State Farm Mutual Funds® Rank Highly in the 2007 Barron’s Review

In their annual mutual fund family review, Barron’s, a respected financial periodical, has ranked State Farm Mutual Funds among the top ten fund families for the 1-year period ending December 31, 2007, for the second straight year.  State Farm Mutual Funds (Associate and Retail Funds combined) ranked 6th overall out of 67 fund families (1-year ranking) and 20th out of 61 fund families (5-year ranking) in their 2007 annual Fund Survey compiled by Lipper Associates.  The 2007 rankings for 1- and 5-year performance are a slight improvement over 2006 results in which State Farm ranked 8th out of 67 fund families for the 1-year period and 24th out of 62 fund families for the 5-year period. 

The high overall 1-year ranking for 2007 is due in large part to State Farm’s #2 ranking in the U.S. Equity category along with #1 and #10 rankings in the Tax-Exempt Bond and Taxable Bond categories, respectively.

While a top-ten ranking over the past 1-year timeframe is an accomplishment to be proud of, the volatility of 1-year rankings must not be ignored.  As recapped by the Barron’s article, only 4 of last year’s top 10 families are still in the top 10 this year.  Volatility over shorter time periods (such as 1 year) can be challenging to understand or explain.  Often, what may perform well one year performs poorly the next, and vice versa.

State Farm takes a long-term focus in its investment philosophy, and it partners with sub-advisers that have similar views. We attempt to balance our internal strengths and complement them with sub-advisers that bring a breadth to our product line that works toward our goal of providing competitive performance on a relative basis that is consistent with our generally conservative risk profile over rolling 5- and 10-year periods of time. In our second year of qualifying for a 5-year ranking from Barron’s, we placed well within the top third of fund families. Consistently achieving this type of ranking is what we are working toward – and if a particular 1-year period is especially strong, it is considered a welcome bonus.

The State Farm Mutual Funds included in the Barron’s Fund Family Survey consist of four Associate mutual funds available only to State Farm associates and thirteen Retail mutual funds available to the public. The Barron’s survey did not include the State Farm S&P 500 Index Fund nor the State Farm Money Market Fund.

The Lipper/Barron’s Fund Survey uses an asset –weighted ranking system.  Each fund family’s funds were weighted by asset size, and the family’s overall ranking was determined by weighting the five fund categories shown below in proportion to their overall importance within Lipper’s fund universe.  Of the five Lipper categories shown, U.S. Equity has the largest weighting of 48.6%.  See table below:

2007 Barron’s Fund Family Review – Top Ten (1-Year Period)

Source: Barron’s “The First Family” February 4, 2008

To qualify for the Lipper/Barron’s Fund Survey, a fund family must have at least three funds in Lipper’s general U.S.–stock category, as well as one in world equity, which combines global and international funds.  Also required is one mixed-equity fund, which holds stocks and bonds.  Fund shops also must have at least two taxable-bond funds and one tax-exempt offering.

The ranking is based on the asset size and returns of each particular fund.  The ranking calculations used the following weightings: 48.6% U.S. Equity, 18.0% World Equity, 15.5% Mixed Equity, 15.0% Taxable Bonds, and 3.0% Tax-Exempt Bonds.  Funds within each classification were weighted by asset size, making larger funds count more towards the results.  The asset-weighted result of the fund was then multiplied by its return, and finally the results were added together within each classification and ranked against all other mutual fund family results in the respective classifications.  Fund returns are adjusted for 12b-1 fees and the return calculation also does not include sales loads or sales charges.  If 12b-1 fees, sales loads or sales charges had been included, the returns for the State Farm retail funds would have been lower.  Additional information regarding the rankings can be found in the attached survey.

Due to copyright laws, this article can only be viewed on-line and can not be printed, photocopied, or re-distributed without direct permission from Barron’s.

Past performance is no indication of future performance. Investment return and principal value will fluctuate so that fund shares, when redeemed, may be worth more or less then their original cost. State Farm VP Management Corp. is a separate entity from those State Farm entities which provide banking and insurance products.

State Farm Mutual Funds are available through prospectus by registered representatives of State Farm VP Management Corp., One State Farm Plaza, Bloomington, Illinois 61710, 1-800-447-4930.  Please read the prospectus and consider the investment objectives, risks, charges and expenses and other information it contains about State Farm Mutual Funds carefully before investing.

State Farm VP Management Corp Risk/Important Disclosures. State Farm Mutual Funds Prospectus. The State Farm College Savings Plan Enrollment Handbook (PDF 260 KB) .

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AP2008/02/9980