TimesSquare Small Cap Growth Fund

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When selecting small cap growth stocks, Fund management utilizes a fundamental, bottom-up process to identify companies:

• Which demonstrate consistent and sustainable revenue and earnings growth and offer distinct, sustainable competitive advantages,
• That have strong, experienced management teams, and
• Whose stock is selling at reasonable valuations
• That Fund management believes have the potential to appreciate in price by 25-50% within the next 12-18 months.

Ideal investment

The ideal investment exhibits many of the following traits:

• Exceptional management (clear goals, track record of success)
• Distinct, sustainable competitive advantage (proprietary products, demonstrated franchise value, few competitors, patents, brand name recognition)
• Strong, consistent growth (3-year projected growth earnings and revenue growth greater than 15%)
• Projected P/E at a discount to earnings growth
• Attractive P/E relative to industry group

Portfolio Construction

Portfolio management:

• TimesSquare's small-cap growth strategy utilizes a bottom-up process that focuses on finding growing businesses with superior business models and quality management teams
• The team closely follows approximately 400 stocks. These 400 stocks meet the following criteria:
  • Market caps between $50 million and $1.5 billion
  • Exceptional company management
  • Distinct, sustainable competitive advantage
  • Strong, consistent growth
• Analysts then conduct further in-depth analysis on these 400 stocks. This analysis includes:
  • Further company management scrutiny. The portfolio managers look to purchase companies with strong management teams
  • Financial modeling based on internally generated growth forecasts
  • Valuation analysis - in order to be purchased, stocks must be selling at reasonable valuations defined by:
    • Projected P/E at a discount to earnings growth (portfolio management states that they are conservative in forecasting the growth rate). The team looks for a stock's PEG to be less than 1 for it to be considered for purchase
    • P/E attractive (at or below) relative to industry group
    • Management utilizes other valuation measures such as price to revenue or price to cash flow ratios for various industries as appropriate
  • Estimating price appreciation potential, which must equal 25-50% over the following 12 to 18 months in order for the stock to be purchased

Sell Discipline

• Operating objectives are not met
• Management is unable to sustain competitive advantage
• Fundamentals are expected to deteriorate
• Reasons for purchase changed
• A stock has reached its price target or is overvalued

Investment Process Chart

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.