Eagle | Small/Mid Cap Core Separately Managed Account

EQUITY PROGRAMS

  Government Securities
  Intermediate Conservative
  High Quality Tax-Free
  Short Term Conservative
  Core Fixed

Eagle Boston Investment
Small Cap Core Value

PORTFOLIO PERFORMANCE

Second quarter 2008

MANAGEMENT

Todd McCallister, Ph.D., CFA
Managing Director, Small/Mid Cap Core Portfolio Manager

Joined Eagle in 1997
21 years of investment experience as a portfolio manager and analyst
B.A., with highest honors, University of North Carolina (1982)
Ph.D. in economics, University of Virginia (1987)
Earned his Chartered Financial Analyst designation in 1996

Investment team bios

SMALL/MID CAP CORE
BUYING COMPANIES, NOT NUMBERS

Smaller, less visible companies with unique business concepts or niche products are often reasonably priced and ripe for growth. Eagle's Small/Mid Cap Core team views investment decisions as if we were private buyers of a company. In other words, we want to own businesses (not just their numbers), which means focusing on firms that maintain sustainable competitive advantages within their industry. Additionally, companies must exhibit self-sustaining growth through substantial cash earnings and employ conservative accounting.

Each member of the team conducts extensive fundamental research to determine the ability of a company’s management team to maintain its competitive advantages and grow within its marketplace. We build the portfolio from those firms with dominant market positions, sustainable profit rates, and market power not yet reflected in current valuations.

INVESTMENT PROCESS

The Eagle Small/Mid Cap Core team identifies investment opportunities based on the following criteria.

Companies with a Unique Competitive Advantage

Better use of technology;
Excellent management;
High barriers to entry;
Low-cost producer;
Industry consolidator;
Diverse customer base.

Growth and Value Parameters

Reasonable price relative to historic valuation;
Reasonable price relative to takeover valuation;
High or expanding return on equity;
High or expanding operating margins relative to peer group.

Sell Discipline

Deterioration of the company's fundamentals or failure of original thesis
Slowing of earnings growth
Price appreciates above sustainable level
Occupation of too large a portion of total portfolio

Portfolio Characteristics | Small/Mid Cap Core

Typical market capitalization	Benchmark	Account minimum	Typical turnover	Typical number of holdings
$500 million to $7 billion	Russell 2500 Index	$100,000	Greater than 50%	40 to 60

Performance¹ | Small/Mid Cap Core (as of June 30, 2008)

Return to top

	— 1st Qtr —		— 2nd Qtr —		— 3rd Qtr —		— 4th Qtr —		— Annual —		Russell
	Gross	Net	Gross	Net	Gross	Net	Gross	Net	Gross	Net	2500
2000	12.53%	12.00%	-1.00%	-1.46%	1.82%	1.33%	3.25%	2.75%	17.12%	14.91%	4.27%
2001	-6.22%	-6.70%	15.29%	14.71%	-11.64%	-12.10%	18.12%	17.51%	12.84%	10.55%	1.22%
2002	4.82%	4.24%	-9.48%	-9.98%	-14.87%	-15.42%	1.27%	0.75%	-18.20%	-20.04%	-17.78%
2003	-1.77%	-2.27%	14.13%	13.57%	3.40%	2.89%	11.93%	11.37%	29.75%	27.18%	45.50%
2004	4.19%	3.69%	2.25%	1.74%	0.74%	0.23%	12.32%	11.76%	20.54%	18.17%	18.30%
2005	-1.74%	-2.21%	3.93%	3.43%	6.78%	6.31%	3.49%	2.98%	12.85%	10.73%	8.09%
2006	7.61%	7.18%	-2.93%	-3.33%	0.01%	-0.42%	5.30%	4.87%	10.01%	8.20%	16.17%
2007	4.54%	4.13%	8.92%	8.49%	2.42%	2.03%	0.84%	0.44%	17.59%	15.76%	1.38%
2008	-10.99%	-11.35%	3.52%	3.13%	—	—	—	—	-7.86%	-8.57%	-8.11%

COMPOUNDED, ANNUALIZED RATES of RETURN Net of fees (as of June 30, 2008)

— Years —	— Percentage —	— $100,000 Compounded —
One	-6.27%	$93,734
Three	7.93%	$125,733
Five	11.48%	$172,202
Seven	6.74%	$157,863
10	9.00%	$236,693

Risk Information

The risks associated with investing in small- and mid-sized companies are based on the premise that relatively small companies will increase their earnings and grow into larger, more valuable companies. However, as with all equity investing, there is the risk that a company will not achieve its expected earnings results, or that an unexpected change in the market or within the company will occur, both of which may adversely affect investment results. Historically, small- and mid-cap stocks have experienced greater volatility than other equity asset classes, and they may be less liquid than large-cap stocks. Thus, relative to larger, more liquid stocks, investing in small- and mid-cap stocks involves potentially greater volatility and risk. The biggest risk of equity investing is that returns can fluctuate and investors can lose money.

Not every investment opportunity will meet all of the stringent investment criteria mentioned to the same degree. Trade-offs must be made, which is where experience and judgment play a key role. Accounts are invested at the discretion of the portfolio manager and may take up to 60 days to become fully invested.

Disclosures

(1) The calculation of the performance data includes reinvestment of all income and gains and is depicted on a time-weighted and size-weighted average for the entire period. Calculations include reinvestment of all income and gains. This performance is after the deduction of both management fees and transaction costs. Performance figures include all of Eagle’s retail managed accounts. All composite performance data through 2006 have been verified by an internationally recognized accounting firm. Performance data for the current year have not been audited and are subject to revision. No inference should be drawn by present or prospective clients that managed accounts will achieve similar investment performance in the future. Because accounts are individually managed, returns for separate accounts may be higher or lower than the average performance stated above.

Performance data for the current year has not been audited and are subject to revision. Thus, the composite returns shown here may be revised and Eagle will publish any revised performance data.

Investing in equities may result in a loss of capital.