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SGA U.S. Large Cap Growth Equity Q2 2021 Firm Profile

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SGA U.S. Large Cap Growth Equity Q2 2021 Firm Profile SGA U.S. Large Cap Growth Equity Q2 2021 Firm Profile Founded July, 2003 Primary Portfolios Customized Portfolios • U.S. Large Cap Growth • U.S. Focused Growth • Global Growth • Global Focused Growth Portfolios Managed • International Growth • Emerging Markets Growth • Global Mid Cap Growth $24.6 Billion Firm-Wide* • $14.1 Billion U.S. Growth Assets Under Care • $10.0 Billion Global Growth • $0.5 Billion International & EM Growth Ownership 69% majority-owned by Virtus Investment Partners, 31% employee-owned^ Location Stamford, CT * As of 6/30/2021, $24.6 billion in assets includes $21.0 billion from discretionary accounts and $3.6 billion from emulated (Model) accounts. ^ 17 employee partners as of 6/30/2021 2 Sustainable Growth Advisers Distinguishing Characteristics The picture can't be displayed. Established Time-Tested Alignment to Stability & Performance Process Clients Continuity Pattern Outperformed in Te a m -based Broad equity Multi-generational volatile markets to approach and time- participation, co- team with very low provide for long- tested philosophy investment and turnover term compounding enhances process compensation linked of wealth repeatability to client performance SGA U.S. Large Cap Growth composite inception is 4/1/2000. The primary benchmark for the SGA U.S. Large Cap Growth composite is the Russell 1000 Growth Index. It should not be assumed that future results will be reflective of past performance. 3 Philosophy Identify those few Perform deep Wield valuation as Focus on a Invest with differentiated company an essential longer-term time conviction based global businesses research with element of horizon to take solely on that offer coverage by growth stock advantage of opportunity and predictable, multiple analysts selection; cash short-term not benchmark sustainable to enhance flow metrics best inefficiencies and active weights growth over the objectivity reflect reality volatility long term 4 SGA U.S. Large Cap Growth Portfolio SGA vs R1G SGA vs R1G Gross Margin 61% 51% EPS Growth 14.6% 6.1% Cash Flow/Earnings 93% 85% Revenue Growth 11.5% 4.4% Debt/EBITDA 2.6x 2.3x Net Debt/Mkt. Cap 5% 4% Quality Earnings Variability 5.9% 10.2% Pricing Power Recurring Revenues Growth Global Opportunity Over 2x Earnings and Financial Strength Revenue Growth vs. R1G Management Strength SGA U.S. LCG Valuation Cash Flow Based SGA vs R1G Enterprise Yield 2.5% 2.3% Cash Earnings Ratio is a measure of proportion of earnings that is converted into cash (CFATS / Earnings). Cash Flow Available To Shareholders (CFATS) = Op Cash Flow – Cap X – Sustaining Acquisitions – Unfunded Obligations (pensions, legal). Enterprise yield (EY) is a proprietary measure of the free cash flow truly available to investors as a percentage of market value (CFATS / Market Capitalization). (I) based on enterprise yield calculations. Source: Bloomberg, FactSet, and SGA estimates and adjustments. Data as of 6/30/2021. C/E Ratio, EY exclude financials. SGA C/E ratio and Enterprise Yield projected. Earnings Growth data is through 12/31/20 (last full calendar year of reported EPS data) for SGA’s longest tenured account. SGA EPS Growth data is based upon portfolio companies non-GAAP operating earnings. EPS calculations exclude companies with earnings going from (i) positive to negative or (ii) negative to positive, year to year. 5 EPS and Revenue Growth are historical values since inception of the U.S. Large Cap Growth composite, 4/1/2000. Higher Growth with Lower Variability SGA Portfolio Companies have historically grown their earnings at 2-3x the rate of the index with 40% less variability Annual Earnings Growth 39% SGA U.S. LCG vs. Russell 1000 Growth 28% 26% 23% 24% 22% 23% 21% 19% 17% 16% 17% 15% 15% 15% 14% 14% 14% 16% 14% 13% 14% 11% 12% 11% 11% 10% 11% 12% 10% 8% 9% 9% 6% 5% 5% 1% -2% -3% -4% -4% -6% -8% -12% Earnings Growth Earnings Variability SGA U.S. LCG 14.6% 5.9% Russell 1000 Growth 6.1% 10.2% Source: Bloomberg, FactSet, SGA Estimates and Adjustments. Data as of 6/30/2021. Historical growth rates for Russell 1000 Growth are sourced from Bloomberg. Russell 1000 Growth Index estimates and characteristics sourced from Bloomberg and FactSet using Russell data. SGA EPS Growth data is based upon portfolio companies non-GAAP operating earnings. EPS calculations exclude companies with earnings going from (i) positive to negative or (ii) negative to positive, year to year. Earning variability calculated using standard deviation of annual EPS growth, since inception 4/1/00. SGA and Russell 1000 Growth earnings growth and volatility statistics are since inception through last full calendar year, 2020. All accounts are modeled in line with SGA’s representative account. Account holdings and weights may differ from this representative account. The representative account holdings are subject to change without notice. This information is supplemental and complements the GIPS Report on composite performance found on the last pages of this document. It should not be assumed that future results 6 will be reflective of past performance. Lower Risk By Most Measures – U.S. LCG Downside Sharpe Information Capture Ratio Ratio 0 25 50 75 100 9th Percentile 13th Percentile 27th Percentile Rank 16 of 146 Rank 22 of 146 Rank 41 of 146 62.8% 0.51 0.36 Data is from 4/1/2000 to 6/30/2021. Source is eVestment. Universe is eVestment US Large Cap Growth Equity. Peer size is 146. Peer universe data and SGA data based on quarterly gross returns and do not reflect the deduction of investment advisory fees. SGA’s fees are available upon request and also may be found in Part 2A of its Form ADV. Actual fees charged to clients may vary depending on, among other things, the applicable fees schedule and portfolio size. It should not be assumed that future results will be reflective of past performance. 7 Downside Capture Down Years Since Inception SGA U.S. LCG Wrap (Gross) Upside & Downside Capture Gross Net SGA U.S. LCG Wrap (Net) 86% Russell 1000 Growth 74% 4.7% 3.3% 1.0% 1.6% -1.5% -5.2% -8.0% -14.7% -17.3% -20.4% -27.6% -27.9% -34.3% -36.3% -38.4% 63% 70% 2000* 2001 2002 2008 2018 Upside Downside *Partial year. SGA US Large Cap Growth WRAP composite inception is 4/1/2000. The performance figures do not reflect the deduction of investment advisory fees. The prospective return will be reduced by the advisory fees and any other expenses incurred in the management of the account. SGA’s fees are available upon request and may be found in Part 2A of its Form ADV. Returns reflect the reinvestment of dividends, interest and other earnings. For interest and capital gains, SGA does not withhold taxes, for dividends, SGA will withhold taxes as reported by the client’s custodian. This information is supplemental and complements the GIPS Report on composite performance found on the last pages of this document. Upside and Downside capture based on quarterly gross returns compared to the Russell 1000 Growth Index, since inception of the SGA US Large Cap Growth composite. It should not be assumed that future results will be reflective of past performance. 8 Investment Team Analysts and Portfolio Managers Tucker Brown Julian Cochran George Fraise HK Gupta Analyst, PM Analyst Analyst Analyst, PM SGA Since 2006 SGA Since 2019 SGA Since 2003 SGA Since 2014 Alexandra James Li, CFA Peter Madej, CMT Gordon Marchand, Lee, MD CFA Analyst, PM Analyst Analyst Analyst, PM SGA Since 2004 SGA Since 2019 SGA Since 2005 SGA Since 2003 Kishore Rao Jon Richter Rob Rohn Luying Wang, CFA Analyst, PM Analyst Analyst, PM Analyst SGA Since 2004 SGA Since 2019 SGA Since 2003 SGA Since 2017 PORTFOLIOS U.S. Global Emerging Markets International Global Mid Cap Gordon Marchand, CFA HK Gupta HK Gupta Tucker Brown HK Gupta Kishore Rao Gordon Marchand, CFA Kishore Rao Alexandra Lee, MD Kishore Rao Rob Rohn Rob Rohn Rob Rohn Gordon Marchand, CFA Rob Rohn 9 Five Flagship Portfolios One Qualified Company List US Global EM Intl. Global Growth Growth Growth Growth Mid-Cap Since 2000 Since 2011 Since 2014 Since 2015 Since 2018 Focused version Focused version available available 10 Investment Approach Structured to manage risk across three pillars Lower Lower Lower Business Risk Human Risk Price Risk Selectivity in Te a m -based Discipline in company approach valuation identification 11 Company Identification 1000+ ≈200 Universe of Thousands Research ≈110 Coverage List Qualified Company List Analysts seek the best Actively monitor ≈200 Continuous due diligence companies worldwide: companies that potentially (including valuation) of ≈110 conferences, trade shows, meet SGA criteria and/or direct companies that meet SGA company ecosystems and competitors and ‘ecosystem’ quality and growth criteria screens companies 12 Research Process 1 2 3 4 5 Idea Due Qualified Valuation Client Formation Diligence Company Portfolios List Analysts Deep Investment Relative to Concentrated present idea for fundamental concept other QCL 25-30 stock analysis to IC analysis, 10Y presented to IC companies portfolios ‘Go/No Go’ financial for inclusion on based on cash providing best projections the ‘buy-list’ flows and combination of Time: 2 – 6 Requires 2 of 3 conviction valuation, months Executive quality and Committee growth Members’ approval 13 Lower Business Risk Key Investment Criteria High degree of predictability in their business Repeat Revenues Able to consistently Long duration of price profitably sustainable growth Pricing Global Power Opportunity Management Financial Execute responsibly and Strength Strength High returns on capital good stewards of shareholder and strong cash-flow capital generation 14 Reducing Business Risk . What We Seek Frequently-replenished, CPGs trusted consumables . Medical/industrial supplies Companies possessing the characteristics we seek can be found across numerous industries Frequently-visited, .
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