AMG Funds. AMG TimesSquare All Cap Growth Fund (MTGIX) (Formerly Managers AMG TSCM Growth Equity Fund) June 2015

Transcription

1 AMG Funds AMG TimesSquare All Cap Growth Fund (MTGIX) (Formerly Managers AMG TSCM Growth Equity Fund) June 2015

2 AMG Funds Overview XXAMG Funds is a wholly owned subsidiary and the U.S. retail distribution arm of Affiliated Managers Group, Inc. (AMG) Assets Under Management $48.0 Billion AMG is a global asset management company with investments in leading boutique investment management firms Subadvised Assets Under Assets Service $10.1 Billion $6.7 Billion Assets Under Service $8.4 Billion Assets Under Management $8.0 Billion XXAMG Funds provides access to many of AMG s boutique investment Affiliates through our family of mutual funds, separately managed accounts, alternative funds and asset-allocation products In addition, we oversee and distribute a number of complementary mutual funds subadvised by unaffiliated investment managers About AMG Funds 1 ffsubsidiary of Affiliated Managers Group, Inc. (AMG) f f$48.0 billion under management Includes $12.3 billion of Aston Asset Management s mutual funds and separately managed accounts f f$8.4 billion under service Includes $1.4 billion of Aston Asset Mangement s separately managed accounts f f$10.1 billion subadvised assets ff153 employees Includes 38 Aston Asset Management Employees 1 As of June 30,

3 AMG TimesSquare All Cap Growth Fund Overview XXFund Subadvisor: TimesSquare Capital Management, LLC XXFund AUM: $50.6 million 1 XXThe Fund utilizes a bottom-up, fundamental research-intensive approach to select stocks across the capitalization spectrum XXThe Fund is concentrated and focuses on investments in approximately stocks in which TimesSquare has the highest conviction Unique product with concentration and exposure to best ideas across the firm Team leverages its wealth of experience researching growth companies across the capitalization spectrum XXThe Fund attempts to outperform the Russell 3000 Growth Index over a full market cycle Share Class Ticker Inception Expense Ratio Gross/Net 2 Minimum Investment Maximum Sales Load 12b 1 Fees Investor Class MTGVX 07/30/ %/1.28% $2,000 ($1,000 IRA) 0.25% 1 As of June 30, The Fund s Investment Manager has contractually agreed, through at least March 1, 2016, to limit Fund operating expenses. The net expense ratio reflects this limitation, while the gross expense ratio does not. Please refer to the Fund s Prospectus for additional information on the Fund s expenses. Service Class MTGSX 07/30/ %/0.89% Institutional Class MTGIX 07/30/ %/0.79% $100,000 ($10,000 IRA) $1,000,000 ($50,000 IRA) 2

4 TimesSquare Capital Management, LLC Overview XXTimesSquare is a fundamental research-oriented equity investment management firm specializing in growth equity strategies for institutional investors AMG Affiliate since 2004 TimesSquare is a significantly employee-owned organization XXInvestment team averages 20 years of investment industry experience XXExperienced team with a long tenure of investing in growth companies Investment team conducts its own proprietary fundamental equity research Process designed to identify superior growth businesses XXTimesSquare manages $19.5 billion in global assets 1 1 As of June 30,

5 Investment Team: Portfolio Managers Portfolio Managers Credentials Investment Focus Kenneth C. Duca, CFA Grant R. Babyak Anthony Rosenthal, CFA 25 years investment industry experience M.B.A./Rutgers University B.A./Muhlenberg College 27 years investment industry experience M.B.A./New York University B.A./Yale University 26 years investment industry experience M.B.A./Columbia Business School B.A./Wesleyan University Generalist, Business Services, Transaction Processing Generalist Generalist 4

6 Investment Team: Analysts Analysts Credentials Investment Focus Seth M. Bienstock 18 years investment industry experience B.S./Wharton School Financial Services Matthew T. D Alto Keith E. Ferguson, CFA David Ferreiro, Ph.D. Mark E. Grzymski Michael J. Russell James J. Russo Edward F. Salib 17 years investment industry experience M.B.A./University of Chicago B.A./Fairfield University 23 years investment industry experience M.B.A./New York University B.B.A./Hofstra University 9 years investment industry experience PhD/MS/Yeshiva University BA/Middlebury College 18 years investment industry experience M.B.A./Forham University B.S.B.A./Bucknell University 22 years investment industry experience M.B.A./Harvard University A.B./Princeton University 12 years investment industry experience B.S./Boston College 13 years investment industry experience BS/Cornell University Energy Communications, Data Networking, Data Storage, Lodging, Transportation Healthcare Industrials, Materials & Processing, Machinery Consumer, Media, Marketing Services Semiconductor, Software, Internet, Computer Hardware Consumer Discretionary, Consumer Staples, Marketing Services 5

7 Investment Philosophy and Process TimesSquare believes that its proprietary fundamental growth equity research skills, which place a particular emphasis on the assessment of management quality and an in-depth understanding of superior business models, enable them to build a portfolio of growth stocks across the capitalization spectrum that will generate superior returns over the long term. Bottom-Up, Research-Driven Investment Process STEP 1 STEP 2 STEP 3 GROWTH CRITERIA GROWTH 3 Yrs. EPS/Sales CRITERIA 3 Growth yrs. EPS/Sales growth >$15% >15% PRIMARY REQUIREMENTS Management Exceptional management Distinct, sustainable Distinct, sustainable competitive advantage competitive advantage Strong, consistent growth Strong, consistent growth WORKING UNIVERSE FURTHER IN-DEPTH ANALYSIS Management scrutiny Financial modeling Valuation Price targets PORTFOLIO CONSTRUCTION/RISK MANAGEMENT Sector/security diversification Active oversight Sell discipline PORTFOLIO ~ 35 STOCKS There is no guarantee that these investment strategies will work under all market conditions, and each investor should evaluate his or her ability to invest for the long term, especially during periods of downturns in the market. 6

8 Investment Process: Primary Requirements STEP 1 Identifying Superior Growth Businesses PRIMARY REQUIREMENTS Exceptional Management management Distinct, sustainable competitive advantage consistent growth Strong, consistent growth Exceptional Management XXClear goals and viable business model XXAlignment of interests with shareholders XXExperience and integrity XXMeaningful proportion of net worth tied to company XXTrack record of success Distinct, Sustainable Competitive Advantage XXProprietary products, services, distribution/ manufacturing advantages XXDemonstrated franchise value XXHigh barriers to entry XXBrand name recognition XXPatents Strong, Consistent Growth XXBoth top line (revenue) and bottom line (earnings) XXStrong probability of retaining or widening margins XXHigh proportion of recurring revenues XXSales to many customers in multiple markets XXStrong balance sheet, conservative accounting, sufficient cash flow XXVisibility of earnings XXGrowth rate potential unidentified 7

9 Investment Process: Further In-Depth Analysis STEP 2 TimesSquare then seeks the best companies across the capitalization spectrum FURTHER IN-DEPTH ANALYSIS Management scrutiny Financial modeling Valuation Price targets Management Scrutiny XXApproximately 1,500 management meetings per year XXOn-site due diligence of manufacturing/production facilities XXFurther management discussions Financial Modeling XXTraditional financial analysis XXModels based on internally generated growth forecasts Valuation Tailored to Industry XXPrice/earnings at a discount to earnings growth XXAttractive price/earnings relative to industry group XXPrice/revenue, price/cash flow, etc., as appropriate Establish Targets for Each Stock XX25-50% price appreciation potential over 12 to 18 months XXRe-evaluate based on evolving fundamentals and current market conditions 8

10 Investment Process: Portfolio Construction/Risk Management STEP 3 TimesSquare applies prudent risk controls when constructing portfolios PORTFOLIO CONSTRUCTION/RISK MANAGEMENT Sector/security diversification Active oversight Sell discipline Sector/Security Diversification XXPrudent diversification XXMaximum portfolio weight of 45% in any one sector XXMaximum portfolio weight of 10% in a single position Active Oversight XXTrading system with built-in, pre-trade compliance XXDaily compliance review XXFormal weekly review versus client guidelines and peer group review XXDaily and weekly strategy/research meetings XXMonthly attribution analysis Sell Discipline XXOperating objectives not met XXManagement unable to sustain competitive advantage XXAnticipated deterioration in fundamentals XXReasons for purchase changed XXOvervaluation XXPrudent profit-taking/trimming Diversification does not guarantee a profit or protect against a loss in declining markets. 9

11 Conclusion XXTimesSquare leverages its wealth of experience researching growth companies across the capitalization spectrum XXTimesSquare s fundamental, research-intensive investment process is designed to identify superior growth companies XXThe AMG TimesSquare All Cap Growth Fund (MTGIX) is a unique product with concentration and exposure to best ideas across the firm XXTimesSquare manages over $19.5 billion in growth equities across the globe 1 1 As of June 30,

12 Portfolio Manager Biographies Kenneth C. Duca, CFA Ken is a Director and Senior Portfolio Manager in TimesSquare s growth equity group, responsible for covering the business services and transaction processing sectors. Prior to joining the firm, Ken held a similar position at Fiduciary Trust Company International. Before joining Fiduciary Trust, Ken spent 10 years with Prudential where, at the time of his departure, he was a senior equity analyst on the small cap growth team. Ken has a B.A. in Economics from Muhlenberg College and an M.B.A. from Rutgers University. He is a member of the CFA Institute and the New York Society of Security Analysts. Grant R. Babyak, Chief Executive Officer, Managing Director and Senior Portfolio Manager Grant is a Managing Director and Portfolio Manager in TimesSquare s growth equity group. Prior to joining the firm, Grant managed small cap and mid cap portfolios at Fiduciary Trust Company International. He previously worked for six years at Avatar Associates as an institutional portfolio manager and for two years at U.S. Trust Company of New York as an analyst covering the consumer and basic industrial sectors. Grant has a B.A. in Political Science from Yale University and an M.B.A. in Finance from the Leonard N. Stern School of Business at New York University. Anthony Rosenthal, CFA Anthony is a Managing Director and Senior Portfolio Manager in TimesSquare s growth equity group. Before joining the firm, Anthony held a similar position at Fiduciary Trust Company International. Prior experience includes three years at the Bank of New York as an equity portfolio manager and analyst and time at U.S. Trust Company of New York, where he conducted economic research. Anthony has a B.A. in Economics from Wesleyan University and an M.B.A. from Columbia Business School. He is a member of the CFA Institute and the New York Society of Security Analysts. 11

13 U.S. Investment Professionals Keith E. Ferguson, CFA Keith is a Director and Analyst in TimesSquare s growth equity group. He is responsible for research coverage of the communications, data networking, data storage, lodging and transportation industries. Keith joined the firm from Alkeon Capital, a technology hedge fund, where he held a similar position. His previous research analyst experiences were as a Vice President at Loomis, Sayles and a Senior Analyst at Value Line, Inc. Keith has a B.B.A. in Banking and Finance from Hofstra University and an M.B.A. from the Leonard N. Stern School of Business at New York University. He is a member of the CFA Institute and the New York Society of Security Analysts. Seth M. Bienstock Seth is a Director and Analyst in TimesSquare s growth equity group and is responsible for research coverage of the financial services sector. Prior to joining the firm, Seth was a Senior Analyst at Second Curve Capital, a financial services hedge fund. Prior experience includes eight years in private equity with Conning Capital Partners and Securitas Capital. At Securitas, he also worked extensively on strategy and corporate development assignments for Swiss Re. Seth has a B.S. in Economics from the Wharton School at the University of Pennsylvania, with a dual concentration in Finance and Insurance/Risk Management. Joshua A. Bischoff Joshua is a Director and Head of Trading at TimesSquare. Joshua joined the firm from Loomis Sayles & Co. where he held a similar position. His previous experience includes trading for small capitalization equity products at Scudder Kemper and Dreman Value and working as a block trader for Bear Stearns where he concentrated on trading financial and energy stocks. Joshua has a B.S. in Business Administration from Providence College and holds FINRA Series 7 and 55 licenses. Matthew T. D Alto Matt is a Senior Vice President and Analyst in TimesSquare s growth equity group, responsible for research coverage of the energy sector. Prior to joining the firm, Matt was a Senior Vice President/Senior Equity Analyst at J. & W. Seligman on their small- and SMID-cap growth equity team for eight years. Prior to J. & W. Seligman, Matt worked at Putnam Investments as an Investment Associate. Matt holds a B.A. in English writing with a Finance minor from Fairfield University, and an MBA from the University of Chicago Booth School of Business. 12

14 U.S. Investment Professionals (continued) Mark E. Grzymski Mark is a Director and Analyst in TimesSquare s growth equity group. He is responsible for research coverage of the industrial manufacturing, services, materials and processing industries. Prior to joining the firm, Mark was a Director at RBC Capital Markets covering industrial manufacturing and services companies. His previous research analyst experiences were as a Vice President at Needham & Company and as an associate analyst at Prospector Partners LLC. Mark has a B.S.B.A. in Management from Bucknell University, and an M.B.A. from the Graduate School of Business at Fordham University. Weidong Huang, Ph.D., CFA Weidong is a Director and Analyst in TimesSquare s growth equity group with research responsibilities for biotechnology, pharmaceutical, medical device, and health care services stocks. Prior to joining the firm, Weidong held a similar position at Fiduciary Trust Company International since Weidong previously held analyst positions at both PaineWebber and Hambrecht & Quist where he covered the biotechnology industry. He also was a research scientist at SmithKline Beecham Pharmaceuticals where he conducted genomics research. Weidong has an A.B. in Molecular Biology from Princeton University and a Ph.D. in Molecular and Cellular Biology from Harvard University. He is a member of the CFA Institute and the New York Society of Security Analysts. Michael J. Russell Mike is a Director and Analyst in TimesSquare s growth equity group with research responsibilities for the consumer, media and marketing services sectors. Before joining the firm, Mike was an Executive Director at Morgan Stanley covering media stocks since 1995 where he was a four year member of the Institutional Investor All-America Research Team and was rated the top broadcasting analyst in the Greenwich Associates survey in his last year on the sell-side. Mike graduated magna cum laude with an A.B. in Economics from Princeton University and has an M.B.A. from Harvard Business School. James J. Russo Jim is a Vice President and Analyst in TimesSquare s growth equity group, responsible for research coverage of the semiconductor, software, internet, and computer hardware industries. Prior to joining the firm, Jim was an Equity Research Analyst at Adage Capital Management, L.P. for four years. Prior to Adage Capital Management, he worked at Fidelity Management and Research as an Equity Research Associate. Jim holds a B.S. in Management with concentrations in Finance and Economics from Boston College. 13

15 Disclosures Investors should carefully consider the Fund s investment objectives, risks, charges and expenses before investing. For this and other information, please call or visit for a free prospectus. Read it carefully before investing or sending money. Any sectors, industries or securities discussed should not be perceived as investment recommendations. The views expressed represent the opinions of AMG Funds and are not intended as a forecast or guarantee of future results. The Fund invests in growth stocks, which may be more sensitive to market movements because their prices tend to reflect future investor expectations rather than just current profits. Growth stocks may underperform value stocks during given periods. The Fund invests in large-capitalization companies that may underperform other stock funds (such as funds that focus on small- and medium-capitalization companies) when stocks of large-capitalization companies are out of favor. The Fund is subject to risks associated with investments in small- and mid-capitalization companies, such as erratic earnings patterns, competitive conditions, limited earnings history and a reliance on one or a limited number of products. A greater percentage of the Fund s holdings may be focused in a smaller number of securities which may place the Fund at greater risk than a more diversified fund. Investing in initial public offerings (IPOs) is risky and the prices of stocks purchased in IPOs tend to fluctuate more widely than stocks of companies that have been publicly traded for a longer period of time. Stocks purchased in IPOs generally do not have a trading history, and information about the companies may be available for very limited periods. The Russell 3000 Growth Index measures the performance of those Russell 3000 Index companies with higher price-to-book ratios and higher forecasted growth values. Unlike the Fund, the Russell 3000 Growth Index is unmanaged, is not available for investment and does not incur expenses. The Russell 3000 Growth is a trademark of Russell Investments. Russell is a trademark of Russell Investments. Funds are distributed by AMG Distributors, Inc., a member of FINRA/SIPC. For more information, call