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Amid bearish market, Annuity Board funds seen as ‘competitive value’

DALLAS (BP)–Despite a series of bearish surprises coming together for one of the largest first-half losses in U.S. stocks since the 1970s, the Annuity Board believes AB Funds Trust is positioned to weather the storm for its more than 140,000 retirement participants.

“We realize this is a frustrating and frightening time to be investing money in the stock market, and it is particularly alarming for participants looking to retire in the next one to five years,” said Roddy Cummins, Annuity Board Investment officer. “But in the midst of a declining market, we believe AB Funds Trust, with its 13 no-load mutual funds, continues to offer our participants a competitive value.”

The current investment climate can be attributed to several factors — mixed economic signals, overvalued stocks, accounting scandals and the continued threat of terrorism.

“As investors, we are in the midst of one of the most challenging and severe market environments in the past half-century,” Cummins said. “While the U.S. economy continues to show signs of recovery, we are still in the painful, but necessary, process of purging excesses brought about by the last economic expansion and the bubble market of the late 1990s.”

Americans are familiar with the recent significant declines in large corporations such as Enron and WorldCom, and the employees in these organizations were among those most adversely impacted. In many cases a large portion of those employees’ retirement funds was invested directly in the individual stock of these companies.

In contrast, when Annuity Board retirement participants invest in one or more of AB Funds Trust’s mutual funds, they are pooling their assets with hundreds or even thousands of other participants to buy stocks and/or bonds of hundreds of different companies.

“The result of this structure means if a single stock has a significant loss, the impact on an individual account is limited, compared to those who owned that stock alone,” Cummins explained. “The disciplined and rigorous process that has become a hallmark of AB Funds Trust helps to minimize company-specific risks.” None of AB Funds Trust select equity funds has fewer than 450 different stock holdings.

“Although no investment fund is free of risk, the retirement assets with AB Funds Trust are diversified in a number of ways to protect our participants from the kinds of losses you read about in the headlines,” Cummins said.

“Our investment management process uses a ‘manager of managers’ approach that benefits our investors by providing access to the world’s best intellectual capital to navigate our customers’ portfolios through these rough waters,” he added.

The adviser to AB Funds Trust, SBC Financial Services (an Annuity Board affiliate), carefully selects the investment management firms based on a rigorous selection criterion including investment performance and style. Once hired, the firms are continually monitored to make sure they are meeting the fund’s investment goals and objectives. In most of the funds, two or more investment management firms are employed to help neutralize the underperformance of any single firm. SBC Financial Services contracts with approximately 25 of the leading investment management firms in the world.

“While we are troubled by the unsettled current conditions of the financial markets and overall magnitude of losses suffered by investors in equity securities, we remain as confident as ever before in the long-term outlook for the U.S. economy and financial markets,” Cummins said. “Despite the noise that fills the financial system today, economic growth is the fuel that drives stock prices over longer periods. The resolve of the U.S. to maintain global economic prominence remains strong, giving us confidence that better days are ahead.”

For more complete information about AB Funds Trust, including charges and expenses, call 1-800-262-0511 for a prospectus, which should be read carefully before investing or sending money. Although the funds are no-load, please refer to the prospectus for fees and expenses that apply to a continued investment in the AB Funds Trust. Shares of the trust are distributed by PFPC Distributors, Inc., King of Prussia, Pa.

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  • Curtis D. Sharp