================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21897
The Roxbury Funds
--------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
6001 Shady Oak Road Suite 200
Minnetonka, MN 55343
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Lance Simpson
Roxbury Capital Management, LLC
6001 Shady Oak Road Suite 200
Minnetonka, MN 55343
--------------------------------------------------------------------------------
(Name and address of agent for service)
Copy to:
Michael P. Malloy, Esquire
Drinker Biddle & Reath LLP
One Logan Square, Ste. 2000
Philadelphia, PA 19103-6996
Registrant's telephone number, including area code: (952) 230-6140
Date of fiscal year end: June 30
Date of reporting period: June 30, 2011
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. Section 3507.
================================================================================
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
(IMAGE)
ANNUAL REPORT
JUNE 30, 2011
SMALL-CAP GROWTH FUND
TELEPHONE: (800) 497-2960
WWW.ROXBURYFUNDS.COM
THE ROXBURY FUNDS
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . . 3
ROXBURY SMALL-CAP GROWTH FUND
Investment Review. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Schedule of Investments. . . . . . . . . . . . . . . . . . . . . . . . 7
FINANCIAL STATEMENTS
Statement of Assets and Liabilities. . . . . . . . . . . . . . . . . . 9
Statement of Operations. . . . . . . . . . . . . . . . . . . . . . . . 10
Statements of Changes in Net Assets. . . . . . . . . . . . . . . . . . 11
FINANCIAL HIGHLIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
NOTES TO FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . 13
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. . . . . . . . . . 16
ADDITIONAL INFORMATION
Tax Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Board Approval of Advisory Agreement. . . . . . . . . . . . . . . . .. 17
FUND EXPENSE EXAMPLES. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
TRUSTEES AND OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2
LETTER TO SHAREHOLDERS
(PHOTO OF BRIAN C. BEH)
BRIAN C. BEH
President, The Roxbury Funds
DEAR SHAREHOLDERS,
In last year's shareholder letter, I discussed that an economic recovery
was trying to get its sea legs following the collapse of a financial/housing
bubble unlike any we have ever seen. Well, if the performance of the stock
market can be a barometer of the recovery, then it appears to be well underway.
During the collapse of 2008, the Russell 2000(R) Growth Index declined by over
38%. Since then, the Index is up approximately 70%, (34% in 2009, 29% in 2010,
and over 8% as of June 30, 2011). Over that same period, the Roxbury Small-Cap
Growth Fund has slightly outperformed the Russell 2000(R) Growth Index, (up 42%
in 2009, 24% in 2010, and 8% as of June 30, 2011). There seems to be little
doubt that since the depths of the swoon in 2008, corporate America has
undergone some major transformations to drive profitability, which have helped
to lift stock prices. The Federal Reserve has also done much to help lift asset
prices by keeping interest rates incredibly low. The Federal Reserve has also
been using its balance sheet to buy Treasury securities through its Quantitative
Easing Programs. The question going forward is how sustainable is the recovery,
and can corporate America continue to grow if the Federal Reserve discontinues
buying Treasury securities, which it is scheduled to do? The tug-of-war between
the "macro headwinds" of global debt and deficits and 9% unemployment versus the
"micro tailwinds" of corporate America profitability and innovation and emerging
market growth will continue to provide risks and opportunities for small-cap
investors.
For the fiscal year ending June 30, 2011, investors in the Roxbury
Small-Cap Growth Fund realized a return of nearly 39%. While this is undoubtedly
a strong absolute return for our investors, the Russell 2000(R) Growth Index
returned over 43% in the same fiscal year. The Fund saw strong stock selection
in the consumer discretionary and health care sectors. Conversely, the Fund had
relatively poor stock selection in the technology and energy sectors. For more
specific information and insights into the strategy, please read the Investment
Review from our Small-Cap team on the next page.
As always, we appreciate the trust you have placed in us as stewards of
your capital. We welcome the opportunity to discuss our Fund with you.
Sincerely,
-s- Brian C. Beh
Brian C. Beh
President
The Roxbury Funds
The Fund experienced relatively high performance due to market conditions that
may not be sustainable or repeated over time.
The above comments reflect the investment adviser's general views regarding the
market and the economy, were current as of the date of this letter, and are
subject to change at any time.
3
SMALL-CAP GROWTH
ROXBURY SMALL-CAP GROWTH FUND
INVESTMENT REVIEW
HOW DID THE ROXBURY SMALL-CAP GROWTH FUND PERFORM DURING THE ANNUAL PERIOD
ENDING JUNE 30, 2011?
During the 12-month period ending June 30, 2011, the Roxbury Small-Cap
Growth Fund achieved a total return of 38.97%. This compares to a return of
43.49% for the Russell 2000(R) Growth Index during the same period.*
WHAT KEY FACTORS WERE RESPONSIBLE FOR THE FUND'S PERFORMANCE DURING THE
12-MONTH REPORTING PERIOD?
The Fund's strong absolute performance was driven by a seemingly
stabilized economy, strong company fundamentals and investors increased appetite
for risk. Stock selection was a negative contributor to the Fund's relative
performance during the 12-month reporting period, while sector selection was
neutral to results for the year relative to the Russell 2000(R) Growth Index.
During the 12-month period equities with higher P/E's tended to outperform,
while the Fund's style of investing in higher growth stocks with lower relative
P/E's lagged the benchmark. The catalyst for the rally in higher P/E equities
was the "risk-on" trade that was given the "green light" from the Federal
Reserve's quantitative easing policies.
WHICH EQUITY MARKET SECTORS MOST SIGNIFICANTLY AFFECTED FUND PERFORMANCE?
Equity selection in a few sectors contributed to under performance for the
12-month period. Specifically, stock selection in the energy, information
technology and consumer discretionary sectors were the major contributors to the
underperformance for the Fund. Counterbalancing the negative stock selection of
information technology within the Fund's performance was the group weight, which
offset a portion of the sector's underperformance. DG FastChannel was the
largest detractor from performance in the information technology sector and the
Fund. Additionally, an underweighted allocation to the consumer discretionary
sector contributed positively to the Fund's results.
Equity selection in the health care and materials sectors was a positive
contributor to the Fund's performance. Within health care, positive
contributions from HealthSpring Inc., SXC Health Solutions Corp., Medivation
Inc. and Amerigroup Corp. were achieved despite doctors and hospitals generally
seeing flat-to-down volumes due to a weak economy. In the materials sector,
Kronos Worldwide Inc. and Zagg Corp. contributed positively. Kronos Worldwide
succeeded in realizing higher prices in a tight supply market for titanium
dioxide, while Zagg continued to rapidly penetrate retailers with its protective
films for smart phones and tablets.
WHAT ARE YOU EXPECTING FROM THE EQUITY MARKETS OVER THE UPCOMING YEAR?
We continue to be optimistic about the relative performance opportunities
for higher quality, small-cap growth stocks. The quality characteristics of the
current portfolio, combined with historically low relative valuations, give us
confidence in the Fund's potential. We believe the Roxbury Small-Cap Growth Fund
philosophy of focusing on owning businesses in which they have a competitive
advantage, accelerating returns on capital, purchased at reasonable valuations
has benefited our investors over the long-term. As the market begins to
differentiate between the high quality growth companies and others with lower
quality attributes in an economically challenged growth environment, we believe
the Fund has the potential to deliver strong relative performance.
Companies that continue to manage their business effectively through these
economically challenging periods are likely to emerge with solid balance sheets
and increased operational leverage for future earnings growth. We seek to
identify and own these high quality, growing businesses at appropriate
valuations. We are confident in our time-tested investment philosophy and look
forward to discovering promising companies for the future.
Very truly yours,
Nick A. Blankl, CFA Robert Marvin, CFA
Portfolio Manager/Analyst Portfolio Manager/Analyst
-s- Nick A. Blankl -s- Robert Marvin
Brian Smoluch, CFA David G. Swank, CFA
Portfolio Manager/Analyst Portfolio Manager/Analyst
-s- Brian Smoluch -s- David G. Swank
------------
* The Fund experienced relatively high performance due to market conditions
that may not be sustainable or repeated over time.
Returns represent past performance and include change in share price and
reinvestment of dividends and capital gains. PAST PERFORMANCE CANNOT GUARANTEE
FUTURE RESULTS. The current performance of the Fund may be lower or higher than
the figures shown. Returns and shares price will fluctuate, and redemption value
may be more or less than original cost. Performance information current to the
most recent month-end is available by calling (800)-497-2960.
In addition to historical information, this report contains forward-looking
statements which may concern, among other things, the domestic and foreign
markets, economic trends and government regulations and their potential impact
on the Fund's investments. These statements are subject to risks and
uncertainties and actual developments in the future and their impact on the Fund
could be materially different than those that are projected or implied.
4
THE FOLLOWING TABLES ARE FOR THE YEAR ENDED JUNE 30, 2011:
TOP TEN HOLDINGS (UNAUDITED) % OF PORTFOLIO
------------------------------------------------------ --------------
SXC Health Solutions Corp. 3.4%
Healthspring, Inc. 2.7%
Cooper Companies, Inc. 2.7%
GeoEye, Inc. 2.4%
Chart Industries, Inc. 2.2%
Kulicke & Soffa Industries 2.1%
Kronos Worldwide, Inc. 2.1%
Tempur Pedic International, Inc. 2.1%
OCZ Technology Group, Inc. 2.1%
Zagg, Inc. 1.9%
SECTOR BREAKDOWN (UNAUDITED) % OF PORTFOLIO
------------------------------------------------------ --------------
Common Stock
Information Technology 20.7%
Consumer Discretionary 20.2%
Industrials 19.9%
Health Care 19.4%
Energy 4.2%
Materials 4.0%
Consumer Staples 3.3%
Financials 2.8%
Telecommunication Services 1.9%
Short-Term Investments 3.6%
TOTAL 100.0%
PORTFOLIO STATISTICS (UNAUDITED)
------------------------------------------------------
Number of Holdings 81
Market Cap (wtd. Median, mil.) $ 1,300
Price / Book Value (wtd.Avg.) 2.9x
Price / Earnings (wtd.Avg.) 18.7x
Beta 0.91
Standard Deviation 21.34%
Portfolio Turnover 181%
QUARTERLY PORTFOLIO HOLDINGS
The Fund files a complete schedule of portfolio holdings with the Securities and
Exchange Commission (SEC) for the first and third quarters of each fiscal year
on Form N-Q. The Fund's Forms N-Q are available electronically on the SEC's
website at www.sec.gov. Hard copies may be reviewed and copied at the SEC's
Public Reference Room in Washington, DC. For more information on the Public
Reference Room, call (202) 551-8090.
Portfolio holdings are subject to change at any time.
5
SMALL-CAP GROWTH
ROXBURY SMALL-CAP GROWTH FUND
ROXBURY SMALL-CAP GROWTH FUND
Comparison of Change in Value of a Hypothetical $100,000 Investment*
(Unaudited)
ROXBURY SMALL-CAP GROWTH FUND GROWTH OF $100K PLOT POINTS
Russell 2000(R) Growth Index Roxbury Small-Cap Growth Fund-Institutional Shares
-------------------------- --------------------------------------------------
1/2/2003 100,000 1/2/2003 100,000
6/30/2003 119,330 6/30/2003 127,600
6/30/2004 154,902 6/30/2004 171,840
6/30/2005 167,589 6/30/2005 174,468
6/30/2006 191,571 6/30/2006 206,164
6/30/2007 230,230 6/30/2007 235,601
6/30/2008 209,095 6/30/2008 193,026
6/30/2009 151,008 6/30/2009 146,901
6/30/2010 177,450 6/30/2010 179,425
6/30/2011 254,640 6/30/2010 249,353
The following table compares the performance of the Roxbury Small-Cap Growth
Fund and the Russell 2000(R) Growth Index for the periods ended June 30.
Average Annual Total Return For the Periods Ended June 30, 2011
SINCE
1 YEAR 5 YEARS INCEPTION(1)
------ ------- ------------
Roxbury Small-Cap Growth Fund Institutional Shares 38.97% 3.88% 11.36%
Russell 2000(R) Growth Index(2) 43.49% 5.82% 11.32%
Fund Expense Ratios(3): Institutional Shares: Gross 1.46%, Net 1.26%.
* Performance quoted represents past performance and does not guarantee
future results. Investment return and principal value will fluctuate.
Shares, when redeemed, may be worth more or less than their original cost.
Current performance may be lower or higher than that shown here.
Performance data current to the most recent month-end is available by
calling 800-497-2960.
The performance in the table above does not reflect the deduction of taxes
a shareholder would pay on Fund distributions or redemption of Fund
shares.
Small company stocks may be subject to a higher degree of market risk
because they tend to be more volatile and less liquid. The Roxbury Funds
are distributed by Professional Funds Distributor, LLC.
(1) The Institutional Shares commenced operations on January 2, 2003.
(2) The Russell 2000(R) Growth Index measures the performance of those Russell
2000 companies with higher price-to-book ratios and higher forecasted
growth values. The Russell 2000(R) Index measures the performance of 2,000
companies in the small capitalization segment of the U.S. equity market.
(3) The expense ratios of the Fund are set forth according to the prospectus
for the Fund effective November 1, 2010 and may differ from the expense
ratios disclosed in the Financial Highlights tables in this report. Net
Expense: Expenses reduced by a contractual fee waiver through December 31,
2020. Gross expenses do not reflect the effect of a contractual fee
waiver.
6
SCHEDULE OF INVESTMENTS JUNE 30, 2011
Value
Shares (Note 2)
--------- ------------
COMMON STOCK -- 98.3%
CONSUMER DISCRETIONARY -- 20.6%
HOTELS, RESTAURANTS & LEISURE -- 3.1%
Bally Technologies, Inc.*. . . . . . . . . . ... 29,265 $ 1,190,500
Texas Roadhouse, Inc. - Class A. . . . . . . ... 105,630 1,852,222
------------
3,042,722
------------
HOUSEHOLD DURABLES -- 5.4%
Jarden Corp.. . . . . . . . . . . . . . . . .... 36,615 1,263,584
Ryland Group, Inc.. . . . . . . . . . . . . .... 39,725 656,654
SodaStream International, Ltd.*. . . . . . . ... 20,510 1,247,213
Tempur-Pedic International, Inc.*. . . . . . ... 31,330 2,124,801
------------
5,292,252
------------
SPECIALTY RETAIL -- 8.9%
Chico's FAS, Inc.. . . . . . . . . . . . . . ... 66,405 1,011,348
DSW, Inc. - Class A*. . . . . . . . . . . . .... 22,690 1,148,341
Finish Line, Inc. - Class A. . . . . . . . . ... 62,605 1,339,747
hhgregg, Inc.*. . . . . . . . . . . . . . . .... 99,045 1,327,203
Lithia Motors, Inc. - Class A. . . . . . . . ... 35,685 700,497
Men's Wearhouse, Inc.. . . . . . . . . . . . ... 51,395 1,732,012
Signet Jewelers Ltd.*. . . . . . . . . . . . ... 28,710 1,343,915
Travelcenters of America LLC*. . . . . . . . ... 43,290 235,931
------------
8,838,994
------------
TEXTILES, APPAREL & LUXURY GOODS -- 3.2%
Hanesbrands, Inc.*. . . . . . . . . . . . . .... 31,035 886,049
Maidenform Brands, Inc.*. . . . . . . . . . .... 39,895 1,103,496
Wolverine World Wide, Inc.. . . . . . . . . .... 28,705 1,198,434
------------
3,187,979
------------
TOTAL CONSUMER DISCRETIONARY. . . . . . . . . .. . 20,361,947
------------
CONSUMER STAPLES -- 3.3%
BEVERAGES -- 1.3%
Heckmann Corp.*. . . . . . . . . . . . . . . ... 211,880 1,279,755
------------
FOOD & STAPLES RETAILING -- 2.0%
Pricesmart Inc.................................. 11,690 598,879
United Natural Foods, Inc.*..................... 33,634 1,435,163
------------
2,034,042
------------
TOTAL CONSUMER STAPLES. . . . . . . . . . . . .. . 3,313,797
------------
ENERGY -- 4.2%
OIL, GAS & CONSUMABLE FUELS -- 4.2%
Gevo, Inc.*. . . . . . . . . . . . . . . . . ... 50,205 789,725
Goodrich Petroleum Corp.*. . . . . . . . . . ... 35,510 653,739
Gulfport Energy Corp.*. . . . . . . . . . . .. . 23,085 685,394
Hyperdynamics Corp.*. . . . . . . . . . . . .. . 135,665 583,359
Northern Oil and Gas, Inc.*. . . . . . . . . .. 26,830 594,285
Whiting Petroleum Corp.*. . . . . . . . . . .. . 15,825 900,601
------------
TOTAL ENERGY. . . . . . . . . . . . . . . . . .. . 4,207,103
------------
FINANCIALS -- 2.9%
CONSUMER FINANCE -- 2.9%
EZCORP, Inc. - Class A*. . . . . . . . . . .. .. 33,805 1,202,613
First Cash Financial Services, Inc.* . . . .. . 39,100 1,641,809
------------
TOTAL FINANCIALS. . . . . . . . . . . . . . . .. . 2,844,422
------------
HEALTH CARE -- 19.8%
BIOTECHNOLOGY -- 1.6%
Codexis, Inc.*. . . . . . . . . . . . . . .. . . 109,165 1,051,259
Metabolix, Inc.*. . . . . . . . . . . . . .. . . 84,290 601,831
------------
1,653,090
------------
HEALTH CARE EQUIPMENT & SUPPLIES -- 4.0%
Cooper Companies, Inc.. . . . . . . . . . .. . . 34,155 2,706,442
Meridian Bioscience, Inc.. . . . . . . . . .. .. 52,875 1,274,816
------------
3,981,258
------------
HEALTH CARE PROVIDERS & SERVICES -- 9.4%
Air Methods Corp.*. . . . . . . . . . . . . . .. 9,805 732,826
AMERIGROUP Corp.*. . . . . . . . . . . . . . ... 21,115 1,487,974
Bio-Reference Laboratories, Inc.*. . . . . . ... 57,485 1,201,436
Healthspring, Inc.*. . . . . . . . . . . . . ... 59,235 2,731,326
MEDNAX, Inc.*. . . . . . . . . . . . . . . . ... 18,170 1,311,692
MWI Veterinary Supply, Inc.*. . . . . . . . .. . 22,575 1,823,383
------------
9,288,637
------------
HEALTH CARE TECHNOLOGY -- 4.8%
Medivation, Inc.*. . . . . . . . . . . . . . ... 58,370 1,250,869
SXC Health Solutions Corp.*. . . . . . . . . ... 59,145 3,484,823
------------
4,735,692
------------
TOTAL HEALTH CARE. . . . . . . . . . . . . . . ... 19,658,677
------------
INDUSTRIALS -- 20.3%
AEROSPACE & DEFENSE -- 4.3%
GeoEye, Inc.*. . . . . . . . . . . . . . . . . . 64,924 2,428,158
Hexcel Corp.*. . . . . . . . . . . . . . . . . . 82,560 1,807,238
------------
4,235,396
------------
AIR FREIGHT & LOGISTICS -- 0.7%
Atlas Air Worldwide Holdings, Inc.*. . . . . . . 11,715 697,160
------------
COMMERCIAL SERVICES & SUPPLIES -- 0.7%
TMS International Corp. - Class A*. . . . . . .. 54,530 711,617
------------
CONSTRUCTION & ENGINEERING -- 1.8%
Dycom Industries, Inc.*. . . . . . . . . . . . . 35,600 581,704
MasTec, Inc.*. . . . . . . . . . . . . . . . . . 32,310 637,153
UniTek Global Services, Inc.*. . . . . . . . . . 69,295 548,123
------------
1,766,980
------------
ELECTRICAL EQUIPMENT -- 1.4%
Enersys*. . . . . . . . . . . . . . . . . . . .. 41,255 1,419,997
------------
The accompanying notes are an integral part of the financial statements.
7
SMALL-CAP GROWTH
ROXBURY SMALL-CAP GROWTH FUND
SCHEDULE OF INVESTMENTS JUNE 30, 2011 continued
Value
Shares (Note 2)
---------- -------------
COMMON STOCK -- continued
MACHINERY -- 5.9%
Cascade Corp. . . . . . . . . . . . . . . . . . . 36,690 $ 1,745,343
Chart Industries, Inc.*. . . . . . . . . . . . .. 40,990 2,212,640
ESCO Technologies, Inc.. . . . . . . . . . . . .. 29,140 1,072,352
Mueller Industries, Inc.. . . . . . . . . . . . . 21,220 804,450
-------------
5,834,785
-------------
PROFESSIONAL SERVICES -- 2.6%
Acacia Research - Acacia
Technologies*. . . . . . . . . . . . . . . . . . 26,335 966,231
Korn/Ferry International*. . . . . . . . . . . .. 71,377 1,569,580
-------------
2,535,811
-------------
ROAD & RAIL -- 1.2%
Old Dominion Freight Line, Inc.*. . . . . . . . . 33,075 1,233,698
-------------
TRADING COMPANIES & DISTRIBUTORS -- 1.7%
Kaman Corp.. . . . . . . . . . . . . . . . . . .. 26,645 945,098
Rush Enterprises, Inc. - Class A*. . . . . . . .. 36,880 701,826
-------------
1,646,924
-------------
TOTAL INDUSTRIALS. . . . . . . . . . . . . . . . .. 20,082,368
-------------
INFORMATION TECHNOLOGY -- 21.2%
COMMUNICATIONS EQUIPMENT -- 4.7%
Brocade Communications
Systems, Inc.*. . . . . . . . . . . . . . . . .. 224,295 1,448,946
Calix, Inc.*. . . . . . . . . . . . . . . . . . . 58,215 1,212,036
Powerwave Technologies, Inc.*. . . . . . . . . .. 279,150 823,493
RADWARE, Ltd.*. . . . . . . . . . . . . . . . . . 32,070 1,117,319
-------------
4,601,794
-------------
COMPUTERS & PERIPHERALS -- 3.3%
OCZ Technology Group, Inc.*. . . . . . . . . . .. 260,475 2,083,800
Quantum Corp.*. . . . . . . . . . . . . . . . . . 354,740 1,170,642
-------------
3,254,442
-------------
ELECTRONIC EQUIPMENT,
INSTRUMENTS & COMPONENTS -- 4.0%
KEMET Corp.*. . . . . . . . . . . . . . . . . . . 74,515 1,064,819
OSI Systems, Inc.*. . . . . . . . . . . . . . . . 38,325 1,647,975
SMART Modular Technologies WWH, Inc.*. . . . . .. 131,090 1,200,784
-------------
3,913,578
-------------
INTERNET SOFTWARE & SERVICES -- 2.8%
Internap Network Services Corp.* .. . . . . . . . 181,670 1,335,274
SAVVIS, Inc.*. . . . . . . . . . . . . . . . . . 37,510 1,482,770
-------------
2,818,044
-------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 5.0%
Entropic Communications, Inc.*. . . . . . . . . . 112,575 1,000,792
FSI International, Inc.*. . . . . . . . . . . . . 149,495 409,616
Kulicke & Soffa Industries, Inc.*. . . . . . . .. 190,515 2,122,337
Netlogic Microsystems, Inc.*. . . . . . . . . . . 20,415 825,174
TriQuint Semiconductor, Inc.*. . . . . . . . . .. 58,830 599,478
-------------
4,957,397
-------------
SOFTWARE -- 1.4%
Kenexa Corp.*. . . . . . . . . . . . . . . . . .. 13,575 325,529
RealD, Inc.*. . . . . . . . . . . . . . . . . . . 28,455 665,562
VASCO Data Security International, Inc.*. . . . . 34,475 429,214
-------------
1,420,305
-------------
TOTAL INFORMATION TECHNOLOGY. . . . . . . . . . . . 20,965,560
-------------
MATERIALS -- 4.1%
CHEMICALS -- 4.1%
Kronos Worldwide, Inc.. . . . . . . . . . . . . . 67,140 2,111,553
Zagg, Inc.*. . . . . . . . . . . . . . . . . . .. 144,630 1,938,042
-------------
TOTAL MATERIALS. . . . . . . . . . . . . . . . . .. 4,049,595
-------------
TELECOMMUNICATION SERVICES -- 1.9%
DIVERSIFIED TELECOMMUNICATION SERVICES -- 1.9%
Neutral Tandem, Inc.*. . . . . . . . . . . . . .. 62,285 1,085,005
Premiere Global Services, Inc.*. . . . . . . . .. 100,335 800,673
-------------
TOTAL TELECOMMUNICATION SERVICES. . . . . . . . . . 1,885,678
-------------
TOTAL COMMON STOCK
(COST $79,111,878). . . . . . . . . . . . . . . . 97,369,147
-------------
SHORT-TERM INVESTMENTS -- 3.7%
Blackrock Liquidity Funds
Tempfund Portfolio, 0.08%**. . . . . . . . . . . 3,675,653 3,675,653
-------------
TOTAL SHORT-TERM INVESTMENTS
(COST $3,675,653). . . . . . . . . . . . . . . .. 3,675,653
-------------
TOTAL INVESTMENTS
(COST $82,787,531)+ - 102.0%. . . . . . . . . . . 101,044,800
LIABILITIES IN EXCESS OF OTHER ASSETS - (2.0%). . .. (1,990,494)
-------------
NET ASSETS - 100.0%. . . . . . . . . . . . . . . . . $ 99,054,306
=============
----------
* Non-income producing security.
** The rate shown represents the 7-day effective yield as of June 30, 2011.
+ The cost for federal income tax purposes is $83,912,570. At June 30, 2011,
net unrealized appreciation was $17,132,230. This consisted of aggregate
gross unrealized appreciation for all securities for which there was an
excess of market value over tax cost of $19,880,370, and aggregate gross
unrealized depreciation for all securities for which there was an excess
of tax cost over market value of $2,748,140.
The accompanying notes are an integral part of the financial statements.
8
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
ROXBURY SMALL-CAP GROWTH FUND
June 30, 2011
ASSETS:
Investments in securities, at value* $ 101,044,800
Receivable for Fund shares sold. . . . . . . . . . . . . . . . . . . . . . .. 15,426
Receivable for investments sold. . . . . . . . . . . . . . . . . . . . . . .. 1,313,940
Dividends and interest receivable. . . . . . . . . . . . . . . . . . . . . .. 24,118
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,833
-------------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102,442,117
-------------
LIABILITIES:
Payable for Fund shares redeemed............................................. 588,783
Payable for investments purchased............................................ 2,594,672
Accrued advisory fee......................................................... 112,835
Other accrued expenses....................................................... 91,521
-------------
Total liabilities............................................................ 3,387,811
-------------
NET ASSETS................................................................... $ 99,054,306
=============
NET ASSETS CONSIST OF:
Par value.................................................................... $ 53,835
Paid-in capital.............................................................. 115,527,276
Accumulated net realized loss on investments................................. (34,784,074)
Net unrealized appreciation of investments................................... 18,257,269
-------------
NET ASSETS................................................................... $ 99,054,306
=============
NET ASSETS BY SHARE CLASS:
Institutional Shares........................................................ $ 99,054,306
=============
SHARES OF BENEFICIAL INTEREST OUTSTANDING:
($0.01 par value, unlimited authorized shares):
Institutional Shares........................................................ 5,383,506
PER SHARE:
Institutional Shares (net asset value, offering and redemption price**)...... $ 18.40
=============
----------
* Investments at cost. . . . . . . . . . . . . . . . . . . . . . . . . .. $ 82,787,531
=============
** Redemption price will vary based on length of time shares are held. See
Note 6.
The accompanying notes are an integral part of the financial statements.
9
THE ROXBURY FUNDS
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
ROXBURY SMALL-CAP GROWTH FUNDS
For the Year Ended June 30, 2011
INVESTMENT INCOME:
Dividends $ 262,534
-------------
Total investment income 262,534
-------------
EXPENSES:
Advisory fees............................................................. 908,508
Administration and accounting fees........................................ 115,593
Legal fees................................................................ 90,132
Transfer agent fees....................................................... 57,774
Trustees' fees............................................................ 43,000
Custody fees.............................................................. 37,470
Registration fees......................................................... 27,833
Reports to shareholders................................................... 23,789
Audit fees................................................................ 19,001
Other..................................................................... 62,656
-------------
Total expenses before fee waivers and expense reimbursements............ 1,385,756
-------------
Advisory fees waived/expenses reimbursed................................ (250,121)
-------------
Total expenses, net..................................................... 1,135,635
-------------
Net investment loss....................................................... (873,101)
-------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments.......................................... 15,067,195
Net change in unrealized appreciation on investments...................... 14,176,444
-------------
Net gain on investments................................................... 29,243,639
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 28,370,538
=============
The accompanying notes are an integral part of the financial statements.
10
STATEMENTS OF CHANGES IN NET ASSETS
ROXBURY SMALL-CAP GROWTH FUND
For the Years
Ended June 30,
----------------------------
2011 2010
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment loss.................................... $ (873,101) $ (905,938)
Net realized gain on investments....................... 15,067,195 24,994,195
Net change in unrealized appreciation on investments... 14,176,444 (6,345,676)
------------ ------------
Net increase in net assets resulting from operations... 28,370,538 17,742,581
------------ ------------
Fund share transactions:
Institutional Class
Proceeds from shares sold.............................. 17,185,100 18,822,083
Redemption fees........................................ 2,267 11,095
Cost of shares redeemed................................ (40,710,389) (19,552,178)
------------ ------------
Net decrease in net assets from Fund share transactions.... (23,523,022) (719,000)
------------ ------------
Total increase in net assets............................... 4,847,516 17,023,581
NET ASSETS:
Beginning of year.......................................... 94,206,790 77,183,209
------------ ------------
End of year................................................ $ 99,054,306 $ 94,206,790
============ ============
Accumulated net investment loss............................ $ -- $ (10,326)
============ ============
Capital share transactions:
Institutional Class
Shares sold............................................ 1,007,087 1,410,825
Shares redeemed........................................ (2,741,435) (1,411,799)
------------ ------------
Net decrease in capital shares............................. (1,734,348) (974)
============ ============
The accompanying notes are an integral part of the financial statements.
11
THE ROXBURY FUNDS
FINANCIAL HIGHLIGHTS
The following tables include selected data for a share outstanding throughout
each year and other performance information derived from the financial
statements. The total returns in the tables represent the rate an investor would
have earned or lost on an investment in the Fund (assuming reinvestment of all
dividends and distributions). This information should be read in conjunction
with the financial statements and notes thereto.
For the Years Ended June 30,
------------------------------------------------------------------------
2011 2010 2009 2008 2007
----------- ----------- ----------- ----------- -----------
SMALL-CAP GROWTH FUND -- INSTITUTIONAL SHARES(1)
NET ASSET VALUE -- BEGINNING OF YEAR............... $ 13.24 $ 10.84 $ 14.25 $ 20.69 $ 19.62
----------- ----------- ----------- ----------- -----------
INVESTMENT OPERATIONS:
Net investment loss(2)........................... (0.16) (0.12) (0.10) (0.13) (0.19)
Net realized and unrealized gain/(loss) on
investments..................................... 5.32 2.52 (3.31) (3.27) 2.87
----------- ----------- ----------- ----------- -----------
Total from investment operations................. 5.16 2.40 (3.41) (3.40) 2.68
----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS:
From net realized gains.......................... -- -- -- (3.04) (1.61)
From tax return of capital....................... -- -- --(3) -- --
----------- ----------- ----------- ----------- -----------
Total distributions.............................. -- -- -- (3.04) (1.61)
REDEMPTION FEES.................................... --(3) --(3) -- -- --
----------- ----------- ----------- ----------- -----------
NET ASSET VALUE -- END OF YEAR..................... $ 18.40 $ 13.24 $ 10.84 $ 14.25 $ 20.69
=========== =========== =========== =========== ===========
TOTAL RETURN....................................... 38.97% 22.14% (23.90)% (18.07)% 14.28%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses:
Including waivers/reimbursements............... 1.25% 1.25% 1.25% 1.25% 1.25%
Excluding waivers/reimbursements............... 1.53% 1.45% 1.47% 1.36% 1.26%
Net investment loss.............................. (0.96)% (0.92)% (0.89)% (0.77)% (0.95)%
Portfolio turnover rate.......................... 181% 194% 163% 167% 159%
Net assets at the end of year (000 omitted)...... $ 99,054 $ 94,207 $ 77,183 $ 168,873 $ 217,391
----------
(1) The information through February 2, 2007 set forth in this table is the
financial data of the Fund as a series of WT Mutual Fund.
(2) The net investment loss per share was calculated using the average shares
outstanding method.
(3) Amount is less than $0.01.
The accompanying notes are an integral part of the financial statements.
12
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE FUND. Roxbury Small-Cap Growth Fund ("Small-Cap Growth
Fund") (the "Fund") is a series of The Roxbury Funds (the "Trust"). The
Trust is registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as a diversified open-end management investment company
and was organized as a Delaware statutory trust on April 4, 2006. The
fiscal year end for the Fund is June 30th.
As of June 30, 2011, the Fund offers one class of shares: Institutional
Shares.
2. SIGNIFICANT ACCOUNTING POLICIES. The following is a summary of the
significant accounting policies of the Fund:
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS. The
preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America ("GAAP")
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
SECURITY VALUATION. Securities held by the Fund which are listed on a
securities exchange and for which market quotations are available are
valued at the last quoted sale price of the day, or, if there is no such
reported sale, securities are valued at the mean between the most recent
quoted bid and ask prices. Securities traded on The NASDAQ Stock Market,
Inc. ("NASDAQ") are valued in accordance with the NASDAQ Official Closing
Price, which may not be the last sale price. Price information for listed
securities is taken from the exchange where the security is primarily
traded. Unlisted securities for which market quotations are readily
available are valued at the most recent bid prices. Securities with a
remaining maturity of 60 days or less are valued at amortized cost, which
approximates market value, unless the Trustees determine that this does
not represent fair value. Securities that do not have a readily available
current market value are valued in good faith using procedures adopted by
the Trustees.
Fair Value Measurements. The inputs and valuation techniques used to
measure the fair value of the Fund's investments are summarized into three
levels as described in the hierarchy below:
- Level 1 -- quoted prices in active markets for identical securities
- Level 2 -- other significant observable inputs (including quoted
prices for similar securities, interest rates, prepayment speeds,
credit risk, etc.)
- Level 3 -- significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily
an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used, as of June 30, 2011, in
valuing the Fund's assets carried at fair value:
LEVEL 2
OTHER LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
JUNE 30, 2011 PRICE INPUTS INPUTS
-------------- ------------- ----------- ------------
Investments in Securities* $ 101,044,800 $ 101,044,800 $ -- $ --
* Common stocks and short-term investments are level 1. Please refer to
schedule of investments for industry or sector breakout.
At the end of each calendar quarter, management evaluates the
classification of Levels 1,2 and 3 assets and liabilities. Various factors
are considered, such as changes in liquidity from the prior reporting
period; whether or not a broker is willing to execute at the quoted price;
the depth and consistency of prices from third party pricing services; and
the existence of contemporaneous, observable trades in the market.
Additionally, management evaluates the classification of Level 1 and Level
2 assets and liabilities on a quarterly basis for changes in listings or
delistings on national exchanges.
Due to the inherent uncertainty of determining the fair value of
investments that do not have a readily available market value, the fair
value of the Fund's investments may fluctuate from period to period.
Additionally, the fair value of investments may differ significantly from
the values that would have been used had a ready market existed for such
investments and may differ materially from the values the Fund may
ultimately realize. Further, such investments may be subject to legal and
other restrictions on resale or otherwise less liquid than publicly traded
securities.
For the year ended June 30, 2011, there were no transfers between Levels
1, 2 and 3 for the Fund.
FEDERAL INCOME TAXES. The Fund is treated as a separate entity for Federal
income tax purposes and intends to continue to qualify as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of
1986, as amended, and to distribute substantially all of its income to its
shareholders. Therefore, no Federal income tax provision has been made.
13
THE ROXBURY FUNDS
NOTES TO FINANCIAL STATEMENTS continued
Management has analyzed the Fund's tax positions taken on Federal income
tax returns for all open tax years (current and prior three tax years) and
has concluded that no provision for Federal income tax is required in the
Fund's financial statements. The Fund's Federal and state income and
Federal excise tax returns for tax years for which the applicable statutes
of limitations have not expired are subject to examination by the Internal
Revenue Service and state departments of revenue.
SECURITY TRANSACTIONS AND INVESTMENT INCOME. Investment security
transactions are accounted for on a trade date basis. The Fund uses the
specific identification method for determining realized gains and losses
on investments for both financial and Federal income tax reporting
purposes. Interest income is recorded on the accrual basis and includes
the amortization of premium and the accretion of discount. Dividend income
is recorded on the ex-dividend date. The Fund records expenses on an
accrual basis.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders
are recorded on the ex-dividend date. Distributions from net investment
income and net realized gains, if any, will be declared and paid annually.
NEW ACCOUNTING PRONOUNCEMENT. In May 2011, the Financial Accounting
Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.
2011-04 "Amendments to Achieve Common Fair Value Measurement and
Disclosure Requirements in U.S. GAAP and International Financial Reporting
Standards ("IFRSs.") ASU 2011-04 includes common requirements for
measurement of and disclosure about fair value between U.S. GAAP and IFRS.
ASU 2011-04 will require reporting entities to disclose the following
information for fair value measurements categorized within Level 3 of the
fair value hierarchy: quantitative information about the unobservable
inputs used in the fair value measurement, the valuation processes used by
the reporting entity and a narrative description of the sensitivity of the
fair value measurement to changes in unobservable inputs and the
interrelationships between those unobservable inputs. In addition, ASU
2011-04 will require reporting entities to make disclosures about amounts
and reasons for all transfers in and out of Level 1 and Level 2 fair value
measurements. The new and revised disclosures are effective for interim
and annual reporting periods beginning after December 15, 2011. Management
is currently evaluating the implications of ASU No. 2011-04 and its impact
on the financial statements.
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES. Roxbury Capital Management,
LLC ("Roxbury") serves as investment adviser to the Fund. For its
services, Roxbury receives a fee from the Fund at an annual rate as
follows:
% of Average Daily Net Assets
-------------------------------------------------
Small-Cap Growth Fund ............ 1.00% up to $1 billion; 0.95% of next $1 billion;
and 0.90% in excess of $2 billion
For the year ended June 30, 2011, Roxbury received an advisory fee of .72%
of the average daily net assets of the Fund after waivers and/or
reimbursements.
Roxbury has contractually agreed to waive a portion of its advisory fees
or reimburse for other operating expenses (excluding taxes, extraordinary
expenses, brokerage commissions and interest) to the extent that total
annual Fund operating expenses exceed the following percentage of average
daily net assets:
Expense Cap Expiration Date
----------- -----------------
Small-Cap Growth Fund Institutional Shares .................. 1.25% December 31, 2020
COMPENSATION OF TRUSTEES AND OFFICERS. The Fund pays each Trustee who is
not an interested person of the Fund a fee of $5,000 per year plus $2,000
for each Board meeting attended in person and $200 for each special Board
or committee meeting attended by telephone. Each Trustee is reimbursed for
reasonable out-of-pocket expenses incurred in connection with attendance
at Board or committee meetings. The Chairman is paid an additional fee of
$1,000 per year. The Fund pays the Chief Compliance Officer a fee of
$8,000 per year. Michael P. Malloy, Secretary of the Fund, is a partner of
Drinker, Biddle & Reath LLP, which receives legal fees from the Fund.
4. OTHER SERVICE PROVIDERS. BNY Mellon Investment Servicing (US) Inc. ("BNY
Mellon"), provides administrative and accounting services to the Fund
pursuant to an Accounting and Administrative Services Agreement.
The Bank of New York Mellon serves as custodian to the Trust pursuant to a
Custodian Services Agreement.
14
5. INVESTMENT SECURITIES TRANSACTIONS. During the fiscal year ended June 30,
2011, purchases and sales of investment securities (excluding short-term
investments) were as follows:
Small-Cap
Growth Fund
--------------
Purchases .................................................... $ 159,667,655
Sales ........................................................ 163,090,652
6. REDEMPTION FEES. In accordance with the prospectus, the Fund charges a
redemption fee of 1% on proceeds from shares redeemed within 60 days
following their acquisition. The redemption fee is included as a separate
line item under the Fund share transactions section on the Statements of
Changes in Net Assets.
7. FEDERAL TAX INFORMATION. Distributions to shareholders from net investment
income and realized gains are determined in accordance with Federal income
tax regulations, which may differ from net investment income and realized
gains recognized for financial reporting purposes. Accordingly, the
character of distributions and composition of net assets for tax purposes
may differ from those reflected in the accompanying financial statements.
To the extent these differences are permanent, such amounts are
reclassified within the capital accounts based on the tax treatment;
temporary differences do not require such reclassification. On June 30,
2011, the following reclassifications were made within the capital
accounts to reflect permanent differences relating to net operating
losses:
Paid-in Capital ................................................. $ (883,427)
Undistributed net investment income (loss) ...................... 883,427
There were no distributions paid during the years ended June 30, 2011 and
June 30, 2010.
Under federal tax law, capital losses realized after October 31 may be
deferred and treated as occurring on the first day of the following fiscal
year. For the fiscal year ended June 30, 2011, the Fund incurred no
post-October capital losses. As of June 30, 2011, the components of
accumulated deficit on a tax basis were as follows:
Capital loss carryforwards .................................... $ (33,659,035)
Net unrealized appreciation on investments .................... 17,132,230
-------------
Total accumulated deficit ..................................... $ (16,526,805)
=============
The differences between book basis and tax basis components of accumulated
deficit are attributable to the deferral of losses on wash sales.
For federal income tax purposes, capital loss carryforwards are available
to offset future capital gains. As of June 30, 2011, the Fund had capital
loss carryforwards of $33,659,035, of which $22,952,670 and $10,706,365
will expire on June 30, 2017 and June 30, 2018, respectively. Under the
recently enacted Regulated Investment Company Modernization Act of 2010,
capital losses incurred by the Fund after June 30, 2011 will not be
subject to expiration. In addition, these losses must be utilized prior to
the losses incurred in pre-enactment taxable years.
8. CONTRACTUAL OBLIGATIONS. The Fund enters into contracts in the normal
course of business that contain a variety of indemnifications. The Fund's
maximum exposure under these arrangements is dependent on claims that may
be made against the Fund in the future, and therefore, cannot be
estimated. However, based on experience, the risk of material loss for
such claims is considered remote.
9. SUBSEQUENT EVENT. Management has evaluated the impact of all subsequent
events on the Fund through the date the financial statements were issued,
and has determined that there were no subsequent events, other than the
following: At a reconvened Special Meeting of Shareholders held on August
9, 2011, which had been adjourned on June 29, 2011 and July 26, 2011,
shareholders of the Roxbury Small-Cap Growth Fund (the "Fund") considered
a proposal to approve a new investment advisory agreement between Roxbury
Capital Management, LLC and the Trust on behalf of the Fund. Shareholders
of record of the Fund on May 16, 2011 were entitled to vote on the
proposal. The proposal was approved at the reconvened August 9, 2011
Special Meeting of Shareholders and the votes recorded at the meeting are
provided below. Percentage information relates to the votes recorded as a
percentage of the outstanding shares at the record date.
VOTES FOR VOTES AGAINST VOTES ABSTAINED
PERCENTAGE/ PERCENTAGE/ PERCENTAGE/
NUMBER NUMBER NUMBER
--------------- ------------------ -----------------
62.79% 0.08% 0.25%
3,413,325 4,201 13,532
15
THE ROXBURY FUNDS
REPORT TO SHAREHOLDERS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of the Roxbury Funds
and the Shareholders of The Roxbury Small-Cap Growth Fund:
We have audited the accompanying statement of assets and liabilities of the
Roxbury Small-Cap Growth Fund, a series of The Roxbury Funds (the "Fund"),
including the schedule of investments, as of June 30, 2011, and the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the years in the two year period then ended, and the
financial highlights for each of the years in the five year period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of June 30, 2011 by correspondence with the
custodian and brokers or by other appropriate auditing procedures where replies
from brokers were not received. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Roxbury Small-Cap Growth Fund as of June 30, 2011, the results of its operations
for the year then ended, the changes in its net assets for each of the years in
the two year period then ended, and its financial highlights for each of the
years in the five year period then ended, in conformity with accounting
principles generally accepted in the United States of America.
-s- BBD, LLP
BBD, LLP
Philadelphia, Pennsylvania
August 23, 2011
16
ADDITIONAL INFORMATION
TAX INFORMATION (UNAUDITED)
For the fiscal year ended June 30, 2011, certain dividends may be subject to a
maximum tax rate of 15%, as qualified dividend income ("QDI") under the Jobs and
Growth Tax Relief Reconciliation Act of 2003. For individual shareholders, a
percentage of their ordinary income dividends (dividend income plus short-term
gains, if any) may qualify for a maximum tax rate of 15%. Complete information
is computed and reported in conjunction with your Form 1099-DIV.
In addition, for corporate shareholders, a percentage of their ordinary income
distributions qualifies for the dividends-received deduction ("DRD").
For the fiscal year ended June 30, 2011, the Fund has no qualifying QDI or DRD
since it did not pay any ordinary income dividends during the year.
In January 2012, shareholders of the Fund will receive Federal income tax
information on all distributions paid to their accounts in the calendar year
2011, including any distributions paid between July 1, 2011 and December 31,
2011.
BOARD APPROVAL OF ADVISORY AGREEMENT
On May 16, 2011, Wilmington Trust Corporation, which indirectly owned a
controlling interest in Roxbury, merged with M&T Bank Corporation (the
"Transaction"). The Transaction constituted an assignment, automatically
terminating the then current investment advisory agreement between Roxbury
Capital Management, LLC ("Roxbury" or the "Adviser") and the Trust on behalf of
the Fund (the "Prior Advisory Agreement") in accordance with the 1940 Act. As
required by the 1940 Act and in anticipation of the Transaction, at a meeting
held on March 16, 2011, the Board of Trustees, including all of the Trustees who
are not "interested persons" of the Trust ("Independent Trustees"), unanimously
approved (i) an interim investment advisory agreement between the Adviser and
the Trust (the "Interim Advisory Agreement") and (ii) a new investment advisory
agreement between the Adviser and the Trust (the "New Advisory Agreement"). The
Interim Advisory Agreement provided that, during the interim period between the
date of the Transaction and until shareholder approval of the New Advisory
Agreement, the Adviser would continue to act as investment adviser to the Fund
on substantially the same terms and with the same fee structure as the Prior
Advisory Agreement, except that the compensation earned by the Adviser would not
be received until shareholder approval of the New Advisory Agreement. In
addition, the Trustees had a pre-Board meeting with representatives of the
Adviser and counsel on March 14, 2011.
In determining whether to approve the Interim Advisory and New Advisory
Agreements at the meeting held on March 16, 2011, the Board exercised its
business judgment and considered information about the Adviser and certain
additional factors described below that the Board deemed relevant. In their
deliberations, the Trustees did not rank the importance of any particular piece
of information or factor considered, and it is presumed that each Trustee
attributed different weights to the various factors. The following summary
details the materials and factors that the Board considered, and the conclusions
the Board reached, in approving the Interim Advisory and New Advisory
Agreements.
Nature, Extent and Quality of Services Provided to the Fund. The Trustees
evaluated the nature, extent and quality of the services that the Adviser would
provide under the New Advisory Agreement and Interim Advisory Agreement, which
are the same services that the Adviser provides under the Prior Advisory
Agreement, on the basis of, among other things, the qualifications and
capabilities of the personnel responsible for providing services to the Fund.
The Trustees noted that, in addition to managing the Fund's investment program,
Roxbury provides, at its expense, personnel responsible for supervising the
provision of compliance, administrative services and related services. Roxbury
provided information about these services, as well as its profitability. The
Board also considered the qualifications, experience and responsibilities of the
portfolio managers for the Fund. Based on the information provided and the
Trustees' prior experience with the Adviser, the Trustees concluded that the
nature and extent of the services that the Adviser will provide under the New
Advisory Agreement and Interim Advisory Agreement, as well as the quality of
those services, would be satisfactory.
Investment Performance of the Fund. The Trustees considered the investment
experience of Roxbury and the investment performance of the Fund. The Fund had
underperformed its benchmark, the Russell 2000 Growth Index (the "Russell
Index") for the one -- and five-year ended March 11, 2011 but outperformed the
Russell Index for the three-year period ended March 11, 2011. The Fund had
outperformed five of the six funds in a peer group of generally similar funds
(the "Peer Group") for the five year period ended March 11, 2011. However, the
Fund had underperformed the Funds in the Peer Group for the one-year period
ended March 11, 2011. The Board considered this information as well as the
performance information that had been presented at the August 4, 2010 Board
meeting.
Costs of Services Provided and Profits Realized by the Adviser. The Board
considered the costs of services to be provided by Roxbury. In connection with
the Trustees' consideration of the level of the management fees, the Trustees
considered the gross and net expense ratio and gross and net advisory fee
comparisons of the Fund compared to the Peer Group as of March 11, 2011. The
Fund's gross and net advisory fees, which were 1.00% and 0.80%, respectively,
were above the median for the Peer Group. However, the Fund's gross and net
17
THE ROXBURY FUNDS
ADDITIONAL INFORMATION continued
total expenses, which were 1.46% and 1.26%, respectively, were below the median
of the Peer Group. The Board also considered Roxbury's contractual agreement to
limit the total expenses for the Fund. On the basis of the information provided,
the Board concluded that the advisory fee under the New Advisory Agreement and
Interim Advisory Agreement is reasonable and appropriate in light of the quality
of the services provided to the Fund.
Economies of Scale and Fee Levels Reflecting Those Economies. The Trustees
considered the extent to which economies of scale were expected to be realized
relative to fee levels as the Fund's assets grow, and whether the advisory fee
levels and fee waivers reflect these economies of scale for the benefit of
shareholders.
Other Benefits to the Adviser. In addition to the above factors, the Trustees
also discussed other benefits received by Roxbury from its management of the
Fund, including, without limitation, the ability to market its advisory services
for similar products in the future.
18
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
The following Expense Table is shown so that you can understand the impact
of fees on your investment. All mutual funds have operating expenses. As a
shareholder of the Fund, you may incur transaction costs, such as redemption
fees, and ongoing costs, including management fees and other Fund expenses. The
Fund's expenses are expressed as a percentage of its average net assets. This
figure is known as the expense ratio. The following examples are intended to
help you understand the ongoing costs (in dollars) of investing in the Fund and
to compare these costs with the ongoing costs of investing in other mutual
funds. The example is based on an investment of $1,000 made at the beginning of
the period shown and held for the entire period.
The Expense Table below illustrate your Fund's costs in two ways.
- ACTUAL FUND RETURN. The first line of the table below provides
information about actual account values and actual expenses. You may use the
information in this line, together with the amount you invested, to estimate the
expenses that you paid over the period. Simply divide your account value by
$1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then
multiply the result by the number in the first line under the heading entitled
"Expenses Paid During Period" to estimate the expenses you paid on your account
during the period.
- HYPOTHETICAL 5% RETURN. The second line of the table below provides
information about hypothetical account values and hypothetical expenses based on
the Fund's actual expense ratio and an assumed rate of return of 5% per year
before expenses, which is not the Fund's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expenses you paid for the period. You may use this information to
compare the ongoing costs of investing in the Fund and other funds. To do so,
compare this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees, if any. Therefore, the
second line of each table is useful in comparing ongoing costs only, and will
not help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher. The "Annualized Expense Ratio" reflects the actual expenses for the
period indicated.
FOR THE PERIOD JANUARY 1, 2011 TO JUNE 30, 2011
EXPENSE TABLE
Beginning Ending Expenses
Account Account Annualized Paid
Value Value Expense During
01/01/11 06/30/11 Ratio Period*
----------- ------------ ---------- --------
Roxbury Small-Cap Growth Fund -- Institutional Shares
Actual Fund Return ............................................. $ 1,000.00 $ 1,083.60 1.25% $ 6.46
Hypothetical 5% Return Before Expenses ......................... 1,000.00 1,018.60 1.25 6.26
----------
* Expenses are equal to the Fund's annualized expense ratio multiplied by
the average account value over the period, multiplied by 181/365 (to
reflect the one half-year period).
19
THE ROXBURY FUNDS
TRUSTEES AND OFFICERS (UNAUDITED)
The Trust is governed by a Board of Trustees (the "Trustees"). The primary
responsibilities of the Trustees of the Trust are to represent the interest of
the Trust's shareholders and to provide oversight management of the Trust.
Unless specified otherwise, the address of each Trustee and Officer as it
relates to the Trust is 6001 Shady Oak Road, Suite 200, Minnetonka, MN 55343.
The Statement of Additional Information for the Trust contains additional
information about the Trust's Trustees and Officers and is available, without
charge, upon request, by calling (800) 497-2960 or by visiting the Fund's
website at www.RoxburyFunds.com.
The following table sets forth certain information with respect to the Trustees
of the Trust:
INDEPENDENT TRUSTEES
Number of
Principal Funds in Fund Other
Position(s) Term of Office(1) and Occupation(s) Complex Directorships
Name, Address Held with Length of Time During Past Overseen by Held by
and Age Trust Served Five Years Trustee Trustee(2)
------------------ ---------------- ---------------------- ------------------------ ------------- -------------
KENNETH GUDORF Trustee and Since June 2006 CEO, Agio Capital
Age 72 Chairman of the Partners I, L.P.
Board (private investment 1 None
company).
JOHN OTTERLEI Trustee Since June 2006 Chief Investment Officer, 1 None
Age 62 Bush Foundation, since
2010; Managing Director,
Investments, from 2008
to 2009; Independent
Financial Advisor, from
2005 to 2008.
----------
(1) Each Trustee serves during the continued lifetime of the Trust until he
dies, resigns, is declared bankrupt or incompetent by a court of competent
jurisdiction, or is removed.
(2) Includes directorships of companies required to report to the SEC under
the Securities Exchange Act of 1934, as amended (i.e., "public
companies"), or other investment companies registered under the 1940 Act.
20
OFFICERS OF THE TRUST
The following table sets forth certain information with respect to the Officers
of the Trust:
Principal
Position(s) Term of Office(1) and Occupation(s)
Name, Address Held with Length of Time During Past
and Age Trust Served Five Years
--------------------------- ----------------------- --------------------- --------------------------------------------
BRIAN C. BEH President Since April 2006 President and Chief Executive Officer of
Age 48 Roxbury Capital Management, LLC, since
2007; President of Roxbury Capital
Management, LLC, from 2003 to 2007.
LANCE P. SIMPSON Treasurer and Chief Since June 2008 Controller, Roxbury Capital Management,
Age 32 Compliance Officer and May 2009 LLC, since 2007; Accountant, Work Rite
Uniform, from 2005 to 2007.
MICHAEL P. MALLOY Secretary Since May 2007 Partner in the law firm Drinker Biddle &
Drinker Biddle & Reath LLP Reath LLP.
One Logan Square
18th & Cherry Streets
Philadelphia, PA 19103-6996
Age 52
MEGAN E. EDWARDS Assistant Secretary and Since August 2010 Senior Compliance Analyst, Roxbury
Age 38 Anti-Money Laundering Capital Management, LLC, since February
Compliance Officer 2010; Compliance Analyst, Deephaven
Capital Management, from 2008 to 2009;
Compliance Risk Analyst GMAC ResCap, from
2004 to 2008.
----------
(1) Each officer shall serve until his or her resignation is accepted by the
Trustees, and his or her successor is chosen, elected and qualified, or
until he or she dies or is removed. Any officer may be removed by the
affirmative vote of a majority of the Trustees at any time, with or
without cause.
21
This page left blank intentionally
This page left blank intentionally
(IMAGE) This report is not authorized for distribution unless
preceded or accompanied by a prospectus for the Fund.
Shares of The Roxbury Funds are distributed by
Professional Funds Distributor, LLC, 760 Moore Road,
King of Prussia, PA 19406.
JUNE 11
ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report,
has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by
the registrant or a third party.
(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial
officer, principal accounting officer or controller, or persons
performing similar functions, regardless of whether these
individuals are employed by the registrant or a third party, and
that relates to any element of the code of ethics definition set
forth in paragraph (b) of this Item.
(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial
officer, principal accounting officer or controller, or persons
performing similar functions, regardless of whether these
individuals are employed by the registrant or a third party, that
relates to one or more of the items set forth in paragraph (b) of
this Item.
(f) A copy of the Code of Ethics is available as provided in Item 12 (a)
(1) of this report.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the Registrant's Board of
Trustees has determined that Kenneth Gudorf and John Otterlei each qualify to
serve as an audit committee financial expert serving on its audit committee and
that each is "independent," as defined by Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Audit Fees
(a) The aggregate fees billed for the fiscal years ended June 30, 2011
and June 30, 2010 for professional services rendered by the
principal accountant for the audit of the registrant's annual
financial statements or services that are normally provided by the
accountant in connection with statutory and regulatory filings or
engagements for those fiscal years are $17,000 and $17,000,
respectively.
Audit-Related Fees
(b) The aggregate fees billed in the fiscal years ended June 30, 2011
and June 30, 2010 for assurance and related services by the
principal accountant that are reasonably related to the performance
of the audit of the registrant's financial statements and are not
reported under paragraph (a) of this Item are $0 and $0,
respectively.
Tax Fees
(c) The aggregate fees billed in the fiscal years ended June 30, 2011
and June 30, 2010 for professional services rendered by the
principal accountant for tax compliance, tax advice, and tax
planning are $1,500 and $1,500, respectively. Fees were for the
review of federal and state income tax returns and excise tax
returns.
All Other Fees
(d) The aggregate fees billed in the fiscal years ended June 30, 2011
and June 30, 2010 for products and services provided by the
principal accountant, other than the services reported in paragraphs
(a) through (c) of this Item are $0 and $0, respectively.
(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
Pursuant to its charter, the Trust's Audit Committee must review and
approve in advance the engagement of the independent accountants,
including each audit and non-audit service permitted by appropriate
rules or regulations provided to the Trust and each non-audit
service provided to the Trust's investment adviser and any entity
controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the Trust
relating to the operations and financial reporting of the Trust. The
Committee may delegate the authority to grant such pre-approval to
one or more Committee members who are independent Trustees within
the meaning of Section 10A(i) of the Securities Exchange Act of
1934, as amended, provided that the decision of such member(s) is
presented to the full Committee at its next scheduled meeting. The
Committee may approve each audit and non-audit service on a
case-by-case basis, and/or adopt pre-approval policies and
procedures that are detailed as to a particular service, provided
that the Committee is informed of each service in a timely manner
and the policies and procedures do not include delegation of the
Committee's responsibilities under the Securities Exchange Act of
1934 to management. The foregoing pre-approval requirement with
respect to the provision of non-audit services to the Trust may be
waived if (i) the aggregate amount of all such non-audit services
provided to the Trust constitutes not more than 5 percent of the
total amount of revenues paid by the Trust to its independent
accountants during the fiscal year in which the non-audit services
are provided; (ii) such services were not recognized by the Trust at
the time of the engagement to be non-audit services; and (iii) such
services are promptly brought to the attention of the Committee and
approved prior to the completion of the audit by the Committee or by
one or more members of the Committee to whom authority to grant such
approvals has been delegated by the Committee.
(e)(2) There were no services described in each of paragraphs (b) through
(d) of this Item that were approved by the audit committee pursuant
to the waiver of pre-approval requirement in paragraph (c)(7)(i)(C)
of Rule 2-01 of Regulation S-X.
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the
most recent fiscal year that were attributed to work performed by
persons other than the principal accountant's full-time, permanent
employees was less than fifty percent.
(g) The aggregate non-audit fees billed by the registrant's accountant
for services rendered to the registrant, and rendered to the
registrant's investment adviser (not including any sub-adviser whose
role is primarily portfolio management and is subcontracted with or
overseen by another investment adviser), and any entity controlling,
controlled by, or under common control with the adviser that
provides ongoing services to the registrant for fiscal years ended
June 30, 2011 and June 30, 2010 of the registrant was $1,500 and
$1,500, respectively.
(h) The registrant's audit committee of the board of directors has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser), and
any entity controlling, controlled by, or under common control with
the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with
maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. INVESTMENTS.
(a) Schedule of Investments in securities of unaffiliated issuers as of the
close of the reporting period is included as part of the report to
shareholders filed under Item 1 of this form.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
PROXY VOTING POLICIES AND PROCEDURES AND PROXY VOTING RECORD
A description of the Fund's policies and procedures with respect to the voting
of proxies relating to the Fund's portfolio securities is available without
charge, upon request, by calling 1-800-497-2960. Information regarding how the
Fund voted proxies related to portfolio securities during the 12-month period
ended June 30, 2011 is available without charge, upon request, by calling
1-800-497-2960. This information is also available on the Securities and
Exchange Commission's ("SEC") website at www.sec.gov.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of trustees.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of this report that includes the disclosure
required by this paragraph, based on their evaluation of these
controls and procedures required by Rule 30a-3(b) under the 1940 Act
(17 CFR 270.30a-3(b)) and Rule 15d-15(b) under the Securities Exchange
Act of 1934, as amended (17 CFR 240 15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the registrant's second
fiscal quarter of the period covered by this report that has
materially affected, or are reasonably likely to materially affect,
the registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section
302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section
906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) The Roxbury Funds
By (Signature and Title)* /s/ Brian C. Beh
----------------------------------------------
Brian C. Beh, President
(principal executive officer)
Date 9/2/11
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Brian C. Beh
----------------------------------------------
Brian C. Beh, President
(principal executive officer)
Date 9/2/11
By (Signature and Title)* /s/ Lance Simpson
----------------------------------------------
Lance Simpson, Treasurer and CCO
(principal financial officer)
Date 9/2/11
* Print the name and title of each signing officer under his or her signature.