Equity Investment Corporation

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MID-CAP PERFORMANCE

Mid-Cap Disclosures

Equity Investment Corporation (EIC) is an SEC registered independent investment advisor incorporated in the state of Georgia. Effective October 1, 2016, ownership of the firm transferred from Jim Barksdale, who founded the firm in 1986, to three members of the investment team who collectively have more than 40 years of experience at EIC. Accounts continue to be managed using the same investment process. Performance numbers are the value-weighted, time-weighted, total return composite results of fully discretionary Mid-Cap Value wrap (SMA) accounts. The strategy invests in high quality, well managed mid-cap companies, while at the same time avoiding those that look inexpensive relative to their historical record but are actually in structural decline. Prior to January 1, 2013, the composite was called the Mid-Cap Value Wrap Composite. Returns are generally presented net of foreign withholding taxes on dividends, interest income, and capital gains; however, returns for some accounts are presented gross of foreign taxes depending on the treatment by their custodian. All accounts included in the composite are managed according to similar investment guidelines. The composite creation date is January 1, 2004, and SMA accounts comprise 100% of the composite. SMA accounts pay an all-inclusive fee based on a percentage of assets under management. Other than brokerage commissions, this fee includes portfolio monitoring, consulting services, and in some cases, custodial fees. Performance includes reinvestment of dividends, and EIC's returns also include interest earned on cash. The benchmark index is the Russell Midcap® Value Index (which excludes an advisory fee), and was chosen because it is representative of the composite’s investment style. The Russell Midcap® Value Index measures the performance of mid-cap companies with lower price-to-book ratios and lower forecasted growth rates. It is a subset of the Russell Midcap® Index which consists of approximately 800 stocks and represents the mid-cap segment of the US equity universe.

The following is presented for informational purposes:

Year Ended
Dec - 31

Gross Rate of Return Net Rate of Return Benchmark Return of Russell Midcap Value Index Composite 3-Yr St Dev Benchmark 3-Yr St Dev Dispersion of Annual Returns (Standard Deviation) Number of Portfolios Composite Assets at ($ mm) UMA Assets ($ Millions) Total Firm Assets ($ Millions) Total ($ Millions)
2016 16.6% 13.2% 20.0% 8.4% 11.3% 1.0% 15 $4.3 $2,044.5 $2,994.4 $5,038.9
2015 -2.1% -5.0% -4.8% 8.9% 10.7% 1.0% 9 $2.3 $1,590.0 $3,658.9 $5,248.9
2014 15.2% 11.8% 14.8% 8.9% 9.8% N/A 5 $1.8 $1,657.7 $3,862.6 $5,520.3
2013 33.6% 29.7% 33.5% 10.5% 13.7% N/A 3 $1.1 $1,009.2 $3,286.3 $4,295.5
2012 11.3% 8.0% 18.5% 10.7% 16.8% N/A 3 $0.9 $665.6 $2,301.1 $2,966.7
2011 5.3% 2.2% -1.4% 15.3% 22.8% N/A 1 $0.2 $314.5 $1,127.9 $1,442.4
2010 22.8% 19.3% 24.8% 17.9% 27.1% 0.4% 7 $1.7 $77.9 $836.9 $914.8
2009 28.1% 24.4% 34.2% 17.6% 25.0% 0.9% 8 $1.5 $10.5 $541.2 $551.7
2008 -20.4% -22.8% -38.4% 13.0% 18.7% 1.2% 11 $1.7 $0.0 $362.6 $362.6
2007 4.4% 1.3% -1.4% 8.3% 9.1% 0.7% 16 $3.2 $0.0 $448.1 $448.1
2006 12.2% 8.9% 20.2% 7.3% 8.7% 0.5% 20 $6.6 $0.0 $487.2 $487.2
2005 6.0% 2.9% 12.7% N/A N/A 0.8% 29 $8.6 $0.0 $463.6 $463.6
2004 19.8% 16.3% 23.7% N/A N/A N/A 32 $10.5 $0.0 $388.1 $388.1

*”Total Assets” include our regulatory assets under management (“GIPS® Firm Assets”) and our advisory-only “UMA Assets”. EIC has no trading discretion for UMA accounts and provides a model portfolio to the program sponsor or overlay manager. The “UMA Assets” and “Total Assets ” amounts are shown as supplemental information.

1 Dispersion is an asset-weighted standard deviation for the accounts in the composite for the entire year (or year to date).

2 Results include SMA accounts and gross returns are shown as supplemental information. Gross returns for SMA accounts are stated gross of all fees and transactions costs; net returns are simulated by reducing gross returns of the composite by an annual SMA fee of 3% (0.25%/month).

N/A – Information is not statistically meaningful due to an insufficient number of portfolios in the composite for the entire year.

Additional Note: The three year annualized standard deviation measures variability of the composite and the benchmark returns over the preceding 36 month period.

 

Performance has been measured on a monthly basis from January 1, 2004, to present. Periods are geometrically linked to obtain the quarterly and annual results. Eligible new accounts are added to the composite at the beginning of the first full quarter under EIC management. Trade date accounting with monthly valuations and adjustments for large cash flows are used. Results are based on fully discretionary accounts under management, including those accounts no longer with the firm. The US Dollar is the currency used to express performance. Returns include the reinvestment of all income. There are no non-fee paying accounts. Economic and market conditions have differed over the time period displayed, and likewise will be different in the future. Policies for valuing portfolios, calculating performance and preparing compliant presentations are available upon request.

Equity Investment Corporation (EIC) claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS® standards. EIC has been independently verified for the periods January 1, 1986, through September 30, 2016. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS® standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the accuracy of any specific composite presentation. The verification reports, as well as a complete list and description of all the firm’s composites, are available upon request by contacting Equity Investment Corporation, 3007 Piedmont Road NE, Suite 200, Atlanta, GA 30305. Prospective clients should be aware that results are historical and do not imply future rates of return or volatility for EIC or the indices, which may be materially different from the past and from each other.

Investment management fees are based on market values of the assets under management. EIC’s maximum annual fees for SMA accounts (charged quarterly) are 0.75%. Total fees charged may equal 3% per year. SMA schedules are provided by independent SMA sponsors and are available upon request from the individual sponsor. Further information about fees and compensation is discussed in EIC’s form ADV Part 2 (www.adviserinfo.sec.gov).

3 Frank Russell Company is the source and owner of the Russell Index data contained or reflected in this material and all trademarks and copyrights related thereto. This is a presentation of EIC. The presentation may contain confidential information and unauthorized use, disclosure, copying, dissemination or redistribution is strictly prohibited. Frank Russell Company is not responsible for the formatting or configuration of this material or for any inaccuracy in EIC’s presentation thereof. S&P 500® Index and Russell Index information is sourced from S&P Capital IQ.

GIPS® is a registered trademark of CFA Institute. CFA Institute has not been involved in the preparation or review of this report/advertisement.