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Effective September 12, 2008, the Fund is closed to new and existing shareholder accounts and scheduled for liquidation on or about November 24, 2008. For more information please refer to the prospectus.
The Fund employs multiple portfolio managers who specialize in distinct investment approaches. This “intelligence diversification” not only serves to manage risk, but also helps us tap the markets’ full potential by focusing different analytical insights on each class of investment. Fund management strives to achieve this performance and diversification while ensuring that the Fund operates within the framework of its investment objective and principal investment strategies.
Kalmar Investment Advisers
Epoch Investment Partners
Kalmar Investment Advisers
The investment team at Kalmar Investment Advisers (“Kalmar”) generates investment ideas through different screening methodologies and several sources, thus employing elements of both “top-down” and “bottom-up” analysis in the initial identification process. The members of the investment management team all have strong research backgrounds and are committed to disciplined in-depth, hands-on fundamental analysis. Top-down thinking is used to identify strategic themes and growth areas to prospect for individual “Growth-with-Value” candidates.
The most intensive research, however, is dedicated to bottom-up fundamental analysis. Kalmar looks for such criteria as proven and sustainable double-digit growth in revenue and EPS together with a stock that is reasonably to cheaply priced relative to EPS, cash flow, revenues, and enterprise value. Kalmar looks for dynamic businesses that are easily understood, run by equity owners they can count on, and buyable at valuations that they expect to rise. The team’s decision threshold for new holdings is a potential return of 50% in approximately two years. This appreciation is expected to come from two sources: compounding business value plus upward revaluation as greater investor discovery unfolds.
Ideal Investment
The ideal company exhibits many of the following traits: - Market capitalization of $50 million up to $2.5 billion at the time of purchase
- Dynamic growth business that Kalmar understands better
- Run by committed managements that deliver
- Buyable at inefficient valuations that should rise
- Strong improving financials with conservative accounting
- Reasonable / cheap valuations, with special positive attributes
Portfolio Construction
Portfolio Management:
- Diversifies the portfolio in terms of sector, security and market capitalization
- Builds a conscious mix of “growth character” companies, from higher growth “Steady Eddies” bought inefficiently valued through to Positive Surprise / Emerging Growth-type companies
Sell Discipline
The investment team will make a sell decision when: - They see a change in the fundamentals of a company
- A better opportunity emerges
- Price or fundamental expectations have been met
- “Peel the Onion” to capture re-valuation upward
Epoch Investment Partners
Epoch seeks to create excess return without assuming a high degree of capital risk by creating portfolios of businesses with superior risk/reward profiles. They analyze a business in the same manner a private investor would in looking to purchase the entire company and only invest in those businesses they understand and where they have confidence in their financial statements. They seek businesses that generate "free cash flow" and securities that have unrecognized potential yet possess a combination of above average yield, above average free cash flow growth, and/or below average valuation.
Ideal Investment
The ideal company exhibits many of the following traits:
- Top quality management that has entrepreneurial drive and experience, a history of success, a strong strategic vision, and that has a reward structure determined by shareholder value creation
- Strong financial position as determined by cash flow use, financial transparancy, hidden or undervalued assets, and low leverage
- Competitive positioning in its marketplace, strong demand characteristics, and sustainable free cash flow
Portfolio Construction
Portfolio management:
- Screens the Russell 3000 universe using both quantitative and qualitative criteria
- Analyzes each business as if they were to buy the entire company; including sustainability of the business, earnings drivers, barriers to entry, and competitive advantages
- Evaluates potential companies on basis of management quality, financial strength, nature of the business, and external factors
- Develops an investment thesis outlining potential value creating and growth in cash flow
- Diversifies the portfolio across important sectors utilizing inverse risk weighting, a 5% position maximum, and recognizing liquidity considerations
Sell Discipline
The investment team will make a sell decision when:
- The security's price target is reached
- There is a change in the investment thesis
- Downside risk becomes too great
Disclosure Investors should carefully consider the fund's investment objectives, risks, charges, and expenses before investing. For this and other information, please call 800.835.3879 or download a free prospectus. Read it carefully before investing or sending money.
The performance shown represents past performance and is not a guarantee of future results. Current performance may be lower or higher than the performance data quoted. The investment return and the principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. From time to time the advisor has waived fees or reimbursed expenses, which may have resulted in higher returns. The listed returns and yields on the Fund are net of expenses and the returns and yields on the indices exclude expenses. Current performance of the Fund may be lower or higher than the performance quoted.
There is no guarantee that these investment strategies will work under all market conditions, and each investor should evaluate their ability to invest for a long-term, especially during periods of downturns in the market.
The investment return and the principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost.
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