SCHEDULE 14C INFORMATION
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MTB GROUP OF FUNDS
MTB International Equity Fund
5800 Corporate Drive
Pittsburgh, PA 15237-7010
January 13, 2006
Dear Shareholder,
This letter is being provided to the shareholders of MTB
International Equity Fund (the "Fund"), a portfolio of MTB Group of Funds
(the "Trust"), to notify shareholders of portfolio management changes for the
Fund.
The Trust and MTB Investment Advisors, Inc. ("MTBIA") received an
exemptive order from the U.S. Securities and Exchange Commission that permits
MTBIA, as the Funds' investment advisor, to hire new sub-advisors or make
changes to the existing sub-advisory agreements with the approval of the
Trust's Board of Trustees, but without obtaining approval of the shareholders
of the affected Fund. As a condition of this exemptive order, MTBIA and the
Trust are required to furnish shareholders with information about the new
sub-advisors or sub-advisory agreements.
The enclosed "Information Statement" provides information
relating to the changes in portfolio management for the Funds. The changes
described in the "Information Statement" do not require shareholder
approval. You have previously been provided with supplements to the Funds'
prospectuses reflecting the changes to the prospectuses required in
connection with the changes in sub-advisors.
Please take a few minutes to review the attached materials and
thank you for your investment in MTB Group of Funds.
Sincerely,
Carl W. Jordan
President
MTB Group of Funds
INFORMATION STATEMENT
MTB GROUP OF FUNDS
MTB International Equity Fund
5800 Corporate Drive
Pittsburgh, PA 15237-7010
This Information Statement is being provided to shareholders of MTB
International Equity Fund (Fund), a portfolio of MTB Group of Funds (Trust),
to provide information regarding the sub-advisory agreements recently entered
into with Hansberger Global Investors, Inc. (HGI), SSgA Funds Management,
Inc. (SSgA FM) and LSV Asset Management (LSV), respectively. (HGI, SSgA FM
and LSV are collectively referred to as New Sub-Advisors.) WE ARE NOT ASKING
YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
Details of Sub-Advisory Relationships
On September 21, 2005, the Board of Trustees of the Trust (Board)
unanimously approved the recommendation of the Trust's investment manager,
MTB Investment Advisors, Inc. (MTBIA), 100 East Pratt Street, 17th floor,
Baltimore, MD 21202, to hire HGI as a sub-advisor for the growth component of
the Fund; to hire SSgA FM as a sub-advisor for the core component of the
Fund; and to hire LSV as a sub-advisor for the value component of the Fund,
all replacing UBS Global Asset Management (Americas) Inc. (UBS).
MTBIA and its predecessors or affiliates have been the investment
advisor to the Fund since its inception. MTBIA continues to serve as such
under an Investment Advisory Contract (Advisory Contract) that was last
approved by Consent of Sole Shareholder dated November 8, 2000. Under the
Advisory Contract, MTBIA has the overall responsibility, subject to the
oversight of the Board, for providing investment advisory services to the
Trust. Also under the Advisory Contract, MTBIA is permitted to hire
sub-advisors to assist it in investing the Trust's assets. MTBIA monitors and
evaluates the performance of any sub-advisors and makes recommendations to
the Board regarding their hiring, termination and replacement.
UBS previously served as sub-advisor to the Fund pursuant to a contract
approved by Consent of Sole Shareholder of the Fund on November 8, 2000.
On October 24, 2005, MTBIA and the Trust entered into new sub-advisory
agreements (New Sub-Advisory Agreements) with each New Sub-Advisor. Each New
Sub-Advisor began serving as a sub-advisor to the Fund on that date. The
subadvisory fees for each New Sub-Advisor are being paid by MTBIA out of the
investment advisory fee it receives from the Fund.
The New Sub-Advisory Agreements do not require shareholder approval
because the Trust has received permission from the U.S. Securities and
Exchange Commission (SEC) to enter into new sub-advisory agreements without
the delay and expense of a shareholder vote. This special permission was made
subject to several conditions. One of the conditions, which has been
satisfied, is that the shareholders of the Fund must approve a policy to
permit the Trust's board and investment advisor to appoint and replace
sub-advisors for the Fund and to enter into and amend its sub-advisory
contracts without seeking shareholder approval. Another condition requires
shareholders to be notified of the details of any new sub-advisory agreements
entered into by the Trust by sending the shareholders an Information
Statement within 90 days of the hiring of the new subadvisor. Therefore, you
are receiving this disclosure document.
Reasons and Process for Appointing New Sub-Advisors
The decision to terminate the previous subadvisory relationship, and
the recommendation to enter into the new sub-advisory relationships, were
made by MTBIA in the ordinary course of its ongoing evaluation of fund
performance and investment strategy. In particular, MTBIA determined that the
use of multiple managers, each with specific expertise in managing a separate
style component of the Fund, was preferable to the single manager approach
previously in effect. The selection of each New Subadvisor for recommendation
to the Board was made after extensive research of numerous candidate firms
and qualitative and quantitative analysis of each candidate's organizational
structure, investment process, style and long-term performance record.
In evaluating each New Sub-Advisor, the Trustees received written and
oral information from MTBIA and each New Sub-Advisor about the portfolio
managers or management team, their investment philosophies, strategies and
processes, and other factors. In approving each New Sub-Advisor as
sub-advisor to a Fund, the Trustees met at its regular meeting on September
20-21, 2005, and carefully evaluated: (1) the search process that led to
MTBIA's recommendation; (2) the nature, extent and quality of the services
expected to be rendered to the Fund; (3) the distinct investment objective
and policies of the Fund; (4) the history, organizational structure,
financial condition and reputation of each New Sub-Advisor, and the
qualification and background of each New Sub-Advisor's personnel; (5) the
practices and policies of each New Sub-Advisor with respect to selecting
brokers and executing trades; (6) certification by the New Sub-Advisors of
the existence and adequacy of an advisor compliance program under the
Investment Advisers Act of 1940; (7) any regulatory, compliance or litigation
matters; (8) business continuity and document management programs; (9) the
investment performance records of each New Sub-Advisor; (10) the
reasonableness of the fees to be paid to and the profits to be realized by
each New Sub-Advisor (including any benefits to be received by each New
Sub-Advisor or its affiliates in connection with soft dollar arrangements);
(11) whether the fees to be paid to the Sub-Advisors were competitive with
the fees they charge other clients that are similarly managed; (12) how
competitive forces in the market impacted the ability to secure the services
of sub-advisors and negotiate fees; (13) the extent to which economies of
scale would be realized as the Fund grows, and whether fee levels reflect
these economies of scale; (14) the reasonableness of the fees that would be
retained by MTBIA, before and after any voluntary waivers, and that there
would be no changes to the advisory fee charged to the Fund; and (15) other
factors deemed relevant. The Board relied upon MTBIA's report to the Board
that the nature of the services to be provided by, and the fees to be paid
to, the New Sub-Advisors are no less favorable to the Fund than are available
from other prospective sub-advisors, noting in that regard that all fees to
New Sub-Advisors will be paid by MTBIA, and not by the Fund.
The Board's decision to approve each New Sub-Advisory Agreement
reflects the exercise of its business judgment on whether the proposed new
sub-advisory arrangements would be in the best interest of the Fund. During
the course of its review of these agreements, the Board considered and relied
upon many factors, among the most material of which are those set forth above.
In particular, the Board relied upon the fact that MTBIA remains the
party primarily responsible for the performance of the Fund, through its
selection and retention (subject to approval of the Board) and continued
supervision of each New Sub-Advisor, and that MTBIA recommended to the Board
the engagement of each New Sub-Advisor after extensive research of numerous
candidate firms. The Board also relied upon the fact that MTBIA negotiated
fee arrangements with the New Sub-Advisors on an arms-length basis and the
new sub-advisory arrangements will not result in any increase in the total
advisory fees and total expenses payable by the Fund.
Finally, the Board based its decision on the favorable results of an
independent review and consideration of extensive background material
provided to it by each New Sub-Advisor regarding the New Sub-Advisor's
organizational structure, compliance program, investment process, style and
long-term performance record. No one factor was determined to be
determinative and the Board made no separate findings or conclusions with
respect to the factors considered. Instead, all of the foregoing factors were
considered together in reaching the conclusion to approve each new
Sub-Advisory Agreement.
New Sub-Advisory Agreements
Each New Sub-Advisor serves as sub-advisor under sub-advisory
agreements among MTBIA, the Fund and the respective New Sub-Advisor. Under
their respective New Sub-Advisory Agreements, each New Sub-Advisor makes
investment decisions for the assets of the Fund component allocated to it by
MTBIA, and continuously reviews, supervises and administers such Fund
component's investment programs with respect to these assets. Each New
Sub-Advisor is independent of MTBIA and discharges its responsibilities
subject to the supervision of MTBIA and the Trustees, and in a manner
consistent with the Fund's investment objectives, policies and limitations.
The New Sub-Advisory Agreements are substantially similar to those in
existence among the Trust, MTBIA and the Trust's other sub-advisors.
Specifically, the duties to be performed, standard of care and termination
provisions of the New Sub-Advisory Agreements are similar to the other
agreements. Each New Sub-Advisory Agreement will remain in effect
until October 24, 2008 (unless earlier terminated), and will have to be
approved annually thereafter by a majority of the Trustees, including a
majority of the Trustees who are not parties to the New Sub-Advisory
Agreements or "interested persons," as that term is defined in the Investment
Company Act of 1940, of any party to a New Sub-Advisory Agreement.
Compensation
Pursuant to the terms of the New Sub-Advisory arrangements, HGI
receives a sub-advisory fee from MTBIA on the growth portion of the average
daily net assets (ADNA) of the Fund at the following annual rate: 0.60% on
all assets; SSgA FM receives an annual sub-advisory fee from MTBIA on the
core portion of the ADNA of the Fund at the following annual rate: 0.40% on
the first $50 million, 0.32% on the next $90 million, and 0.30% on ADNA over
$140 million; and LSV receives a sub-advisory fee from MTBIA on the value
portion of the ADNA of the Fund at the following annual rate: 0.49% on all
assets. (By comparison, UBS received a sub-advisory fee from MTBIA on the
ADNA of the Fund at the following annual rate: 0.40% on the first $50 million
of ADNA; 0.35% on the next $150 million of ADNA; and 0.30% on ADNA over $200
million.) The new sub-advisory arrangements will not affect the advisory
fees or total expenses payable by the Fund. All sub-advisory fees will be
paid by MTBIA out of its investment advisory fee. Each New Sub-Advisor may
voluntarily waive all or a portion of its sub-advisory fee in its sole
discretion.
For its services under the Advisory Contract, MTBIA receives an annual
Advisory Fee from the Fund equal to 1.00% of the Fund's ADNA. For the fiscal
year ended April 30, 2005, the Fund paid MTBIA $1,229,522 for investment
advisory services.
UBS, the Fund's previous sub-advisor, was paid by MTBIA as follows:
0.40% on the first $50 million of ADNA; 0.35% on the next $150 million of
ADNA; and 0.30% on ADNA over $200 million. For the fiscal year ended April
30, 2005, MTBIA paid UBS $453,465 for sub-advisory services.
Additional Information on the Sub-Advisors
HGI
HGI is a registered investment advisor and a wholly-owned subsidiary of
Hansberger Group, Inc., a privately held corporation. It was founded in 1994
and its principal business address is 401 East Las Olas Blvd., Suite 1700,
Fort Lauderdale, FL 33301. As of December 31, 2005, HGI managed approximately
$7.5 billion in assets.
Following is a list of the directors and principal executive officers
of HGI and their principal occupation. Unless otherwise noted, the address
of each person listed is 401 East Las Olas Blvd., Suite 1700, Fort
Lauderdale, FL 33301.
Name Principal Occupation
Thomas Loren Hansberger Chairman and CEO
Jerald Christopher Jackson Senior Vice President and General
Counsel
Wesley Edmond Freeman Managing Director of Institutional
Marketing
Thomas Allen Christensen Chief Financial Officer
Neil Edward Riddles Chief Operating Officer
Ronald Wayne Holt President and Managing Director of
Research
Thomas R. H. Tibbles* Chief Investment Officer - Growth Team
and Managing Director - Canada
Lauretta Ann Reeves Chief Investment Officer - Value Team
and Managing Director of Research
Technology
David Sundin Lemanski Chief Administrative Officer
Susan H. Moore-Wester Chief Compliance Officer
*5500 North Service Road, 11th Floor, Burlington, Ontario, Canada L7L6W6
HGI currently serves as investment advisor or subadvisor to two other
mutual funds with an objective similar to the Fund. The following chart
contains a description of these funds and the compensation paid to HGI for
its advisory services:
Name of Fund Approximate Total Advisory Fee Waiver of
Fund Assets as of (Annually, as Advisory Fee
December 31, 2005 % of average
daily net
assets)
Hansberger $198,702,793 0.75% HGI will waive
Institutional Series fees and/or
- - International reimburse
Growth Fund expenses in
order to limit
total fund
operating
expenses* to
1.00% and 1.15%
for the
Institutional
Class and the
Advisor Class,
respectively.**
ING International $4,967,778 0.45% on the None
Capital Appreciation first $500
Fund million of the
Fund's ADNA;
0.40% on the
next $500
million of the
Fund's ADNA;
and 0.35% of
the Fund's
ADNA in excess
of $1 billion
*Total expenses exclude brokerage, interest, taxes, deferred
organizational and extraordinary expenses.
**HGI may recoup all or a portion of any waived management fees and
reimbursed expenses it has borne, if any, within one year after the end of
the fiscal year in which the waiver was made. The waiver agreement will
continue in effect through April 30, 2006. There is no guarantee that the
waiver agreement will continue after that date.
SSgA FM
SSgA FM is a registered investment advisor and a wholly-owned
subsidiary of State Street Corporation, a publicly traded bank holding
company. It was founded in 2001 and its principal business address is State
Street Financial Center, One Lincoln Street, Boston, Massachusetts
02111-2900. State Street Corporation owns 100% of the outstanding voting
securities of SSgA FM. Its principal business address is the same as SSgA FM.
As of December 31, 2005, SSgA FM managed approximately $97 billion in assets.
Following is a list of the directors and principal executive officers
of SSgA FM and their principal occupation. Unless otherwise noted, the
address of each person listed is State Street Financial Center, One Lincoln
Street, Boston, Massachusetts 02111-2900.
Name Principal Occupation
James Ross Director and President, SSgA FM;
[Senior] Principal, State Street
Global Advisors, a division of State
Street Bank and Trust Company
Peter Leahy Director, SSgA FM; Chief Operating
Officer, State Street Global Advisors,
a division of State Street Bank and
Trust Company
Mitchell Shames Director, SSgA FM; Chief Counsel,
State Street Global Advisors, a
division of State Street Bank and
Trust Company
Thomas Kelly Treasurer, SSgA FM; Senior Principal,
State Street Global Advisors, a
division of State Street Bank and
Trust Company
Peter Ambrosini Chief Compliance Officer, SSgA FM and
State Street Global Advisors, a
division of State Street Bank and
Trust Company
Mark Duggan Chief Legal Officer, SSgA FM; Senior
Counsel, State Street Global Advisors,
a division of State Street Bank and
Trust Company
SSgA FM currently serves as subadvisor to one other mutual fund with
an objective similar to the Fund. The following chart contains a description
of this fund and the compensation paid to SSgA FM for its sub-advisory
services:
Name of Fund Approximate Total Advisory Fee Waiver of
Fund Assets as of (annually, as % of Advisory Fee
December 31, 2005 average daily net
assets)
Citistreet $185,323,904 0.50% on the first None
International $50 million of
Stock Fund average daily net
assets (ADNA),
0.45% on the next
$100 million of
ADNA, and 0.40% on
ADNA over $150
million
LSV
LSV is a registered investment advisor that was formed as a Delaware
partnership in November 1994. The general partnership interests of LSV are
principally as follows: SEI Funds, Inc. (a wholly-owned subsidiary of SEI
Investments, a publicly held corporation), 43%; Josef Lakonishok, 24%; Robert
Vishny, 12%; and Chris LaCroix, 11%. As of December 31, 2005, LSV oversaw
approximately $51.8 billion of client assets in equity portfolios for a
variety of institutional investors including retirement plans, endowments,
foundations, corporations and mutual fund sponsors. LSV's principal business
address is 1 North Wacker Drive, Suite 4000, Chicago, Illinois 60606.
Following is a list of the general partners (exclusive of SEI Funds,
Inc.) who (i) hold the five largest economic interests in LSV, and (ii)
exercise primary management responsibility with respect to LSV, together with
their principal occupation. Unless otherwise noted, the address of each
person listed is 1 North Wacker Drive, Suite 4000, Chicago, Illinois 60606.
Name Principal Occupation
Josef Lakonishok Partner, Chief Executive Officer and
Portfolio Manager, LSV and William G.
Karnes Professor of Finance at the
College of Commerce & Business
Administration at the University of
Illinois at Urbana-Champaign
Robert Vishny Partner and Portfolio Manager, LSV and
Eric J. Gleacher Distinguished Service
Professor of Finance, University of
Chicago Graduate School of Business
Menno Vermeulen, CFA Partner, Portfolio Manager and Senior
Quantitative Analyst, LSV
Christopher Lacroix Partner and Managing Director of New
Business Development, LSV
Tremaine Atkinson Partner, Chief Operating Officer and
Chief Compliance Officer, LSV
LSV currently serves as subadvisor (but not investment advisor) to 10
other mutual funds with an objective similar to the Fund. The following chart
contains a description of the funds and the compensation paid to LSV for its
sub-advisory services:
Name of Fund Approximate Total Subadvisory Fee Waiver of
Fund Assets as of (annually, as % of Subadvisory
December 31, 2005 average daily net Fee
assets)
DIA International $1 billion 0.45% of the first None
Equity Portfolio $100 million of
ADNA; 0.40% of the
next $100 million
of ADNA; 0.37% of
the next $400
million of ADNA;
0.35% of the next
$200 million of
ADNA; and 0.33% of
any amount in
excess of $800
million of ADNA.
Prudential $253 million; $199 0.45% of the first None
Investments LLC: million; $34 $150 million of
AST LSV million; $34.6 ADNA; 0.425% of the
International million; $113.5 next $150 million
Value Portfolio; million; $131.3 of ADNA; 0.40% of
Prudential Series million; $388.7 the next $150
Fund Global million million of ADNA;
Portfolio; 0.375% of the next
Strategic $300 million of
Partners Growth ADNA; and 0.35% of
Allocation Fund; any amount in
Strategic excess of $750
Partners Moderate million.
Allocation Fund;
Target
International
Equity Portfolio;
Strategic
Partners
International
Value Fund; SP
LSV International
Value Portfolio
Wells Fargo Funds $230.2 million; 0.35% of the first None
Trust - $163 million $150 million of
International ADNA; 0.40% of the
Equity Fund; next $350 million;
International 0.35% of the next
Value Fund $250 million;
0.325% of the next
$250 million; 0.30%
of any amount in
excess of $1
billion.
Additional Information on the Funds
The Trust mailed to shareholders the annual report for the Fund, which
includes audited financial statements for its fiscal year ended April 30,
2005, and its semi-annual report, which contains unaudited financial
statements for the period ended October 31, 2005. The Trust will promptly
provide, without charge and upon request, a copy of the Fund's annual report
and/or semi-annual report. Requests for the annual report or semi-annual
report for the Fund may be made by writing to the Trust's principal executive
offices located at 5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7010
or by calling the Trust toll-free at 1-800-836-2211.
The Trust's distributor is Edgewood Services, Inc., 5800 Corporate
Drive, Pittsburgh, Pennsylvania 15237-5829.
The co-administrators for the Trust are M&T Securities, Inc., One M&T
Plaza, Buffalo, NY 14203; and Federated Services Company, Federated Investors
Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779.
January 13, 2006
IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY
In an effort to reduce costs and avoid duplicate mailings, the Trust intends
to deliver a single copy of certain documents to each household in which more
than one shareholder of the Trust resides (so-called "householding"), as
permitted by applicable rules. The Trust's "householding" program covers its
Prospectuses and Statements of Additional Information, and supplements to
each, as well as Semi-Annual and Annual Shareholder Reports and any Proxies
or information statements. Shareholders must give their written consent to
participate in the "householding" program. The Trust is also permitted to
treat a shareholder as having given consent ("implied consent") if (i)
shareholders with the same last name, or believed to be members of the same
family, reside at the same street address or receive mail at the same post
office box, (ii) the Trust gives notice of its intent to "household" at least
sixty (60) days before they begin "householding" and (iii) none of the
shareholders in the household have notified the Trust or its agent of the
desire to "opt out" of "householding." Shareholders who have granted written
consent, or have been deemed to have granted implied consent, can revoke that
consent and opt out of "householding" at any time: shareholders who purchased
shares through an intermediary should contact their representative; other
shareholders may call the Trust at 1-800-836-2211.
Edgewood Services, Inc., Distributor
Cusip 55376T791
Cusip 55376T783
Cusip 55376T775
34203 (01/06)