· | Whether the issues raised are recurring or isolated; |
· | The company’s ownership structure; and |
· | Whether the support level was less than 50 percent, which would warrant the highest degree of responsiveness. |
1b. Contested Election of Directors
Contested elections of directors frequently occur when a board candidate or slate runs for the purpose of seeking a significant change in corporate policy or control. Competing slates will be evaluated based upon the personal qualifications of the candidates, the economic impact of the policies that they advance, and their expressed and demonstrated commitment to the interests of all shareholders.
· | Votes in a contested election of directors are evaluated on a case-by-case basis, considering the following factors: |
· | long-term financial performance of the target company relative to its industry; |
· | management’s track record; |
· | background to the contested election; |
· | nominee qualifications and any compensatory arrangements; |
· | strategic plan of dissident slate and quality of the critique against management; |
7
Table of Contents
· | likelihood that the proposed goals and objectives can be achieved (both slates); and |
· | stock ownership positions |
1c. Classified Board
Under a classified board structure only one class of directors would stand for election each year, and the directors in each class would generally serve three-year terms.
· | Vote against proposals to classify the board. |
· | Vote for proposals to declassify the board. |
1d. Shareholder Ability to Remove Directors
Shareholder ability to remove directors, with or without cause, is either prescribed by a state’s business corporation law, an individual company’s articles of incorporation, or its bylaws. Many companies have sought shareholder approval for charter or bylaw amendments that would prohibit the removal of directors except for cause, thus ensuring that directors would retain their directorship for their full-term unless found guilty of self-dealing. By requiring cause to be demonstrated through due process, management insulates the directors from removal even if a director has been performing poorly, not attending meetings, or not acting in the best interests of shareholders.
· | Vote against proposals that provide that directors may be removed only for cause. |
· | Vote for proposals to restore shareholder ability to remove directors with or without cause. |
· | Vote against proposals that provide that only continuing directors may elect replacements to fill board vacancies. |
· | Vote for proposals that permit shareholders to elect directors to fill board vacancies. |
1e. Cumulative Voting
Most corporations provide that shareholders are entitled to cast one vote for each share owned. Under a cumulative voting scheme the shareholder is permitted to have one vote per share for each director to be elected. Shareholders are permitted to apportion those votes in any manner they wish among the director candidates.
· | Vote against proposals to eliminate cumulative voting. |
· | Vote for proposals to restore or provide for cumulative voting. |
1f. Alter Size of the Board
Proposals which would allow management to increase or decrease the size of the board at its own discretion are often used by companies as a takeover defense. TFL supports management proposals to fix the size of the board at a specific number. This prevents management, when facing a proxy context, from increasing the board size without shareholder approval. By increasing the size of the board, management can make it more difficult for dissidents to gain control of the board. Fixing the size of the board also prevents a reduction in the size of the board as a strategy to oust independent directors. Fixing board size also prevents management from increasing the number of directors in order to dilute the effects of cumulative voting.
· | Vote for proposals that seek to fix the size of the board. |
· | Vote on a case-by-case basis on proposals that seek to change the size or range of the board. |
· | Vote against proposals that give management the ability to alter the size of the board without shareholder approval. |
8
Table of Contents
1g. Adopt Director Term Limits
Those who support term limits argue that this requirement would bring new ideas and approaches to a board. However, we prefer to look at directors and their contributions to the board individually rather than impose a strict rule.
· | Vote with the board on proposals to limit the tenure of outside directors. |
9
Table of Contents
2. EXECUTIVE AND DIRECTOR COMPENSATION
Non-salary compensation remains one of the most sensitive and visible corporate governance issues. Although shareholders have little say about how much the CEO is paid in salary and bonus, they do have a major voice in approving stock option and incentive plans.
Stock option plans transfer significant amounts of wealth from shareholders to employees, and in particular to executives and directors. Rightly, the cost of these plans must be in line with the anticipated benefits to shareholders. Clearly, reasonable limits must be set on dilution as well as administrative authority. In addition, shareholders must consider the necessity of the various pay programs and examine the appropriateness of award types. Consequently, the pros and cons of these proposals necessitate a case-by-case evaluation.
Factors that increase the cost (or have the potential to increase the cost) of plans to shareholders include: excessive dilution; options awarded at below-market discounts; restricted stock giveaways that reward tenure rather than results; sales of shares on concessionary terms; blank-check authority for administering committees; option repricing or option replacements; accelerated vesting of awards in the event of defined changes in corporate control; stand-alone stock appreciation rights; loans or other forms of assistance; or evidence of improvident award policies.
Positive plan features that can offset costly features include: plans with modest dilution potential (i.e. appreciably below double-digit levels), bars to repricing, and related safeguards for investor interests. Also favorable are performance programs of two or more year duration; bonus schemes that pay off in non-dilutive, fully deductible cash; 401K and other thrift or profit sharing plans; and tax-favored employee stock purchase plans. In general, we believe that stock plans should afford incentives, not sure-fire, risk-free rewards.
2a. Stock-Based Incentive Plans
· | Vote case-by-case on certain equity-based compensation plans depending on a combination of certain plan features and equity grant practices, where positive factors may counterbalance negative factors, and vice versa, as evaluated using an “equity plan scorecard” (EPSC) approach with three pillars: |
Plan Cost:
· | The total estimated cost of the company’s equity plans relative to industry/market cap peers, measured by the company’s estimated Shareholder Value Transfer (SVT) in relation to peers and considering both: |
· | SVT based on new shares requested plus shares remaining for future grants, plus outstanding unvested/unexercised grants; and |
· | SVT based only on new shares requested plus shares remaining for future grants. |
Plan Features:
· | Automatic single-triggered award vesting upon a change in control (CIC); |
· | Discretionary vesting authority; |
· | Liberal share recycling on various award types; |
· | Lack of minimum vesting period for grants made under the plan; |
· | Dividends payable prior to award vesting. |
Grant Practices:
· | The company’s three-year burn rate relative to its industry/market cap peers; |
· | Vesting requirements in most recent CEO equity grants (3-year look-back); |
· | The estimated duration of the plan (based on the sum of shares remaining available and the new shares requested, divided by the average annual shares granted in the prior three years); |
· | The proportion of the CEO’s most recent equity grants/awards subject to performance conditions; |
· | Whether the company maintains a claw-back policy; |
· | Whether the company has established post-exercise/vesting share-holding requirements. |
10
Table of Contents
· | Generally vote against the plan proposal if the combination of above factors indicates that the plan is not, overall, in shareholders’ interests, or if any of the following egregious factors apply: |
· | Awards may vest in connection with a liberal change-of-control definition; |
· | The plan would permit repricing or cash buyout of underwater options without shareholder approval (either by expressly permitting it – for NYSE and Nasdaq listed companies -- or by not prohibiting it when the company has a history of repricing – for non-listed companies); |
· | The plan is a vehicle for problematic pay practices or a significant pay-for-performance disconnect under certain circumstances; or |
· | Any other plan features are determined to have a significant negative impact on shareholder interests. |
2b. Approval of Cash or Cash-and-Stock Bonus Plans
Cash bonus plans can be an important part of an executive’s overall pay package, along with stock-based plans tied to long-term total shareholder returns. Over the long term, stock prices are an excellent indicator of management performance. However, other factors, such as economic conditions and investor reaction to the stock market in general and certain industries in particular, can greatly impact the company’s stock price. As a result, a cash bonus plan can effectively reward individual performance and the achievement of business unit objectives that are independent of short-term market share price fluctuations.
· | Vote for plans where the performance measures included under the plan are appropriate, the plan is administered by a committee of independent outsiders, and the preservation of the full deductibility of all compensation paid reduces the company’s corporate tax obligation. |
2c. Say on Pay
Non-binding advisory votes on executive compensation (Say on Pay votes) are required by the SEC every one, two, or three years. In addition, a vote to determine the frequency of these votes is required every six years.
· | Vote case-by-case on advisory votes on executive compensation. With respect to companies in the Russell 3000 index, this analysis considers the following: |
1. | Peer Group Alignment: |
· | The degree of alignment between the company’s TSR rank and the CEO’s total pay rank within a peer group, as measured over a three-year period; |
· | The multiple of the CEO’s total pay relative to the peer group median. |
2. | Absolute Alignment: The absolute alignment between the trend in CEO pay and company TSR over the prior five fiscal years – i.e., the difference between the trend in annual pay changes and the trend in annualized TSR during the period. |
If the above analysis demonstrates significant unsatisfactory long-term pay-for-performance alignment or, in the case of companies outside the Russell indices, misaligned pay and performance are otherwise suggested, analyze the following qualitative factors to determine how various pay elements may work to encourage or to undermine long-term value creation and alignment with shareholder interests:
· | The ratio of performance- to time-based equity awards; |
· | The ratio of performance-based compensation to overall compensation; |
· | The completeness of disclosure and rigor of performance goals; |
· | The company’s peer group benchmarking practices; |
· | Actual results of financial/operational metrics, such as growth in revenue, profit, cash flow, etc., both absolute and relative to peers; |
· | Special circumstances related to, for example, a new CEO in the prior fiscal year or anomalous equity grant practices (e.g., biennial awards); |
· | Realizable pay compared to grant pay; and |
· | Any other factors deemed relevant. |
11
Table of Contents
· | Regarding votes to determine the frequency of executive compensation proposals, vote for annual advisory votes. |
· | For externally-managed issuers (EMIs), generally vote against the say on pay proposal when insufficient compensation disclosure precludes a reasonable assessment of pay programs and practices applicable to the EMI’s executives. |
2d. Severance Agreements/ Golden Parachutes
Golden and tin parachutes are designed to protect the employees of a corporation in the event of a change in control. With golden parachutes senior level management employees receive a pay out during a change in control at usually two to three times base salary. Increasingly companies that have golden parachute agreements for executives are extending coverage for all their employees via tin parachutes. The SEC requires disclosure of all golden parachutes arrangements in the proxy; such disclosure is not required of tin parachutes.
· | Vote case-by-case on Golden Parachute proposals, including consideration of existing change-in-control arrangements maintained with named executive officers rather than focusing primarily on new or extended arrangements. |
Features that may result in an against recommendation include one or more of the following, depending on the number, magnitude, and/or timing of issue(s):
· | Single- or modified-single-trigger cash severance; |
· | Single-trigger acceleration of unvested equity awards; |
· | Excessive cash severance (>3x base salary and bonus); |
· | Excise tax gross-ups triggered and payable (as opposed to a provision to provide excise tax gross-ups); |
· | Excessive golden parachute payments (on an absolute basis or as a percentage of transaction equity value); or |
· | Recent amendments that incorporate any problematic features (such as those above) or recent actions (such as extraordinary equity grants) that may make packages so attractive as to influence merger agreements that may not be in the best interests of shareholders; or |
· | The company’s assertion that a proposed transaction is conditioned on shareholder approval of the golden parachute advisory vote. |
Recent amendment(s) that incorporate problematic features will tend to carry more weight on the overall analysis. However, the presence of multiple legacy problematic features will also be closely scrutinized.
In cases where the golden parachute vote is incorporated into a company’s advisory vote on compensation (management say-on-pay), ISS will evaluate the say-on-pay proposal in accordance with these guidelines, which may give higher weight to that component of the overall evaluation.
2e. Employee Stock Purchase Plans
Employee stock purchase plans enable employees to become shareholders, which gives them a stake in the company’s growth. However, purchase plans are beneficial only when they are well balanced and in the best interests of all shareholders. From a shareholder’s perspective, plans with offering periods of 27 months or less are preferable. Plans with longer offering periods remove too much of the market risk and could give participants excessive discounts on their stock purchases that are not offered to other shareholders.
· | Vote for employee stock purchase plans with at least 85 percent of fair market value, an offering period of 27 months or less, and when voting power dilution is ten percent or less. |
· | Vote against employee stock purchase plans with a fair market value below 85 percent, or with an offering period of greater than 27 months, or voting power dilution of greater than ten percent. |
12
Table of Contents
2f. Employee Stock Ownership Plans (ESOPs)
· | Vote for proposals to implement an ESOP or increase authorized shares for existing ESOPs, unless the number of shares allocated to the ESOP is more than five percent of outstanding shares. |
2g. 401(k) Employee Benefit Plans
· | Vote for proposals to implement a 401(k) savings plan for employees. |
2h. Outside Director Stock Awards / Options in Lieu of Cash
These proposals seek to pay outside directors a portion of their compensation in stock rather than cash. By doing this, a director’s interest may be more closely aligned with those of shareholders.
· | Vote for proposals that seek to pay outside directors a portion of their compensation in stock. |
2i. Retirement Bonus for Non-Employee Director
· | Vote against proposals that seek to pay outside directors a retirement bonus. (Consistent with Policy 10d-10) |
2j. Incentive Bonus Plans and Tax Deductibility Proposals (OBRA-Related Compensation)
· | Vote case-by-case on amendments to cash and equity incentive plans. |
Addresses administrative features only; or Seeks approval for Section 162(m) purposes only, and the plan administering committee consists entirely of independent outsiders, per ISS’ Categorization of Directors.
Note that if the company is presenting the plan to shareholders for the first time after the company’s initial public offering (IPO), or if the proposal is bundled with other material plan amendments, then the recommendation will be case-by-case (see below).
· | Vote against proposals to amend executive cash, stock, or cash and stock incentive plans if the proposal |
Seeks approval for Section 162(m) purposes only, and the plan administering committee does not consist entirely of independent outsiders, per ISS’ Categorization of Directors.
Vote case-by-case on all other proposals to amend cash incentive plans. This includes plans presented to shareholders for the first time after the company’s IPO and/or proposals that bundle material amendment(s) other than those for Section 162(m) purposes.
· | Vote case-by-case on all other proposals to amend equity incentive plans, considering the following: |
If the proposal requests additional shares and/or the amendments may potentially increase the transfer of shareholder value to employees, the recommendation will be based on the Equity Plan Scorecard evaluation as well as an analysis of the overall impact of the amendments.
If the plan is being presented to shareholders for the first time after the company’s IPO, whether or not additional shares are being requested, the recommendation will be based on the Equity Plan Scorecard evaluation as well as an analysis of the overall impact of any amendments.
If there is no request for additional shares and the amendments are not deemed to potentially increase the transfer of shareholder value to employees, then the recommendation will be based entirely on an analysis of the overall impact of the amendments, and the EPSC evaluation will be shown for informational purposes.
13
Table of Contents
· | Vote case-by-case to amend existing plans to increase shares reserved and to qualify for favorable tax treatment under the provisions of Section 162(m). |
2k. Director and Officer Liability Protection
Management proposals typically seek shareholder approval to adopt an amendment to the company’s charter to eliminate or limit the personal liability of directors to the company and its shareholders for monetary damages for any breach of fiduciary duty to the fullest extent permitted by state law. While TFL recognizes that a company may have a more difficult time attracting and retaining directors if they are subject to personal monetary liability, TFL believes the great responsibility and authority of directors justifies holding them accountable for their actions. Each proposal addressing director liability will be evaluated consistent with this philosophy. TFL may support these proposals when the company persuasively argues that such action is necessary to attract and retain directors, but TFL may often oppose management proposals and support shareholder proposals in light of our philosophy of promoting director accountability.
· | Vote against proposals to limit or eliminate entirely directors’ and officers’ liability for monetary damages for violating the duty of care. |
2l. Director and Officer Indemnification
Indemnification is the payment by a company of the expenses of directors who become involved in litigation as a result of their service to a company. Proposals to indemnify a company’s directors differ from those to eliminate or reduce their liability because with indemnification directors may still be liable for an act or omission, but the company will bear the expense. TFL may support these proposals when the company persuasively argues that such action is necessary to attract and retain directors, but will generally oppose indemnification when it is being proposed to insulate directors from actions they have already taken.
· | Vote against indemnification proposals that would expand coverage beyond just legal expenses to acts, such as negligence, that are more serious violations of fiduciary obligations than mere carelessness. |
· | Vote for only those proposals that provide such expanded coverage in cases when a director’s or officer’s 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 director’s legal expenses would be covered. |
2m. Shareholder Ratification of Director Pay Programs
· | Vote case-by-case on management proposals seeking ratification of non-employee director compensation, based on the following factors: |
· | If the equity plan under which non-employee director grants are made is on the ballot, whether or not it warrants support; and |
· | An assessment of the following qualitative factors: |
· | The relative magnitude of director compensation as compared to companies of a similar profile; |
· | The presence of problematic pay practices relating to director compensation; |
· | Director stock ownership guidelines and holding requirements; |
· | Equity award vesting schedules; |
· | The mix of cash and equity-based compensation; |
· | Meaningful limits on director compensation; |
· | The availability of retirement benefits or perquisites; and |
· | The quality of disclosure surrounding director compensation. |
14
Table of Contents
2n. Equity Plans for Non-Employee Directors
· | Vote case-by-case on compensation plans for non-employee directors, based on: |
· | The total estimated cost of the company’s equity plans relative to industry/market cap peers, measured by the company’s estimated Shareholder Value Transfer (SVT) based on new shares requested plus shares remaining for future grants, plus outstanding unvested/unexercised grants; |
· | The company’s three-year burn rate relative to its industry/market cap peers; and |
· | The presence of any egregious plan features (such as an option repricing provision or liberal CIC vesting risk). |
On occasion, director stock plans will exceed the plan cost or burn rate benchmarks when combined with employee or executive stock plans. In such cases, vote case-by-case on the plan taking into consideration the following qualitative factors:
· | The relative magnitude of director compensation as compared to companies of a similar profile; |
· | The presence of problematic pay practices relating to director compensation; |
· | Director stock ownership guidelines and holding requirements; |
· | Equity award vesting schedules; |
· | The mix of cash and equity-based compensation; |
· | Meaningful limits on director compensation; |
· | The availability of retirement benefits or perquisites; and |
· | The quality of disclosure surrounding director compensation. |
15
Table of Contents
Annual election of the outside accountants is standard practice. While it is recognized that the company is in the best position to evaluate the competence of the outside accountants, we believe that outside accountants must ultimately be accountable to shareholders. Furthermore, audit committees have been the subject of a report released by the Blue Ribbon Commission on Improving the Effectiveness of Corporate Audit Committees in conjunction with the NYSE and the National Association of Securities Dealers. The Blue Ribbon Commission concluded that audit committees must improve their current level of oversight of independent accountants. Given the rash of accounting irregularities that were not detected by audit panels or auditors, shareholder ratification is an essential step in restoring investor confidence.
· | Vote for proposals to ratify auditors, unless an auditor has a financial interest in or association with the company, and is therefore not independent; fees for non-audit services are not more than 50 percent of the total fees paid; or there is reason to believe that the independent auditor has rendered an opinion that is neither accurate nor indicative of the company’s financial position. (Consistent with Policy 10c-3) |
16
Table of Contents
4. MERGERS AND CORPORATE RESTRUCTURINGS
4a. Mergers and Acquisitions
When voting on mergers and acquisitions TFL will consider the following:
• anticipated financial and operating benefits;
• offer price (cost vs. premium);
• prospects of the combined companies;
• how the deal was negotiated;
• the opinion of the financial advisor;
• potential conflicts of interest between management’s interests and shareholders’ interests;
• changes in corporate governance and their impact on shareholder rights.
· | Votes on mergers and acquisitions are considered on a case-by-case basis. |
4b. Voting on State Takeover Statutes
· | We review on a case-by-case basis proposals to opt in or out of state takeover statutes (including control share acquisition statutes, control share cash-out statutes, freezeout provisions, fair price provisions, stakeholder laws, poison pill endorsements, severance pay and labor contract provisions, antigreenmail provisions, and disgorgement provisions). |
· | We generally vote for opting into stakeholder protection statutes if they provide comprehensive protections for employees and community stakeholders. We would be less supportive of takeover statutes that only serve to protect incumbent management from accountability to shareholders and which negatively influence shareholder value. |
4c. Voting on Reincorporation Proposals
· | Proposals to change a company’s state of incorporation should be examined on a case-by-case basis. Review management’s rationale for the proposal, changes to the charter/bylaws, and differences in the state laws governing the corporations. |
4d. Corporate Restructuring
· | Votes on corporate restructuring proposals, including minority squeeze-outs, leveraged buyouts, spin-offs, liquidations, and asset sales, should be considered on a case-by-case basis. |
4e. Spin-offs
· | Votes on spin-offs should be considered on a case-by-case basis depending on the tax and regulatory advantages, planned use of sale proceeds, market focus, and managerial incentives. |
4f. Asset Purchases
· | Votes on asset purchases should be made on a case-by-case basis after considering various factors such as purchase price, fairness opinion, financial and strategic benefits, how the deal was negotiated, conflicts of interest, other alternatives for the business, and noncompletion risk. |
17
Table of Contents
4g. Asset Sales
· | Votes on asset sales should be made on a case-by-case basis after considering the impact on the balance sheet/working capital, potential elimination of diseconomies, anticipated financial and operating benefits, anticipated use of funds, value received for the asset, fairness opinion, how the deal was negotiated, and conflicts of interest. |
4h. Liquidations
· | Votes on liquidations should be made on a case-by-case basis after reviewing management’s efforts to pursue other alternatives, appraisal value of assets, and the compensation plan for executives managing the liquidation. |
4i. Appraisal Rights
Rights of appraisal provide shareholders who do not approve of the terms of certain corporate transactions the right to demand a judicial review in order to determine the fair value for their shares. The right of appraisal generally applies to mergers, sales of essentially all assets of the corporation, and charter amendments that may have a materially adverse effect on the rights of dissenting shareholders.
· | Vote for proposals to restore, or provide shareholders with, rights of appraisal. |
18
Table of Contents
5. PROXY CONTEST DEFENSES / TENDER OFFER DEFENSES
Corporate takeover attempts come in various guises. Usually, a would-be acquirer makes a direct offer to the board of directors of a targeted corporation. The bidder may offer to purchase the company for cash and/or securities. If the board approves the offer, a friendly transaction is completed and presented to shareholders for approval. If, however, the board of directors rejects the bid, the acquirer can make a tender offer for the shares directly to the targeted corporation’s shareholders. Such offers are referred to as hostile tender bids. Prior to 1968, tender offers were not federally regulated. In 1968, Congress enacted the Williams Act as an amendment to the 1934 Securities and Exchange Act to regulate all tender offers. The Securities and Exchange Commission has adopted regulations pursuant to the Williams Act that are intended to promote fairness and prevent fraudulent or manipulative practices. At the same time, many states have enacted statutes that are aimed at protecting incorporated or domiciled corporations from hostile takeovers. Many of these state statutes have been challenged as being unconstitutional on grounds that they violate the Williams Act and the commerce and supremacy clauses of the U.S. Constitution. Most statutes, however, have been upheld. The result is a complex set of federal and state regulation, with federal regulation designed to facilitate transactions and state laws intended to impede them.
Not wishing to wait until they are subjects of hostile takeover attempts, many corporations have adopted anti-takeover measures designed to deter unfriendly bids or buy time. The most common defenses are the shareholders rights protection plan, also known as the poison pill, and charter amendments that create barriers to acceptance of hostile bids. In the U.S., poison pills do not require shareholder approval. Shareholders must approve charter amendments, such as classified boards or supermajority vote requirements. In brief, the very existence of defensive measures can foreclose the possibility of tenders and hence, opportunities to premium prices for shareholders.
5a. Shareholder Ability to Call Special Meeting
Most state corporation statutes allow shareholders to call a special meeting when they want to take action on certain matters that arise between regularly scheduled annual meetings. Sometimes this right applies only if a shareholder or a group of shareholders own a specified percentage of shares, with 10 percent being the most common. Shareholders may lose the ability to remove directors, initiate a shareholder resolution, or respond to a beneficial offer without having to wait for the next scheduled meeting if they are unable to act at a special meeting of their own calling.
· | Vote for proposals that remove restrictions on the right of shareholders to act independently of management. |
· | Vote against proposals to restrict or prohibit shareholder ability to call special meetings. |
5b. Shareholder Ability to Act by Written Consent
Consent solicitations allow shareholders to vote on and respond to shareholder and management proposals by mail without having to act at a physical meeting. A consent card is sent by mail for shareholder approval and only requires a signature for action. Some corporate bylaws require supermajority votes for consents while at others standard annual meeting rules apply. Shareholders may lose the ability to remove directors, initiate a shareholder resolution, or respond to a beneficial offer without having to wait for the next scheduled meeting if they are unable to act at a special meeting of their own calling.
· | Vote for proposals to allow or facilitate shareholder action by written consent. |
· | Vote against proposals to restrict or prohibit shareholder ability to take action by written consent. |
5c. Poison Pills
Poison pills are corporate-sponsored financial devices that, when triggered by potential acquirers, do one or more of the following: 1) dilute the acquirer’s equity holdings in the target company; 2) dilute the acquirer’s voting interests in the target company; or 3) dilute the acquirer’s equity holdings in the post-merger company. Poison pills generally allow shareholders to purchase shares from, or sell shares back to, the target company (flip-in pill) and/or the potential acquirer (flip-out pill) at a price far out of line with fair market value. Depending on the type of pill, the triggering
19
Table of Contents
event can either transfer wealth from the target company or dilute the equity holdings of current shareholders. Poison pills insulate management from the threat of a change in control and provide the target board with veto power over takeover bids. Because poison pills greatly alter the balance of power between shareholders and management, shareholders should be allowed to make their own evaluation of such plans. (Consistent with Policy 10c-2)
· | Review on a case-by-case basis management proposals to ratify a poison pill. Look for shareholder friendly features including a two to three year sunset provision, a permitted bid provision, a 20 percent or higher flip-in provision, shareholder redemption feature, and the absence of dead hand features. |
5d. Fair Price Provisions
Fair price provisions were originally designed to specifically defend against the most coercive of takeover devises, the two-tiered, front-end loaded tender offer. In such a hostile takeover, the bidder offers cash for enough shares to gain control of the target. At the same time the acquirer states that once control has been obtained, the target’s remaining shares will be purchased with cash, cash and securities or only securities. Since the payment offered for the remaining stock is, by design less valuable than the original offer for the controlling shares, shareholders are forced to sell out early to maximize their value. Standard fair price provisions require that, absent board or shareholder approval of the acquisition, the bidder must pay the remaining shareholders the same price for their shares that brought control.
�� | Vote for fair price proposals, as long as the shareholder vote requirement embedded in the provision is no more than a majority of disinterested shares. |
5e. Greenmail
Greenmail payments are targeted share repurchases by management of company stock from individuals or groups seeking control of the company. Since only the hostile party receives payment, usually at a substantial premium over the market value of shares, the practice discriminates against most shareholders. This transferred cash, absent the greenmail payment, could be put to much better use for reinvestment in the company, payment of dividends, or to fund a public share repurchase program.
· | Vote for proposals to adopt antigreenmail charter or bylaw amendments or otherwise restrict a company’s ability to make greenmail payments. |
· | Review on a case-by-case basis antigreenmail proposals when they are bundled with other charter or bylaw amendments. |
5f. Unequal Voting Rights
Incumbent managers use unequal voting rights with the voting rights of their common shares superior to other shareholders in order to concentrate their power and insulate themselves from the wishes of the majority of shareholders. Dual class exchange offers involve a transfer of voting rights from one group of shareholders to another group of shareholders typically through the payment of a preferential dividend. A dual class recapitalization also establishes two classes of common stock with unequal voting rights, but initially involves an equal distribution of preferential and inferior voting shares to current shareholders.
· | Vote against proposals to create a new class of common stock with superior voting rights. |
· | Vote against proposals at companies with dual class capital structures to increase the number of authorized shares of the class of stock that has superior voting rights. |
· | Vote for proposals to create a new class of nonvoting or subvoting common stock if it is intended for financing purposes with minimal or no dilution to current shareholders and not designed to preserve the voting power of an insider or significant shareholder. |
20
Table of Contents
5g. Supermajority Shareholder Vote Requirement to Amend Charter or Bylaws
Supermajority provisions violate the principle that a simple majority of voting shares should be all that is necessary to effect change regarding a company.
· | Vote for proposals to lower supermajority shareholder vote requirements for charter and bylaw amendments. |
· | Vote against proposals to require a supermajority shareholder vote to approve charter and bylaw amendments. |
5h. Supermajority Shareholder Vote Requirement to Approve Mergers
Supermajority provisions violate the principle that a simple majority of voting shares should be all that is necessary to effect change regarding a company.
· | Vote for proposals to lower supermajority shareholder vote requirements for mergers and other significant business combinations. |
· | Vote against proposals to require a supermajority shareholder vote to approve mergers and other significant business combinations. |
21
Table of Contents
The equity in a corporate enterprise (that is, the residual value of the company’s assets after the payment of all debts) belongs to the shareholders. Equity securities may be employed, or manipulated, in a manner that will ultimately enhance or detract from shareholder value. As such, certain actions undertaken by management in relation to a company’s capital structure can be of considerable significance to shareholders. Changes in capitalization usually require shareholder approval or ratification.
6a. Common Stock Authorization
State statutes and stock exchanges require shareholder approval for increases in the number of common shares. Corporations increase their supply of common stock for a variety of ordinary business purposes: raising new capital, funding stock compensation programs, business acquisitions, and implementation of stock splits or payment of stock dividends.
Proposals to increase authorized common stock are evaluated on a case-by-case basis, taking into account the size of the increase, the company’s need for additional shares, and the company’s performance as compared with their industry peers. A company’s need for additional shares is gauged by measuring shares outstanding and reserved as a percentage of the total number of shares currently authorized for issuance. For industry peer comparisons, TFL relies on data compiled by ISS on common stock authorization proposals for companies comprising 98 percent of the investable U.S. equity market. Companies are classified into one of 11 peer groups and each company’s performance is measured on the basis of three-year total shareholder returns.
TFL evaluates on a case-by-case basis on proposals when the company intends to use the additional stock to implement a poison pill or other takeover defense.
· | Review on a case-by-case basis proposals to increase the number of shares of common stock authorized for issue. |
· | Vote against proposals that increase authorized common stock for the explicit purpose of implementing a shareholder rights plan (poison pill). |
· | Vote for proposals to approve increases beyond the allowable increase when a company’s shares are in danger of being delisted or if a company’s ability to continue to operate as a going concern is uncertain. |
6b. Stock Distributions: Splits and Dividends
Generally vote for management proposals to increase common share authorization for stock split or stock dividend, provided that the effective increase in authorized shares is equal to or is less than the allowable increase calculated in with Common Stock Authorization policy.
6c. Reverse Stock Splits
Reverse splits exchange multiple shares for a lesser amount to increase share price. Increasing share price is sometimes necessary to restore a company’s share price to a level that will allow it to be traded on the national stock exchanges. In addition, some brokerage houses have a policy of not monitoring or investing in very low priced shares. Reverse stock splits help maintain stock liquidity.
· | Vote case-by-case on proposals to implement a reverse stock split that do not proportionately reduce the number of shares authorized for issue. |
· | Vote for proposals to implement a reverse stock split when the number of shares will be proportionately reduced. |
· | Vote for proposals to implement a reverse stock split to avoid delisting. |
22
Table of Contents
6d. Blank Check Preferred Authorization
Preferred stock is an equity security, which has certain features similar to debt instruments, such as fixed dividend payments, seniority of claims to common stock, and in most cases no voting rights. The terms of blank check preferred stock give the board of directors the power to issue shares of preferred stock at their discretion - with voting rights, conversion, distribution and other rights to be determined by the board at time of issue. Blank check preferred stock can be used for sound corporate purposes, but could be used as a devise to thwart hostile takeovers without shareholder approval.
· | Vote for proposals to create blank check preferred stock in cases when the company expressly states that the stock will not be used as a takeover defense or carry superior voting rights. |
· | Vote against proposals authorizing the creation of new classes of preferred stock with unspecified voting, conversion, dividend distribution, and other rights. |
· | Vote against proposals to increase the number of authorized blank check preferred shares. If the company does not have any preferred shares outstanding we will vote against the requested increase. |
· | Vote case-by-case on proposals to increase the number of blank check preferred shares after analyzing the number of preferred shares available for issue given a company’s industry and performance in terms of shareholder returns. |
· | Vote for requests to require shareholder approval for blank check authorizations. |
6e. Adjustments to Par Value of Common Stock
Stock that has a fixed per share value that is on its certificate is called par value stock. The purpose of par value stock is to establish the maximum responsibility of a stockholder in the event that a corporation becomes insolvent. Proposals to reduce par value come from certain state level requirements for regulatory industries such as banks, and other legal requirements relating to the payment of dividends.
· | Vote for management proposals to reduce or eliminate the par value of common stock. |
6f. Preemptive Rights
Preemptive rights permit shareholders to share proportionately in any new issues of stock of the same class. These rights guarantee existing shareholders the first opportunity to purchase shares of new issues of stock in the same class as their own and in the same proportion. The absence of these rights could cause stockholders’ interest in a company to be reduced by the sale of additional shares without their knowledge and at prices unfavorable to them. Preemptive rights, however, can make it difficult for corporations to issue large blocks of stock for general corporate purposes. Both corporations and shareholders benefit when corporations are able to arrange issues without preemptive rights that do not result in a substantial transfer of control.
· | Review on a case-by-case basis proposals to create or abolish preemptive rights. In evaluating proposals on preemptive rights, we look at the size of a company and the characteristics of its shareholder base. |
6g. Corporate Reorganization/Debt Restructuring/Prepackaged Bankruptcy Plans/Reverse Leveraged Buyouts/Wrap Plans
· | Review on a case-by-case basis proposals to increase common and/or preferred shares and to issue shares as part of a debt restructuring plan, taking into consideration dilution to existing shareholders’ position, terms of the offer, financial issues, management’s efforts to pursue other alternatives, control issues and conflicts of interest. |
· | Vote for the debt restructuring if it is expected that the company will file for bankruptcy if the transaction is not approved. |
23
Table of Contents
6h. Share Repurchase Programs
· | Vote for management proposals to institute open-market share repurchase plans in which all shareholders may participate on equal terms. |
24
Table of Contents
7. MISCELLANEOUS GOVERNANCE PROVISIONS
7a. Confidential Voting
Confidential voting, or voting by secret ballot, is one of the key structural issues in the proxy system. It ensures that all votes are based on the merits of proposals and cast in the best interests of pension plan beneficiaries. In a confidential voting system, only vote tabulators and inspectors of election may examine individual proxies and ballots; management and shareholders are given only vote totals. In an open voting system, management can determine who has voted against its nominees or proposals and then resolicit those votes before the final vote count. As a result, shareholders can be pressured to vote with management at companies with which they maintain, or would like to establish, a business relationship. Confidential voting also protects employee shareholders from retaliation. Shares held by employee stock ownership plans, for example, are important votes that are typically voted by employees.
· | Vote for proposals to adopt confidential voting. |
7b. Bundled Proposals
· | Review on a case-by-case basis bundled or “conditioned” proxy proposals. In the case of items that are conditioned upon each other, examine the benefits and costs of the packaged items. In instances where the joint effect of the conditioned items is not in shareholders’ best interests, vote against the proposals. If the combined effect is positive, support such proposals. |
7c. Adjourn Meeting
Companies may ask shareholders to adjourn a meeting in order to solicit more votes. Generally, shareholders already have enough information to make their vote decisions. Once their votes have been cast, there is no justification for spending more money to continue pressing shareholders for more votes.
· | Vote against proposals to adjourn the meeting absent compelling reasons to support the proposal. |
· | Vote for proposals to adjourn the meeting when supporting a company merger proposal. |
7d. Changing Corporate Name
Proposals to change a company’s name are generally routine matters. Generally, the name change reflects a change in corporate direction or the result of a merger agreement.
· | Vote for changing the corporate name. |
7e. Amend Quorum Requirements
· | Vote against proposals to reduce quorum requirements for shareholder meetings below a majority of the shares outstanding unless there are compelling reasons to support the proposal. |
7f. Amend Bylaws
· | Vote against proposals giving the board exclusive authority to amend the bylaws. |
· | Vote for proposals giving the board the ability to amend the bylaws in addition to shareholders. |
· | Vote for bylaw or charter changes that are of a housekeeping nature (updates or corrections). |
25
Table of Contents
7g. Other Business
Other business proposals are routine items to allow shareholders to raise other issues and discuss them at the meeting. Only issues that may be legally discussed at meetings may be raised under this authority. However, shareholders cannot know the content of these issues so they are generally not supported.
· | Vote against other business proposals. |
26
Table of Contents
8a. Election of Trustees
Votes on trustee nominees are made on a case-by-case basis, taking the following into consideration:
1) | Board structure |
2) | Director independence and qualifications |
3) | Compensation of directors within the fund and family of funds |
4) | Attendance |
8b. Investment Advisory Agreement
An investment advisory agreement is an agreement between a mutual fund and its financial advisor under which the financial advisor provides investment advice to the fund in return for a fee based on the fund’s net asset size.
· | Votes on investment advisory agreements should be evaluated on a case-by-case basis. |
8c. Fundamental Investment
Fundamental investment restrictions are limitations within a fund’s articles of incorporation that limit the investment practices of the particular fund.
· | Votes on amendments to a fund’s fundamental investment restrictions should be evaluated on a case-by-case basis. |
8d. Distribution Agreements
Distribution agreements are agreements between a fund and its distributor which provide that the distributor is paid a fee to promote the sale of the fund’s shares.
· | Votes on distribution agreements should be evaluated on a case-by-case basis. |
8e. Convert Closed-End Fund to Open-End Fund
The benefits of open-ending include eliminating the discount to net asset value (NAV) at which closed-end equity fund shares often trade. Once this discount is eliminated the open-end fund is free to sell shares at any time, and this structure thus facilitates investment in, and growth of, the fund. The disadvantages arising from changing the fund’s structure include: (1) the possibility that many investors will sell out of the fund in order to realize the benefit of instantly eliminating the discount to NAV; and (2) the increased expense ratio that could result from a depleted asset base. Management fees for closed-end funds are generally lower than fees for open-end funds on a percentage basis, but with a decrease in assets, per share management costs arise.
· | Vote on a case-by-case basis on proposals to convert a closed-end fund to an open-end fund. |
8f. Mirror Voting
In the event of Thrivent Funds issuing proxies, Asset Allocation funds and portfolios shall vote their proxies in proportion to the voting instructions received from the remaining holders of shares of such funds.
27
Table of Contents
9. SHAREHOLDER PROPOSALS - SOCIAL & ENVIRONMENTAL
In addition to moral and ethical considerations intrinsic to many of these proposals, TFL recognizes their potential for impact on the economic performance of the company. TFL balances these considerations carefully. On proposals which are primarily social, moral or ethical, TFL believes it is impossible to vote in a manner that would accurately reflect the views of the beneficial owners of the portfolios that it manages. As such, on these items TFL abstains. When voting on matters with apparent economic or operational impacts on the company, TFL realizes that the precise economic effect of such proposals is often unclear. Where this is the case, TFL relies on management’s assessment, and generally votes with company management.
9A. DIVERSITY AND WORKPLACE ISSUES
9a-1. Add Women and Minorities to Board: Vote abstain.
9a-2. Report on Distribution of Stock Options by Gender and Race: Vote abstain.
9a-3. Prepare Report/Promote EEOC-Related Activities: Vote abstain.
9a-4. Report on Progress Toward Glass Ceiling Commission Recommendations: Vote abstain.
9a-5. Prohibit Discrimination on the Basis of Sexual Orientation: Vote abstain.
9a-6. Report on/Eliminate Use of Racial Stereotypes in Advertising: Vote abstain.
9B. CODES OF CONDUCT, LABOR STANDARDS & HUMAN RIGHTS
9b-1. Codes of Conduct and Vendor Standards
· | Vote abstain on proposals to implement human rights standards and workplace codes of conduct. |
· | Vote abstain on proposals calling for the implementation and reporting on ILO codes of conduct, SA 8000 Standards, or the Global Sullivan Principles. |
· | Vote abstain on proposals that call for the adoption of principles or codes of conduct relating to company investment in countries with patterns of human rights abuses (Northern Ireland, Burma, former Soviet Union, and China). |
· | Vote abstain on proposals which mandate outside, independent monitoring, which may entail sizable costs to the company. |
· | Vote abstain on proposals that seek publication of a “Code of Conduct” to the company’s foreign suppliers and licensees, requiring they satisfy all applicable standards and laws protecting employees’ wages, benefits, working conditions, freedom of association, and other rights. |
· | Vote abstain on proposals for reports outlining vendor standards compliance. |
· | Vote abstain on proposals to adopt labor standards for foreign and domestic suppliers to ensure that the company will not do business with foreign suppliers that manufacture products for sale in the U.S. using forced labor, child labor, or that fail to comply with applicable laws protecting employee’s wages and working conditions. |
28
Table of Contents
9b-2. Operations in High Risk Markets
· | Vote with the board on proposals seeking reports on operations in “high risk” markets, such as terrorism-sponsoring state or politically/socially unstable region. |
9b-3. Operations in Burma/Myanmar
· | Vote with the board on proposals to adopt labor standards in connection with involvement in Burma. |
· | Vote with the board on proposals seeking reports on Burmese operations and reports on costs of continued involvement in the country. |
· | Vote with the board on proposals to pull out of Burma. |
9b-4. MacBride Principles
· | Vote with the board on proposals to report on or to implement the MacBride Principles. |
9b-5. China Principles
· | Vote with the board on proposals to implement the China Principles. |
9b-6. Prepare Report on Maquiladoras
· | Vote with the board on proposals to prepare reports on a company’s Maquiladora operation. |
9b-7. Prepare Report on Company Activities Affecting Indigenous Peoples’ Rights
· | Vote with the board on proposals to prepare reports on a company’s impact on indigenous communities. |
9b-8. Product Sales to Repressive Regimes
· | Vote with the board on proposals requesting that companies cease product sales to repressive regimes that can be used to violate human rights. |
· | Vote with the board on proposals to report on company efforts to reduce the likelihood of product abuses in this manner. |
9b-9. Report on the Impacts of Pandemics on Company Operations
· | Vote with the board on proposals asking companies to report on the impacts of pandemics, such as HIV/AIDS, Malaria, Tuberculosis, on their business strategies. |
9b-10. Outsourcing
· | Vote with the board on proposals asking companies to report on the risks associated with outsourcing or offshoring. |
· | Vote with the board on proposals seeking greater disclosure on plant closing criteria if such information has not been provided by the company. |
9b-11. Adopt Holy Land Principles
· | Vote with the board on proposals adopting Holy Land Principles. |
29
Table of Contents
9C. ENVIRONMENT AND ENERGY
9c-1. Environmental Report (General)
· | Vote with the board on reports disclosing the company’s environmental policies unless it already has well-documented environmental management systems that are available to the public. |
9c-2. Prepare Report on Global Warming/Greenhouse Gas Emissions
· | Vote with the board on proposals calling for the reduction of greenhouse gas. |
· | Vote with the board on reports on the level of greenhouse gas emissions from the company’s operations and/or products. |
· | Vote with the board on proposals requesting that companies outline their preparations to comply with standards established by Kyoto Protocol signatory markets. |
9c-3. Invest in Clean/Renewable Energy
· | Vote with the board on proposals seeking the preparation of a report on a company’s activities related to the development of renewable energy sources. |
· | Vote with the board on proposals seeking increased investment in renewable energy sources. |
9c-4. Drilling in the Arctic National Wildlife Refuge
· | Vote with the board on proposals asking companies to prepare a feasibility report or to adopt a policy not to mine, drill, or log in environmentally sensitive areas such as ANWR. |
· | Vote with the board on proposals seeking to prohibit or reduce the sale of products manufactured from materials extracted from environmentally sensitive areas such as old growth forests. |
9c-5. Adopt/Implement CERES Principles
· | Vote with the board on proposals to study or implement the CERES principles. |
9c-6. Phase Out Chlorine-Based Chemicals
· | Vote with the board on proposals to prepare a report on the phase-out of chlorine bleaching in paper production. |
· | Vote with the board on proposals asking companies to cease or phase-out the use of chlorine bleaching. |
9c-7. Report/Reduce Toxic Emissions and Assess Community Impact
· | Vote with the board on proposals that seek to prepare a report on the company’s procedures for reducing or preventing pollution and/or the impact of the company’s pollution on the surrounding communities. |
· | Vote with the board on proposals calling on the company to establish a plan to reduce toxic emissions. |
9c-8. Land Procurement and Development
· | Vote with the board on proposals requesting that companies report on or adopt policies for land procurement and use that incorporate social and environmental factors. |
30
Table of Contents
9c-9. Report on the Sustainability of Concentrated Area Feeding Operations
· | Vote with the board on proposals requesting that companies report on the sustainability and the environmental impacts of both company-owned and contract livestock operations. |
9c-10. Adopt a Comprehensive Recycling Policy
· | Vote with the board on proposals requesting the preparation of a report on the company’s recycling efforts. |
· | Vote with the board on proposals that ask companies to increase their recycling efforts or to adopt a formal recycling policy. |
9c-11. Report on the Feasibility of Removing “Harmful” Ingredients from Cosmetic Products
· | Vote with the board on proposals asking companies report on the feasibility of removing, or substituting with safer alternatives, all “harmful” ingredients used in company products. |
9c-12. Nuclear Energy
· | Vote with the board on proposals seeking the preparation of a report on a company’s nuclear energy procedures. |
· | Vote with the board on proposals that ask the company to cease the production of nuclear power. |
9D. WEAPONS
9d-1. Handgun Safety Initiatives
· | Vote with the board on reports on a company’s efforts to promote handgun safety. |
9d-2. Landmine Production
· | Vote with the board on proposals asking a company to renounce future involvement in antipersonnel landmine and cluster bomb production. |
9d-3. Prepare Report on Foreign Military Sales
· | Vote with the board on reports on foreign military sales or offsets. |
· | Vote with the board on proposals that call for outright restrictions on foreign military sales. |
9d-4. Spaced-Based Weaponization
· | Vote with the board on reports on a company’s involvement in spaced-based weaponization. |
31
Table of Contents
9E. CONSUMER ISSUES, PUBLIC SAFETY & MISCELLANEOUS
9e-1. Phase-out or Label Products Containing Genetically Modified Organisms (“GMOS”)
· | Vote with the board on proposals to voluntarily label genetically modified ingredients in the company’s products, or alternatively to do interim labeling and eventual elimination of GMOs |
· | Vote with the board on proposals asking for a report on the feasibility of labeling products containing GMOs. |
· | Vote with the board on proposals to completely phase out GMOS from the company’s products. |
· | Vote with the board on reports outlining the steps necessary to eliminate GMOs from the company’s products. |
· | Vote with the board on proposals seeking a report on the health effects of GMOs. |
9e-2. Tobacco-related Proposals
· | Vote with the board on proposals seeking to limit the sale of tobacco products to children. |
· | Vote with the board on proposals asking producers of tobacco product components (such as filters, adhesives, flavorings, and paper products) to halt sales to tobacco companies. |
· | Vote with the board on proposals that ask restaurants to adopt smoke-free policies. |
· | Vote with the board on proposals seeking a report on a tobacco company’s advertising approach. |
· | Vote with the board on proposals prohibiting investment in tobacco equities. |
· | Vote with the board on proposals asking producers of cigarette components for a report outlining the risks and potential liabilities of the production of these components. |
· | Vote with the board on proposals calling for tobacco companies to cease the production of tobacco products. |
· | Vote with the board on proposals seeking stronger product warning. |
9e-3. Adopt Policy/Report on Predatory Lending Practices
· | Vote with the board on reports on the company’s procedures for preventing predatory lending, including the establishment of a board committee for oversight. |
9e-4. Disclosure on Credit in Developing Countries (LDCs)
· | Vote with the board on proposals asking for disclosure on lending practices in developing countries. |
9e-5. Forgive LDC Debt
· | Vote with the board on proposals asking banks to forgive loans outright. |
· | Vote with the board on proposals asking for loan forgiveness at banks that have failed to make reasonable provisions for non-performing loans. |
· | Vote with the board on proposals to restructure and extend the terms of non-performing loans. |
9e-6. Adopt Policy/Report on Drug Pricing
· | Vote with the board on proposals to prepare a report on drug pricing or access to medicine policies. |
· | Vote with the board on proposals to adopt a formal policy on drug pricing. |
· | Vote with the board on reports on the financial and legal impact of prescription drug re-importation policies. |
· | Vote with the board on proposals requesting that companies adopt policies to encourage or constrain prescription drug re-importation. |
32
Table of Contents
9e-7. Animal Testing and Welfare
· | Vote with the board on proposals for reports on a company’s animal welfare standards or animal welfare-related risks. |
· | Vote with the board on proposals that seek to limit unnecessary animal testing where alternative testing methods are feasible or not required by law. |
· | Vote with the board on proposals asking companies to report on the operational costs and liabilities associated with selling animals. |
9e-8. Control over Charitable Contributions
· | Vote with the board on proposals giving criteria or to require shareholder ratification of grants. |
9e-9. Disclosure on Prior Government Service
Shareholders have asked companies to disclose the identity of any senior executive and/or other high-level employee, consultant, lobbyist, attorney, or investment banker who has served in government. Although the movement of individuals between government and the private sector may benefit both, the potential also exists for conflicts of interest, especially in industries that have extensive dealings with government agencies.
· | Vote with the board on proposals calling for the disclosure of prior government service of the company’s key executives. |
9e-10. Lobbying Expenditures/Initiatives
🌑 | Vote with the board on proposals requesting information on a company’s lobbying initiatives. |
33
Table of Contents
10. SHAREHOLDER PROPOSALS - MISCELLANEOUS
10A. SHAREHOLDER MEETINGS/HOUSEKEEPING ISSUES
10a-1. Rotate Annual Meeting: The argument in favor of rotating annual meeting location sites is to enable a greater number of shareholders to attend and participate in the meeting.
· | Vote on a case-by-case basis to rotate the annual meeting of shareholders or change the date and time of the meeting. |
10B. BOARD-RELATED ISSUES
10b-1. Separate Chairman and CEO: Shareholder proposal that would require the positions of chairman and CEO to be held by different persons.
· | Vote for shareholder proposals requiring that the positions of chairman and CEO be held by different persons. |
10b-2. Majority of Independent Directors: Independent outside directors can bring objectivity and a fresh perspective to the issues facing the company. Outside directors bring new contacts and skills to their boards. The conflict of interest problem boards face in designing executive compensation policies, and responding to takeover offers, is much less severe for outsiders than it is for executive officers. Perhaps the most important role of outside directors is to objectively evaluate the performance of top management. That same objectivity cannot be exercised by directors inside the company because they may be too close to the problem to see it clearly, they may be part of the problem, or they may see it but be reluctant to “blow the whistle” for fear of losing their directorship or their job.
· | Vote for shareholder proposals asking that a majority of directors be independent. |
10b-3. Majority Elections
· | Vote for shareholder proposals calling for directors to be elected with an affirmative majority of votes cast provided binding proposals include a carve-out for plurality voting when there are more nominees than board seats. |
10b-4. Independent Committees: Most corporate governance experts agree that the key board committees (audit, compensation, and nominating/corporate governance) of a corporation should include only independent directors. The independence of key committees has been encouraged by regulation. For example, the NYSE requires that the audit committees of listed companies to be entirely “independent.” SEC proxy rules require disclosure of any members of a compensation committee who have significant business relationships with the company or interlocking directorships.
· | Vote for shareholder proposals that request that the board audit, compensation and/or nominating committees include independent directors exclusively. |
10b-5. Implement Director Share Ownership Requirement: Corporate directors should own some amount of stock of the companies on which they serve as board members. It is a simple way to align the interests of directors and shareholders. However, many highly qualified individuals such as academics and clergy might not be able to meet this requirement. A preferred solution is to look at the board nominees individually and take stock ownership into consideration when voting on candidates. Vote with the board on shareholder proposals requiring directors to own a minimum amount of company stock in order to qualify as a director or to remain on the board.
34
Table of Contents
· | Vote with the board on shareholder proposals that seek to establish mandatory share ownership requirements for directors. |
· | Vote case-by-case on shareholder proposals that ask directors to accept a certain percentage of their annual retainer in the form of stock. |
· | Vote case-by-case on shareholder proposals asking companies to limit director compensation to a stock-only plan. |
10C. SHAREHOLDER RIGHTS & BOARD ACCOUNTABILITY
10c-1. Remove Antitakeover Provisions: There are numerous antitakeover mechanisms available to corporations that can make takeovers prohibitively expensive for a bidder or at least guarantee that all shareholders are treated equally. The debate over antitakeover devices centers on whether these devices enhance or detract from shareholder value. One theory argues that a company’s board, when armed with these takeover protections, may use them as negotiating tools to obtain a higher premium for shareholders. The opposing view maintains that management afforded such protection are more likely to become entrenched than to actively pursue the best interests of shareholders. Such takeover defenses also serve as obstacles to the normal functioning of the marketplace which, when operating efficiently, should replace incapable and poorly performing management.
· | Vote for shareholder proposals that seek to remove antitakeover provisions. |
10c-2. Submit Poison Pill (Shareholder Rights Plan) to a Vote: Shareholder rights plans, typically known as poison pills, take the form of rights or warrants issued to shareholders and are triggered when a potential acquiring stockholder reaches a certain threshold of ownership. Generally, poison pills insulate management from the threat of a change in control and provide the target board with veto power over takeover bids. Because poison pills greatly alter the balance of power between shareholders and management, shareholders should be allowed to make their own evaluation of such plans. (Consistent with Policy 5c)
· | Vote for shareholder proposals requesting that the company submit its poison pill to a shareholder vote. |
· | Vote case-by-case on shareholder proposals to redeem a company’s poison pill. |
· | Vote case-by-case on shareholder proposals to amend an existing shareholder rights plan. |
10c-3. Elect Auditors/ Ensure Auditor Independence: These shareholder proposals request that the board allow shareholders to elect the company’s auditor at each annual meeting. Annual election of the outside accountants is standard practice. While it is recognized that the company is in the best position to evaluate the competence of the outside accountants, we believe that outside accountants must ultimately be accountable to shareholders. (Consistent with Policy 3)
· | Vote for shareholder proposals that would allow shareholders to elect the auditors. |
· | Vote case-by-case on shareholder proposals asking companies to prohibit or limit the auditors from engaging in non-audit services. |
· | Vote case-by-case on shareholder proposals asking for audit firm rotation, taking into account the tenure of the audit firm, the length of rotation specified in the proposal, any significant audit-related issues at the company, the number of Audit Committee meetings held each year, the number of financial experts serving on the committee, and whether the company has a periodic renewal process where the auditor is evaluated for both audit quality and competitive price. |
10c-4. Non-Partisanship/ Political Contributions: Proponents are concerned about the amount of money given to political action committees (PACs). They argue that companies spending scarce resources on expensive lobbying efforts and donating to PACs would be better off spending that money on new procedures that will better position them to deal with the coming regulations. An example would be a company spending money on R&D to reduce its air emissions instead of funding a campaign to change certain provisions in the Clean Air Act.
· | Vote with the board on proposals calling for a company to disclose its political contributions. |
35
Table of Contents
· | Vote with the board on proposals calling for a company to refrain from making any political contributions. |
10D. COMPENSATION ISSUES
10d-1. Executive and Director Pay
· | Vote with the board on shareholder proposals seeking additional disclosure on executive and director pay information. |
· | Vote with the board on all other shareholder proposals regarding executive and director pay. |
10d-2. Prohibit/Require Shareholder Approval for Option Repricing: Repricing involves the reduction of the original exercise price of a stock option after the fall in share price. TFL does not support repricing since it undermines the incentive purpose of the plan. The use of options as incentive means that employees must bear the same risks as shareholders in holding these options. Shareholder resolutions calling on companies to abandon the practice of repricing or to submit repricing to a shareholder vote will be supported.
· | Vote for shareholder proposals seeking to limit option repricing. |
· | Vote for shareholder proposals asking the company to have option repricings submitted for shareholder ratification. |
10d-3. Severance Agreements/ Golden Parachutes: Golden and tin parachutes are designed to protect the employees of a corporation in the event of a change in control. With golden parachutes senior level management employees receive a pay out during a change in control at usually two to three times base salary. Increasingly companies that have golden parachute agreements for executives are extending coverage for all their employees via tin parachutes. The SEC requires disclosure of all golden parachutes arrangements in the proxy; such disclosure is not required of tin parachutes.
· | Vote for shareholder proposals to have golden and tin parachutes submitted for shareholder ratification. |
· | Vote case-by-case on proposals to ratify or cancel golden parachutes. An acceptable parachute should include the following: |
· | The triggering mechanism should be beyond the control of management |
· | The amount should not exceed three times base salary plus guaranteed benefits |
· | The change in control payments should be double-triggered, i.e., (1) after a change in control has taken place, and (2) termination of the executive as a result of the change in control |
10d-4. Cash Balance Plans
· | Vote on a case-by-case basis on shareholder proposals calling for non-discrimination in retirement benefits. |
· | Vote on a case-by-case basis on shareholder proposals asking a company to give employees the option of electing to participate in either a cash balance plan or in a defined benefit plan. |
10d-5. Performance-Based Options/Indexed Options: Performance-Based Option/Indexed Options is defined as compensating of executives at a reasonable rate and that executive compensation should be correlated to performance.
· | Vote for shareholder proposals advocating the use of performance-based stock options (indexed, premium-priced, and performance-vested options). |
10d-6. Option Expensing
· | Vote for shareholder proposals asking the company to expense stock options, unless the company has already publicly committed to expensing options by a specific date. |
36
Table of Contents
10d-7. Pension Plan Income Accounting
· | Vote for shareholder proposals to exclude pension plan income in the calculation of earnings used in determining executive bonuses/compensation. |
10d-8. Supplemental Executive Retirement Plans (SERPs)
· | Vote for shareholder proposals to requesting to put extraordinary benefits contained in SERP agreements to a shareholder vote unless the company’s executive pension plans do not contain excessive benefits beyond what is offered under employee-wide plans. |
10d-9. Link Compensation to Non-Financial Factors: Proponents of these proposals feel that social criteria should be factored into the formulas used in determining compensation packages for executives. These shareholders are looking for companies to review current compensation practices and to include social performance criteria, such as increasing investment in order to revitalize “distressed areas,” meeting environmental goals, and accounting for “poor corporate citizenship” when evaluating executive compensation. One of the companies cited by proponents as an example sets annual goals such as employee satisfaction, corporate responsibility, diversity and customer satisfaction as part of a written policy used in linking compensation with financial performance and non-financial bases for evaluation. Proponents believe that many of these factors such as poor environmental performance, workplace lawsuits, etc. are likely to have an impact on the company’s financial performance in the future if they are not addressed adequately today. As a result, shareholders believe they should be considered along with traditional financial considerations when determining executive pay.
· | Vote on a case-by-case basis for shareholder proposals calling for the preparation of a report on the feasibility of linking executive pay to nonfinancial factors, such as social and environmental goals. |
· | Vote on a case-by-case basis for shareholder proposals seeking to link executive pay to non-financial factors. |
10d-10. Eliminate Outside Directors’ Retirement Benefits
· | Vote for shareholder proposals seeking to eliminate outside directors’ retirement benefits. (Consistent with Policy 2i) |
10d-11. Hold Equity Past Retirement or for a Significant Period of Time
· | Vote on a case-by-case basis for shareholder proposals asking companies to adopt policies requiring senior executive officers to retain a portion of net shares acquired through compensation plans, taking into account: |
· | The percentage/ratio of net shares required to be retained |
· | The time period required to retain the shares |
· | Whether the company has equity retention, holding period, and/or stock ownership requirements in place and the robustness of such requirements |
· | Whether the company has any other policies aimed at mitigating risk taking by executives |
· | Executives’ actual stock ownership and the degree to which it meets or exceeds the proponent’s suggested holding period/retention ratio or the company’s existing requirements |
· | Problematic pay practices, current and past, which may demonstrate a short-term versus long-term focus |
37
Table of Contents
10E. STRATEGIC ISSUES
10e-1. Maximize shareholder value
Shareholder value maximization proposals that suggest exploring alternatives, including a sale or merger, should be considered on a case-by-case basis. While under normal circumstances the decision to buy, sell, or engage in a merger is best left in the hands of management and the board, it is recognized that certain situations may justify the adoption of such proposals, such as a prolonged period of poor or sluggish performance with no turnaround in sight. Support of such proposals is further justified in cases where the board and management have become entrenched. Adoption of poison pills, golden parachutes, and other antitakeover provisions in the face of an attractive offer may be signs of entrenchment.
· | Vote on a case-by-case basis for proposals that request the company 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. |
38
Table of Contents
PART C
OTHER INFORMATION
Item 15. Indemnification
Under Section 12 of Article Seven of Registrant’s Declaration of Trust, Registrant may not indemnify any trustee, officer or employee for expenses (e.g. attorney’s fees, judgements, fines and settlement amounts) incurred in any threatened, pending or completed action, if there has been an adjudication of liability against such person based on a finding of willful misfeasance, bad faith, gross negligence or reckless disregard of such person’s duties of office (“disabling conduct”). Registrant shall indemnify its trustees, officers or employees for such expenses whether or not there is an adjudication of liability, if, pursuant to Investment Company act Release 11330, a determination is made that such person was not liable by reason of disability conduct by: (i) final decision of the court before which the proceeding was brought; or (ii) in the absence of such a decision, a reasonable determination, based on factual review, that the person was not liable for reasons of such conduct is made by: (a) a majority vote of disinterested, independent trustees; or (b) independent legal counsel in a written opinion.
Advancement of expenses incurred in defending such actions may be made pursuant to Release 11330, provided that the person undertakes to repay the advance unless it is ultimately determined that such person is entitled to indemnification and one or more of the following conditions is met: (1) the person provides security for the undertaking; (2) Registrant is insured against losses arising by reason of any lawful advances; or (3) a majority of disinterested non-party trustees or independent legal counsel in a written opinion determines, based on review of readily available facts, that there is reason to believe the person ultimately will be found entitled to indemnification.
Table of Contents
Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to trustees, officers and controlling persons of Registrant pursuant to the foregoing provision, or otherwise, Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in that Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Registrant of expenses incurred or paid by a trustee, officer or controlling person of Registrant in the successful defense of any action, suit or 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 issue.
Registrant and its officers, employees, and agents are insured under the fidelity bond required by Rule 17g-1 of the Investment Company Act of 1940.
Item 16. Exhibits
1.1 | Declaration of Trust (1) | |
1.2 | Amendment No. 1 to Declaration of Trust (2) | |
2. | Amended and Restated By laws (6) | |
3. | Not Applicable | |
4. | Form of Agreement and Plan of Reorganization (**) | |
5. | Not Applicable | |
6.1 | Investment Advisory Agreement with Thrivent Asset Management, LLC (4) | |
6.2 | Amendment No. 1 to Investment Advisory Agreement (5) | |
6.3 | Amendment No. 2 to Investment Advisory Agreement (7) | |
6.4 | Amendment No. 3 to Investment Advisory Agreement (7) | |
6.5 | Amendment No. 4 to Investment Advisory Agreement (7) | |
6.6 | Amendment No. 5 to Investment Advisory Agreement (8) | |
6.7 | Amendment No. 6 to Investment Advisory Agreement (9) | |
6.8 | Amendment No. 7 to Investment Advisory Agreement (10) | |
6.9 | Amendment No. 8 to Investment Advisory Agreement (11) | |
6.10 | Amendment No. 9 to Investment Advisory Agreement (12) | |
6.11 | Amendment No. 10 to Investment Advisory Agreement (14) | |
6.12 | Amendment No. 11 to Investment Advisory Agreement (14) | |
6.13 | Amendment No. 12 to Investment Advisory Agreement (15) | |
7.1 | Distribution Agreement between Thrivent Distributors, LLC and Thrivent Mutual Funds (13) | |
7.2 | Amendment No. 1 to Distribution Agreement (14) | |
7.3 | Amendment No. 2 to Distribution Agreement (15) | |
8. | Not Applicable | |
9. | Master Custodian Agreement with State Street Bank and Trust (16) | |
10.1 | Rule 12b-1 Plan (15) | |
10.2 | Rule 18f-3 Plan (3) | |
11. | Opinion and Consent of Counsel (*) | |
12. | Opinion of Counsel supporting tax matters and consequences (+) | |
13.1 | Administrative Services Agreement, effective as of January 1, 2009, between Registrant and Thrivent Asset Management, LLC (6) | |
13.2 | Amendment No. 1 to Administrative Services Agreement (7) | |
13.3 | Amendment No. 2 to Administrative Services Agreement (9) | |
13.4 | Amendment No. 3 to Administrative Services Agreement (10) | |
13.5 | Amendment No. 4 to Administrative Services Agreement (11) | |
13.6 | Amendment No. 5 to Administrative Services Agreement (11) | |
13.7 | Amendment No. 6 to Administrative Services Agreement (14) | |
13.8 | Amendment No. 7 to Administrative Services Agreement (15) | |
13.9 | Amended and Restated Transfer Agency Agreement between Registrant and Thrivent Financial Investor Services Inc. (16) | |
13.10 | Expense Reimbursement Letter Agreement (16) | |
13.11 | Securities Lending Agency Agreement between Registrant and Goldman Sachs Bank USA (16) |
Table of Contents
14. | Consent of Independent Registered Public Accounting Firm (*) | |
15. | Not Applicable | |
16. | Powers of Attorney (*) | |
17. | Form of Proxy Card (*) |
* | Filed herewith |
** | Included in Appendix A to the Statement of Additional Information |
+ | To be filed by further amendment |
(1) | Incorporated by reference from Post-Effective Amendment No.26 to the registration statement of Registrant, file no. 33-12911, filed on June 25, 1998. | |
(2) | Incorporated by reference from Post-Effective Amendment No. 52 to the registration statement of Registrant, file no. 33-12911, filed on July 14, 2004. | |
(3) | Incorporated by reference from Post-Effective Amendment No. 58 to the registration statement of Registrant, file no. 33-12911, filed on December 15, 2005. | |
(4) | Incorporated by reference from Post-Effective Amendment No. 59 to the registration statement of Registrant, file no. 33-12911, filed on February 22, 2006. | |
(5) | Incorporated by reference from Post-Effective Amendment No. 62 to the registration statement of Registrant, file no. 33-12911, filed on November 29, 2007. | |
(6) | Incorporated by reference from Post-Effective Amendment No. 64 to the registration statement of Registrant, file no. 33-12911, filed on February 27, 2009. | |
(7) | Incorporated by reference from Post-Effective Amendment No. 65 to the registration statement of Registrant, file no. 33-12911, filed on December 7, 2009. | |
(8) | Incorporated by reference from Post-Effective Amendment No. 69 to the registration statement of Registrant, file no. 33-12911, filed on February 27, 2012. | |
(9) | Incorporated by reference from Post-Effective Amendment No. 74 to the registration statement of Registrant, file no. 33-12911, filed on February 26, 2013. | |
(10) | Incorporated by reference from Post-Effective Amendment No. 76 to the registration statement of Registrant, file no. 33-12911, filed on February 27, 2014. | |
(11) | Incorporated by reference from Post-Effective Amendment No. 1 of Registrant on Form N-14, file no. 333-204192, filed on October 18, 2015. | |
(12) | Incorporated by reference from Post-Effective Amendment No. 78 to the registration statement of Registrant, file no. 33-12911, filed on February 27, 2015. | |
(13) | Incorporated by reference from Post-Effective Amendment No. 81 to the registration statement of Registrant, file no. 33-12911, filed on December 22, 2015. | |
(14) | Incorporated by reference from Post-Effective Amendment No. 85 to the registration statement of Registrant, file no. 33-12911, filed on December 1, 2016. | |
(15) | Incorporated by reference from Post-Effective Amendment No. 88 to the registration statement of Registrant, file no. 33-12911, filed on December 11, 2017. | |
(16) | Incorporated by reference from Post-Effective Amendment No. 89 to the registration statement of Registrant, file no. 33-12911, filed on February 28, 2018. |
Table of Contents
Item 17. | Undertakings |
(1) | The undersigned registrant agrees that prior to any public reoffering of the securities registered through the use of a prospectus which is a part of this registration statement by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) of the Securities Act (17 CFR 230.145c), the reoffering prospectus will contain the information called for by the applicable registration form for the reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. |
(2) | The undersigned registrant agrees that every prospectus that is filed under paragraph (1) above will be filed as a part of an amendment to the registration statement and will not be used until the amendment is effective, and that, in determining any liability under the 1933 Act, each post-effective amendment shall be deemed to be a new registration statement for the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering of them. |
(3) | The undersigned registrant agrees to file, by post-effective amendment to the registration statement, an opinion of counsel supporting the tax consequences of the proposed reorganization as soon as practicable after the closing of the reorganization. |
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Minneapolis, State of Minnesota, on this 29th day of March, 2018.
THRIVENT MUTUAL FUNDS | ||
/s/ Michael W. Kremenak | ||
Michael W. Kremenak | ||
Secretary and Chief Legal Officer |
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated and on this 29th day of March, 2018.
Signature | Title | |
/s/ David S. Royal | President (Principal Executive Officer) | |
David S. Royal | ||
/s/ Gerard V. Vaillancourt | Treasurer (Principal Financial and Accounting Officer) | |
Gerard V. Vaillancourt | ||
* | Trustee | |
Janice B. Case | ||
* | Trustee | |
Robert J. Chersi | ||
* | Trustee | |
Richard A. Hauser | ||
* | Trustee | |
Marc S. Joseph | ||
* | Trustee | |
Paul R. Laubscher | ||
* | Trustee | |
James A. Nussle | ||
* | Trustee | |
Verne O. Sedlacek | ||
* | Trustee | |
Constance L. Souders | ||
* | Trustee | |
Russell W. Swansen |
* | Michael W. Kremenak, by signing his name hereto, does hereby sign this document on behalf of each of the above- named Trustees and Officers of Thrivent Mutual Funds pursuant to the powers of attorney duly executed by such persons and filed herewith. |
Dated: March 29, 2018 | /s/ Michael W. Kremenak | |||
Michael W. Kremenak | ||||
Attorney-in-Fact |
Table of Contents
INDEX TO EXHIBITS
11. | Opinion and Consent of Counsel |
14. | Consent of Independent Registered Public Accounting Firm |
16. | Powers of Attorney |
17. | Form of Proxy Card |