To Our Valued Clients: We find ourselves in the midst of an unsettling moment. While quarter-end results are typically a benchmark for reflection, they now feel distant given the dramatic movements in equity markets during the first week of April. For many investors, the emotional whiplash of these swings has been just as intense as the financial headlines. In times like these, clarity and perspective become more important than ever.

As I take up the pen for our quarterly newsletter, I want to begin by introducing myself. My name is Rick Ryskalczyk, and I have had the privilege of being part of Sandhill for the past fourteen years. During that time, it has been an honor to work closely with the twenty-eight members of our firm and witness the remarkable dedication and trust that underpin the relationships we have built with you. I also want to acknowledge the exceptional work of Edwin M. Johnston, who set a high standard for thoughtful communication over many years. While my writing style may differ, it is my intention to bring a fresh perspective while assuring you that our commitment to the principles that guide your investments remains steadfast. In this letter and subsequent quarterly newsletters, I will provide updates on our proprietary strategies, share insights on the market, and outline how we are positioning for the future. I look forward to continuing the dialogue and sharing this journey with you. As one of the longest-tenured partners at the firm, I have seen Sandhill grow and evolve – with one underlying goal: to add genuine value for our clients. We now have hundreds of clients, and the value that we provide to each of you can come in different ways. This idea of adding value is crystallized with our mission statement: To provide <strong>financial comfort</strong> and <strong>security</strong> through <strong>trusted execution</strong>. Our goal is to provide you comfort in knowing that we understand your unique situation and to be stewards of your trust that our team will execute a path to help you achieve your goals. Our firm’s success is entirely dependent on the success of our clients. We are dedicated to an ongoing pursuit of excellence and continuously refining our strategies to create and deliver greater value for you, our clients.

I am pleased that we are enjoying another strong year on the investment side. Over the past twenty-one months, the equities in our flagship CEA product are up 58.0% net of fees. Over the last twenty-one months, the CEA composite is up 54.0% net of fees (this includes the return of the cash held in CEA accounts). More on this later. This will be my last newsletter. It has been a privilege to write to you every quarter. I have written these quarterly missives for twenty-two years. In the advent of Sandhill, these quarterly letters were our best piece of marketing material. I have received a lot of feedback on the letters over the last two decades. I repeatedly heard that the letters exhibited common sense, allowed clients to gain a better understanding of how their money is invested, and delivered complete transparency with regard to Sandhill’s investment performance and operational capabilities. Most of all, I believe the letters highlighted what is important. What is not important. Information – often complex – was made consumable. I also believe the letters gave a true sense of Sandhill’s capabilities and the lengths we go to in order to generate market beating returns and protect our clients capital. Competence and trust. A powerful combination. It is time for a new voice. That voice will be Rick Ryskalczyk. Rick is as capable as they come. A true talent and Sandhill is lucky to have him. He is a co-managing partner and has recently been promoted to co-portfolio manager. Rick has worked for Sandhill for fourteen years and been a partner for eleven years. He came up through our ranks as an equity analyst and has one of the best knowledge sets of the U.S. capital markets of anybody that I have met in our industry. You will enjoy what he has to say. Rick is a meaningful equity owner of Sandhill and has every interest in driving this business forward successfully. I will remain lead portfolio manager. I will also remain the largest equity holder of Sandhill. I remain committed to the firm and serving you – our clients. That said, there is a lot of talent running around Sandhill and it is time that we bring some to the fore.

Sandhill completed one of the finest operating years in the history of our company in 2023. Performance was strong across the board, but many operational improvements were made that will bear fruit in the years to come. Sandhill completed the Schwab custodial transition with 100% reconciliation of client assets, hired Jedidiah Lemen to our investment team, retooled our client service delivery to clients and hired Mariah Hollingsworth to our client service team, launched Jeff Lowrie as our national sales manager as Sandhill seeks a broader audience, hired John Canty as an advisor to bolster our advisor team, launched our municipal bond product at an opportune time to take advantage of higher interest rates, tightened credit standards in our corporate bond portfolios, upgraded our website and marketing materials, named Rick Ryskalczyk co-managing partner, and watched Shant Goubrial complete his first full year as co-managing partner and start to truly understand the complexity, heavy work load, and leadership skills involved with running Sandhill. Numerous other team members moved into more senior roles and executed across the responsibilities that they were given. Sandhill operates with four distinct teams—research/investment, sales and marketing, client service, and operations. I am proud of the effort put forth and the results that the teams produced for our clients. Finally, the talent bench at Sandhill is deep with ten partners—all of whom have worked at Sandhill for at least five years.

The American financial landscape is locked in a tug of war. This presents both danger and opportunity. At one end of the spectrum, the economy remains quite good — even vital. Economic activity remains brisk which increases corporate profit. At the other end of the spectrum, interest rates are rising rapidly. Higher interest rates — if increased enough — will slow economic activity and dampen or lower corporate profit. Higher interest rates also lower the price earnings multiple investors are willing to pay for stocks. <strong>These two trends — unfolding in real time at the same time — will eventually collide. In fact, they are colliding as we speak.</strong>

Sandhill delivered a really good first half of 2023. We are pleased to deliver returns well in excess of the market. As importantly, our books look good and we remain well positioned with a stable of first-class growth companies in our portfolios for the next decade. <strong>For the first six months of 2023 (1/1/23 – 6/30/23), Sandhill’s Concentrated Equity Alpha (CEA) composite had a return of +22.3% net of fees vs. the Russell 3000 Total Return Index of +16.2%.</strong> For the first six months of 2023, Sandhill’s <strong>Corporate Bond</strong> composite had a return of +2.6% net of fees vs. the Bank of America Merrill Lynch 3-5 Year Corporate Bond Index return of +2.1%. For the first six months of 2023, Sandhill’s <strong>Large Cap Yield (LCY)</strong> composite had a return of +5.0% net of fees vs. the Dow Jones Industrial Average’s return of +3.8%. For the first six months of 2023, Sandhill’s Preferred product had a slight gain net of fees. <strong>I continue to really like the total return opportunity of this product going forward</strong>. To post a positive return in the first six months of 2023 is impressive given that interest rates have continued to increase and there was a “mini” banking crisis. Our strategy of being very selective on our preferred credits has worked well. For the first six months of 2023, the <strong>Private REIT</strong> that we distribute and follow returned +2.7% net of fees and continues to provide tax-sheltered income to our clients. <strong>The headline news for the quarter was the performance of our CEA product</strong>. A year ago, in the shadow of the bear market, we deployed the cash that we had built up over the first half of 2022 and deployed it aggressively. It was the first time in years that we had seen premier growth companies on sale. The mania for value stocks was short-lived and investors returned to growth stocks in the first half of 2023 in droves. The operative point is that through the bear market, Sandhill stuck with its discipline of being a quality growth manager. As I have said many times, growth far outperforms value over time. We were not swayed by short-term market dynamics. I would also like to highlight the quality of work across Sandhill’s entire product offering. Corporate Bonds outperformed and so did our Large Cap Yield equity product. Our Preferred product is off to a good start and slightly ahead of break-even in a terrible environment for this product (but therein lies the opportunity). The Private REIT has held its share value and continues to pay its attractive dividend in an environment where REITs have performed badly. We continue to build our product offering so that we have the right solutions for the many and varied needs of our customers, regardless of the macro environment.

Sandhill delivered a very good quarter to its clients. The Concentrated Equity Alpha (CEA) composite returned +9.4% net of fees vs. a return of +7.2% for the Russell 3000 Total Return Index. The Corporate Bond composite returned +2.8% net of fees vs. a return of +2.2% for the Bank of America Merrill Lynch 3-5 Year Corporate Bond Index. The Large Cap Yield (LCY) composite returned +1.7% net of fees vs. a return of +0.4% for the Dow Jones Industrial Average. The Private REIT that we distribute had no change in its equity price and maintained its dividend – a good result given the rapid rise in interest rates. The new <strong>Preferred Equity </strong>composite had a positive return of 4 basis points in the first quarter which is a good result given the tremors in the banking system and the increase in interest rates. I am extremely pleased with Sandhill’s results and execution in the first quarter.

After a difficult start to the year, Sandhill returned to form. We had a terrific year. We beat our benchmarks for every product in a difficult and complex year. We did a great job protecting our clients’ capital. While no one gets excited about losing money, I do not believe that we have handed any of our clients permanent capital loss. One of the most important parts of our job is to protect and preserve capital in bear markets. Numerous bubbles burst in 2022, and our clients were caught in none of them. Our flagship Concentrated Equity Alpha (CEA) composite returned -16.9% net of fees for 2022. The Russell 3000 Total Return Index returned -19.2%. The most impressive part of CEA’s performance is that it is a growth product and beat the broader market whose return was driven by value stocks. Growth outperforms value over time, and capital flows will return to growth when the Fed is done raising interest rates. Our Corporate Bond composite returned -7.1% net of fees for 2022. The Bank of America Merrill Lynch 3-5 Year Corporate Bond Index returned -8.2%. The Bloomberg U.S. Aggregate Bond Index returned -13.0%. The thirty-year U.S. Treasury Bond returned -35.8%. Sandhill’s bond performance relative to the broader bond market was really good for two reasons. First, we stayed short on the yield curve, which left us less exposed to the numerous interest rate increases from the Fed. Second, we were rock solid on credit quality. The short duration of our bond portfolios will allow our clients to cycle out of the majority of their lower yield to maturity bond investments over the next few years and redeploy their bond capital at better rates of return. In the meantime (and investors forget this), the cash flow keeps coming every quarter with their current bond portfolios. The mark to market losses on our current bond portfolios will lessen as the bonds get closer and closer to maturity. Expect some good bond returns in 2024 and 2025. Stay patient. Our Large Cap Yield (LCY) composite returned -8.2% net of fees for 2022. The Dow Jones Industrial Average returned -8.8%. The Large Cap Yield product is a more conservative product. The LCY companies are larger capitalization companies that tend to have lower valuations and higher yields than the companies in our CEA (growth) product. The Large Cap Yield portfolios were well managed and the place to be in 2022. The Private REIT product that Sandhill distributes and monitors like any of our other holdings returned +7.9% net of fees in 2022. Sandhill’s clients in aggregate make Sandhill the largest investor in the REIT. With the rapid and large increases in interest rates in 2022, the REIT will be challenged financially in 2023. We do not expect the REIT to decrease its dividend, but it will likely have to pay out 110% of its Funds From Operations (FFO) in 2023 to cover the current dividend. This will not be sustainable over a long period of time. Rent increases and purchasing new properties at higher capitalization rates should allow the company to recalibrate and get back on track over the course of 2023. For the moment, I would not commit new capital here.