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Eagle Small Cap Growth Fund 
The most appealing aspect of small companies — their small size — is also what makes them riskier investments. Those risks include price volatility, less liquidity and the threat of competition. Fund management recognizes these risks and diversifies the portfolio widely to help reduce the impact of a single holding.
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Affiliated Managed Account
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Eagle’s Small Cap Growth managers employ a rigorous bottom-up stock selection technique to identify dynamic small companies that offer Rapid Growth at Reasonable Valuations. The team targets
key characteristics such as:
- An accelerating earnings growth rate
- Strong management with insider ownership
- Reasonable debt levels
- Price-to-earnings at or below the earnings growth rate
The managers take a deeper look at companies that pass their financial health screens. Because the team’s primary focus is on individual companies, they place the highest value on their own research and analysis. Managers and analysts will comb through financial statements and SEC filings, speak with industry and buy- and sell-side contacts, and typically conduct company visits before deciding whether or not
to invest.
Understanding a company’s fundamentals, its strengths and competition are one part of the team’s strategy for managing the risks of small-cap investing: price volatility, less liquidity and the threat of competition. The fund’s managers diversify the portfolio widely to help reduce the impact of a single holding.
Investing in small company stocks may involve greater risks than investing in larger, more established companies. These companies often have narrow markets and more limited managerial and financial resources.
Growth companies are expected to increase their earnings at a certain rate. When these expectations are not met, investors may punish the stocks excessively, even if earnings showed an absolute increase. Growth company stocks also typically lack the dividend yield that can cushion stock prices in market downturns. Investing in small- and mid-cap stocks may involve greater risks than investing in larger, more established companies. These companies often have narrow markets and more limited managerial and financial resources. The companies engaged in the technology industry are subject to fierce competition and their products and services may be subject to rapid obsolescence. The values of these companies tend to fluctuate sharply.
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*For the period ended June 30, 2010, the Fund’s Class A shares are rated 3 stars overall and for the three- and five-year periods, and 4 stars for the 10-year period among a total of 666, 666, 549 and 315 funds respectively, in the small-cap growth category.
These ratings are subject to change every month.
2010 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers;
(2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Funds with at least three years of performance history are assigned ratings from the fund's three-, five- and ten-year average annual returns (when available) and a risk factor that reflects fund performance relative to three-month Treasury bill monthly returns. Funds' returns are adjusted for fees and sales loads. Ten percent of the funds in an investment category receive five stars, 22.5% receive four stars, 35% receive three stars, 22.5% receive two stars and the bottom 10% receive one star. Investment return and principal value will vary so that investors have a gain or loss when shares are sold. Funds are rated for up to three time periods (3-, 5-, and 10-years) and these ratings are combined to produce an overall rating. Ratings may vary among share classes and are based on past performance. Past performance does not guarantee future results.
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