Small Cap Growth Fund Quarterly Review

March 2020

Michael P. Balkin, Partner Ward Sexton, CFA, Partner Portfolio Managers

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William Blair Small Cap Growth Fund Important Disclosures March 2020

Risks: The views expressed in this report and the information about the holdings are as of the date of this material, unless otherwise noted, and are subject to change. Information about the Fund’s holdings should not be considered investment advice. There is no guarantee that the Fund will continue to hold any one particular security or stay invested in any one particular sector. Holdings are subject to change at any time. The Fund’s returns will vary, and you could lose money by investing in the Fund. The Fund invests most of its assets in equity securities of small cap domestic growth companies where the primary risk is that the value of the equity securities it holds might decrease in response to the activities of those companies or market and economic conditions. Individual securities may not perform as expected or a strategy used by the Adviser may fail to produce its intended result. Investing in smaller companies involves special risks, including higher volatility and lower liquidity. Small cap stocks are also more sensitive to purchase/sale transactions and changes in the issuer’s financial condition. These risks are intensified for investments in micro-cap companies. Individual securities may not perform as expected or a strategy used by the Adviser may fail to produce its intended result. Convertible securities may be called before intended, which may have an adverse effect on investment objectives. The Fund is not intended to be a complete investment program. The Fund is designed for long-term investors. Performance cited represents past performance. Past Performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are average annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate with market and economic conditions and you may have a gain or loss when you sell shares. For the most current month end performance information, please call 1‐877‐962‐5247, or visit our Web site at www.williamblairfunds.com. Class N shares are available to the general public without a sales load. Class I and Class R6 shares are available only to investors who meet certain eligibility requirements. This content is for informational and educational purposes only and is not intended as investment advice or a recommendation to buy or sell any security. Investment advice and recommendations can be provided only after careful consideration of an investor’s objectives, guidelines and restrictions. Please carefully consider the Fund’s investment objectives, risks, charges, and expenses before investing. This and other information is contained in the Fund’s prospectus and summary prospectus, which you may obtain by calling +1 800 742 7272. Read the prospectus and summary prospectus carefully before investing. Investing includes the risk of loss. Copyright © 2020 William Blair & Company, L.L.C. “William Blair” is a registered trademark of William Blair & Company, L.L.C. Distributed by William Blair & Company, L.L.C., member FINRA/SIPC.

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William Blair Small Cap Growth Fund Summary & Outlook March 2020

Market Overview Coming into 2020, the U.S. economic and business environment was quite healthy, helping drive U.S. equity markets to new highs by mid-February. Unemployment was near record lows, inflation was benign and economic growth appeared to be accelerating after a slower patch of global economic growth earlier in 2019. Similar to recent years, valuations remained above long-term average levels, as we were nearly eleven years into a bull market and economic expansion with generationally low interest rates. Investors initially underestimated the speed and magnitude of the spread of a novel coronavirus (COVID-19), which was, at that point, primarily contained to China. As it became clear that COVID-19 was evolving into a global pandemic, concerns surrounding the expanding magnitude of its economic impact caused a rapid downward move in U.S. equities starting in late February. Stay-at-home directives became increasingly pervasive, effectively shutting down many segments of the economy and resulting in a unique environment relative to past downturns. Volatility spiked as investors struggled to digest rapidly evolving information related to COVID-19 and its implications for the U.S. and global economies. Stock correlations reached extreme levels. Adding to heightened market volatility, oil prices collapsed as tensions between Russia and Saudi Arabia resulted in increased oil production as demand fell, creating further challenges for some businesses, while benefiting others. In conjunction with these developments, there was tremendous demand for liquidity across multiple asset classes, and fixed income spreads widened dramatically. In an effort to support the economy through this disruption, the U.S. responded with numerous monetary and fiscal stimulus measures. The Federal Open Market Committee (FOMC) lowered the target federal funds rate twice in March, by a total of

150 basis points to a lower bound of zero, and announced uncapped asset purchases. These moves were followed by the passing of a coronavirus relief bill that will provide approximately $2 trillion in fiscal stimulus. Notwithstanding stimulus, jobless claims spiked and consumer sentiment fell as the economic fallout of social distancing and stay-at-home measures began to be reflected in economic data, leaving investors with little clarity as to the depth and duration of this slowdown. Fund Performance The Small Cap Growth Fund (Class N) outperformed the Russell 2000 Growth Index during the first quarter, primarily driven by stock specific dynamics. Top contributors during the period were Virtu Financial (Financials) and Cable One (Communication Services). Virtu Financial, a leading electronic market maker and liquidity provider, benefitted from increased market volatility and trading volumes throughout the quarter. Cable One, a leading provider of high-speed internet services, outperformed given its solid business momentum, subscription-based revenue model and strong demand for internet services. Additionally, broad-based stock selection in Industrials was strong, contributing positively to relative returns. Other top contributors included Tabula Rasa (Health Care), Simulations Plus (Health Care) and BJ’s Wholesale Club (Consumer Staples). Conversely, our top detractors during the period were Boot Barn (Consumer Discretionary) and Portola Pharmaceuticals (Health Care). Western and work wear retailer Boot Barn experienced headwinds as a result of COVID-19 shelter-in-place directives and the related energy market weakness negatively impacting retail store traffic. Biopharmaceutical company Portola Pharmaceuticals experienced headwinds during the early stages of commercializing Andexxa, a drug that reverses the anti-coagulation effects of Factor Xa inhibitors. Stock selection in Information Technology, including our position in Euronet

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William Blair Small Cap Growth Fund Summary & Outlook March 2020

Worldwide, also detracted from relative returns. Other first quarter laggards included Orion Engineered Carbons (Materials) and Brink’s Co (Industrials). In addition, from a style perspective, our underweight to the most expensive stocks in the benchmark was a headwind during the period. Stock specific contributors and detractors for the first quarter are discussed in greater detail at the end of this quarterly review. Outlook Our investment philosophy leads us to own companies with durable businesses, whose stock prices are not reflective of our long-term fundamental expectations, that we believe can outperform over a market cycle. Given our bottom-up approach, our focus remains on assessing individual companies and determining where stock prices have become dislocated relative to our long-term expectations, factoring in a range of short-to-intermediate term scenarios associated with coronavirus-related disruptions. More specifically, for both owned and unowned stocks, we are examining how long term growth prospects, competitive dynamics, and business, financial, and valuation risk, may change under a variety of forward looking economic scenarios, including a temporary slowdown and a more prolonged recession. Given the depth of our analysis and the strength of communication across the team, we believe we are well positioned to make portfolio adjustments as opportunities arise. While stock correlations are high – meaning stocks have a strong directional relationship – so is dispersion. Wide dispersion indicates variability in the magnitude of stock returns and provides opportunities for active managers. Ongoing market volatility should continue to present attractive entry points for our fundamental, bottom-up approach. We continue to monitor market movements and will make adjustments as appropriate. We believe that companies with durable business models and strong balance sheets that can

withstand a period of economic disruption should emerge in a stronger position.

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Market Performance March 2020

Value Core GrowthMonth to DateRussell 3000 -17.58 -13.75 -10.41Russell 1000 -17.09 -13.21 -9.84Russell Midcap -22.70 -19.49 -14.91Russell 2500 -24.93 -21.70 -17.72Russell 2000 -24.67 -21.73 -19.10Quarter to DateRussell 3000 -27.32 -20.90 -14.85Russell 1000 -26.73 -20.22 -14.10Russell Midcap -31.71 -27.07 -20.04Russell 2500 -34.64 -29.72 -23.22Russell 2000 -35.66 -30.61 -25.76Year to DateRussell 3000 -27.32 -20.90 -14.85Russell 1000 -26.73 -20.22 -14.10Russell Midcap -31.71 -27.07 -20.04Russell 2500 -34.64 -29.72 -23.22Russell 2000 -35.66 -30.61 -25.76

Market Performance• U.S. equity benchmarks continued their decidedly downward trajectory in March due to the rapid spread of the coronavirus throughout the world. The global pandemic led to social distancing and shelter in place directives across the nation, essentially shutting down many parts of the economy. Also contributing to heightened investor anxiety, oil prices collapsed as Saudi Arabia and Russia failed to agree on production cuts in the face of a rapidly declining demand environment. • In an effort to mitigate the economic impact of the virus, the FOMC lowered rates twice in March, implemented numerous monetary policy initiatives, and the federal government passed a $2 trillion economic stimulus package. Economic data began to show signs of the economic impact of the coronavirus as initial jobless claims spiked late in the quarter.Style Performance• Growth benchmarks significantly outperformed value benchmarks in March, further extending growth’s outperformance of value year-to-date. The dispersion of returns between growth and value was narrowest within small caps.Market Cap Performance• Larger caps outperformed smaller caps across the size spectrum and the dynamic was linear across growth and value benchmarks for the month and year-to-date periods. The dispersion of returns was wider across growth benchmarks.

Source: FactSet; Eagle Past Performance is not a guarantee of future results. A direct investment is an index is not possible.

The Russell 3000 Index measures the performance of the all-cap segment of the U.S. equity universe. The Russell 1000 Index measures the performance of the large-cap segment of the U.S. equity universe. It includes approximately 1000 of the largest securities based on a combination of their market cap and current index membership. The Russell Midcap Index measures the performance of the mid cap segment of the U.S. equity universe. It includes approximately 800 of the smallest securities in the Russell 1000 Index based on a combination of their market cap and current index membership. The Russell 2500 Index measures the performance of the small to mid-cap segment of the U.S. equity universe. It includes approximately 2500 of the smallest securities in the Russell 3000 Index based on a combination of their market cap and current index membership. The Russell 2000 Index measures the performance of the small cap segment of the U.S. equity universe. It includes approximately 2000 of the smallest securities in the Russell 3000 Index based on a combination of their market cap and current index membership. Core returns represent the Total Return indices. The value segments of these indices include companies with lower price-to-book ratios and lower forecasted growth values. The growth segments of these indices include companies with higher price-to-book ratios and higher forecasted growth values.

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Market Performance March 2020

Russell 2000 Growth Total Return Q1 2020

-26.29-40.93

-24.11-65.60

-22.56-18.48

-30.65-20.88

-36.55-29.63

-8.39

Communication ServicesConsumer Discretionary

Consumer StaplesEnergy

FinancialsHealth CareIndustrials

Information TechnologyMaterials

Real EstateUtilities

Data calculated in our proprietary attribution system. Past returns are no guarantee of future performance. A direct investment in an index is not possible. The Russell 2000 Growth Index measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values.

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William Blair Small Cap Growth Fund Performance March 2020

Periods ended 3/31/2020 Quarter 1 Year 3 Year 5 Year 10 Year Since

Inception* -25.08% -20.96% 2.00% 4.45% 8.24% -- -25.01% -20.75% 2.26% 4.72% 8.52% -- -25.00% -- -- -- -- -22.94%Small Cap Growth Fund (WBSNX) Class N Small Cap Growth Fund (WBSIX) Class I Small Cap Growth Fund (WBSRX) Class R6 Russell 2000 Growth -25.76% -18.58% 0.10% 1.70% 8.89% -20.14%Class I & Class N Inception Date: 12/27/1999 *Class R6 Inception Date: 5/2/2019 Performance cited represents past performance. Past Performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are average annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate with market and economic conditions and you may have a gain or loss when you sell shares. For the most current month end performance information, please call 1‐877‐962‐5247, or visit our Web site at www.williamblairfunds.com. Class N shares are available to the general public without a sales load. Class I and Class R6 shares are available only to investors who meet certain eligibility requirements.

Small Cap Growth Fund Expense Ratios: Gross Net Class N Shares 1.55% 1.50% Class I Shares 1.25% 1.25% Class R6 Shares 1.15% 1.15% The Fund’s Adviser has contractually agreed to waive fees and/or reimburse expenses to limit fund operating expenses until 4/30/20. Expenses shown are as of the most recent prospectus. A direct investment in an index is not possible. The Russell 2000 Growth Index measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values.

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William Blair Small Cap Growth Fund Analysis March 2020

The charts below show the average sector weights and relative performance, by sector, for the Fund vs. its benchmark. Q1 2020 Average Weights Q1 2020 Relative Performance

*Other represents Ishares Russell 2000 Growth. Source: Proprietary attribution system.

Past returns are no guarantee of future results. Based on Global Industry Classification Sectors (GICS). Concentration of assets in one or a few sectors may entail greater risk than a fully diversified stock portfolio and should be considered as only part of a diversified portfolio.

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William Blair Small Cap Growth Fund Top 5 Contributors to Return March 2020

This information does not constitute, and should not be construed as, investment advice or recommendations with respect to the securities listed. Specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients, and you should not assume that investments in the securities identified and discussed were or will be profitable.

Virtu Financial (VIRT) is a leading electronic market maker and liquidity provider to the global financial marketplace. The company benefitted from tailwinds due to increased market volatility and trading volumes throughout the quarter. Additionally, Virtu announced preliminary first quarter earnings estimates that exceeded expectations, further solidifying its strong performance during the quarter. We trimmed our position and continue to believe the company's scale and asset class diversification create a large barrier to entry and lower risk profile over the long term. Cable One (CABO) is a leading provider of high-speed internet services to rural or suburban markets across the United States. With the backdrop of solid current business momentum, the stock outperformed the market during the first quarter given its subscription-based revenue model and strong demand for internet services. We trimmed our position on strength during the quarter. However, we continue to believe Cable One is attractively positioned for long-term growth within the broadband internet industry, given limited competition in most of its geographies, high barriers to entry and increasing consumer demand in part due to the proliferation of streaming video services. Tabula Rasa HealthCare (TRHC) is a leading provider of software-based personalized medication therapy management (MTM) and also provides pharmacy services for the PACE (Program for All-inclusive Care for the Elderly) market. Tabula Rasa reported strong fourth quarter revenue growth and 2020 guidance. An expanded salesforce, strong interest from managed Medicaid and commercial payors, continued robust growth of its PACE business and a large pipeline provide visibility to forward looking estimates. We trimmed our position on strength, but continue to believe Tabula Rasa will see above market growth as payors adopt additional monitoring technologies in efforts to reduce costly adverse drug interaction events and corresponding high cost hospitalizations.

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William Blair Small Cap Growth Fund Largest 5 Detractors From Return March 2020

This information does not constitute, and should not be construed as, investment advice or recommendations with respect to the securities listed. Specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients, and you should not assume that investments in the securities identified and discussed were or will be profitable.

Boot Barn Holdings (BOOT) is a western and work wear retailer with a market leading position in an otherwise fragmented category with low fashion exposure. The stock underperformed during the quarter given uncertainty as to the duration of COVID-19 shelter-in-place and other social distancing measures as well as related energy market weakness. These dynamics pressure retail store traffic generally, and more specifically, the energy market weakness could reduce demand in Boot Barn’s stores located in markets such as Texas. We added to our position as we believe the stock has discounted a substantial decline in business. Despite these near term disruptions to its business, we believe long-term growth will resume as Boot Barn is likely to emerge in a stronger competitive position relative to weaker peers, allowing the company to continue consolidating the large and fragmented western and work wear industry. Portola Pharmaceuticals (PTLA) is a biopharmaceutical company focused on the development and commercialization of novel therapeutics in hematology. In January, the company pre-released sales that were below expectations due to issues associated with the early stages of commercialization of Andexxa, a drug that reverses the anti-coagulation effects of Factor Xa inhibitors and is a key long-term growth driver for Portola. While it may take time to determine what the appropriate, long-term utilization rate is, our research continues to indicate the amount of the drug being used is consistent with expectations. Portola continues to be positively exposed to long-term growth drivers for Andexxa, including growing use of Factor Xa inhibitors and expansion into the European market, where Factor Xa inhibitors are used more widely than they are in the U.S. We added to our position. Orion Engineered Carbons (OEC) is one of the leading producers of carbon black. The company produces two types of carbon black: rubber black, which is mainly used in the production of tires, and specialty carbon black, which is used in paints, inks and other coatings. While the company reported robust demand for its higher margin products and continued to demonstrate strong pricing discipline, headwinds related to the COVID-19 disruption weighed on the stock during the quarter due to the company's exposure to the auto industry. As shelter-in-place directives are enforced, miles driven are likely to decrease in the near term resulting in an anticipated slowdown in the demand replacement tires. Despite these near-term headwinds, our long-term thesis remains intact. We maintained our position and continue to believe the stock's valuation offers an attractive risk/reward over the long term given our view that margins and profitability will improve as higher margin specialty carbon black becomes a greater portion of company revenues.

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William Blair Small Cap Growth Fund Positioning March 2020

Top 10 Holdings by Weight

Small Cap Growth Fund Russell 2000 Growth % in Fund % in Index BWX Technologies Inc 2.81 0.00 J2 Global Inc 2.21 0.44 Brink's Co/The 2.11 0.33 Grand Canyon Education Inc 1.90 0.00 Casella Waste Systems Inc-A 1.78 0.22 Mercury Systems Inc 1.77 0.49 LHC Group Inc 1.71 0.53 Cable One Inc 1.69 0.00 FirstCash Inc 1.68 0.37 Tabula Rasa Healthcare Inc 1.68 0.13 Total: 19.35 2.50

Source: Eagle. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities. William Blair may or may not own the securities referenced and, if such securities are owned, no representation is being made that such securities will continue to be held. Holdings are shown as a percentage of total gross assets.

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William Blair Small Cap Growth Fund Positioning March 2020

Sector Weights as of 3/31/2020

2.74 6.862.841.15 5.12 27.1025.1322.490.61 4.360.001.60

2.33 9.553.380.28 5.94 33.9017.5018.202.704.361.870.00

Communication ServicesConsumer DiscretionaryConsumer StaplesEnergyFinancialsHealth CareIndustrialsInformation TechnologyMaterialsReal EstateUtilitiesCashSMALL CAP GROWTHFUNDRussell 2000 Growth

Source: William Blair; Eagle Based on Global Industry Classification Sectors (GICS). Concentration of assets in one or a few sectors may entail greater risk than a fully diversified stock portfolio and should be considered as only part of a diversified portfolio.

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William Blair Small Cap Growth Fund Holdings March 2020

Portfolio Benchmark Portfolio Benchmark Portfolio Benchmark Weight Weight Weight Weight Weight Weight COMMUNICATION SERVICES 2.74 2.33 HEALTH CARE (continued) INFORMATION TECHNOLOGY (continued) Cable One Inc 1.69 0.00 Halozyme Therapeutics Inc 1.31 0.30 Pure Storage Inc - Class A 1.43 0.00 Quinstreet Inc 1.06 0.05 Irhythm Technologies Inc 1.31 0.27 Wns Holdings Ltd-Adr 1.31 0.00 CONSUMER DISCRETIONARY 6.86 9.55 Codexis Inc 1.19 0.07 Alarm.Com Holdings Inc 1.24 0.18 Grand Canyon Education Inc 1.90 0.00 Amedisys Inc 1.07 0.72 Perspecta Inc 1.19 0.02 Laureate Education Inc-A 1.32 0.00 Cryolife Inc 1.02 0.08 Grid Dynamics Holdings Inc 1.19 0.00 Etsy Inc 1.00 0.00 Health Catalyst Inc 0.97 0.05 Agilysys Inc 1.18 0.04 Lithia Motors Inc-Cl A 0.95 0.14 Insmed Inc 0.86 0.18 Littelfuse Inc 1.17 0.00 Boot Barn Holdings Inc 0.92 0.05 Axogen Inc 0.81 0.04 Euronet Worldwide Inc 1.13 0.00 National Vision Holdings Inc 0.78 0.19 Portola Pharmaceuticals Inc 0.72 0.07 Avalara Inc 1.09 0.00 CONSUMER STAPLES 2.84 3.38 Healthequity Inc 0.62 0.44 Computer Services Inc 0.91 0.00 Bj's Wholesale Club Holdings 1.46 0.12 INDUSTRIALS 25.13 17.50 Knowles Corp 0.90 0.00 Darling Ingredients Inc 1.38 0.00 Bwx Technologies Inc 2.81 0.00 Brooks Automation Inc 0.78 0.24 ENERGY 1.15 0.28 Brink's Co/The 2.11 0.33 Inphi Corp 0.77 0.45 Cameco Corp 0.95 0.00 Casella Waste Systems Inc-A 1.78 0.22 Liveperson Inc 0.75 0.18 Parsley Energy Inc-Class A 0.20 0.00 Mercury Systems Inc 1.77 0.49 Qualys Inc 0.74 0.37 FINANCIALS 5.12 5.94 Ritchie Bros Auctioneers 1.54 0.00 Rogers Corp 0.70 0.22 Firstcash Inc 1.68 0.37 Pae Inc 1.43 0.00 Novanta Inc 0.68 0.34 Virtu Financial Inc-Class A 1.14 0.00 Luxfer Holdings PLC 1.38 0.04 Verra Mobility Corp 0.60 0.11 Glacier Bancorp Inc 1.13 0.05 Trex Company Inc 1.37 0.59 Sitime Corp 0.50 0.01 Home Bancshares Inc 0.63 0.00 Douglas Dynamics Inc 1.34 0.10 Repay Holdings Corp 0.48 0.00 Encore Capital Group Inc 0.54 0.00 John Bean Technologies Corp 1.23 0.29 Pdf Solutions Inc 0.01 0.00 HEALTH CARE 27.10 33.90 Armstrong World Industries 1.16 0.00 MATERIALS 0.61 2.70 Lhc Group Inc 1.71 0.53 Albany Intl Corp-Cl A 1.08 0.18 Orion Engineered Carbons SA 0.61 0.04 Tabula Rasa Healthcare Inc 1.68 0.13 Healthcare Services Group 1.04 0.22 REAL ESTATE 4.36 4.36 Encompass Health Corp 1.67 0.00 Ducommun Inc 1.00 0.01 Coresite Realty Corp 1.53 0.00 Horizon Therapeutics PLC 1.64 0.00 Forrester Research Inc 0.97 0.04 Firstservice Corp 1.51 0.00 Twist Bioscience Corp 1.57 0.10 Esco Technologies Inc 0.91 0.23 Colliers International Group 1.32 0.00 Penumbra Inc 1.54 0.00 Lincoln Electric Holdings 0.78 0.00 Cash 1.60 0.00 Ligand Pharmaceuticals 1.54 0.02 Blue Bird Corp 0.77 0.01 Total 100.00 100.00 Veracyte Inc 1.52 0.14 Willdan Group Inc 0.66 0.03 Hanger Inc 1.49 0.01 INFORMATION TECHNOLOGY 22.49 18.20 Simulations Plus Inc 1.47 0.05 J2 Global Inc 2.21 0.44 Merit Medical Systems Inc 1.40 0.21 Varonis Systems Inc 1.55 0.24

As of 3/31/2020. Information about the Fund’s holdings should not be considered investment advice. There is no guarantee that the Fund will continue to hold any one particular security or stay invested in any one particular sector. Holdings are subject to change at any time.

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Glossary – Terms

Active Share: A measure of the percentage of equity holdings in a portfolio that differ from the benchmark index. It is calculated by taking the sum of the absolute value of the differences of the weight of each holding in a portfolio versus the weight of each holding in the index and dividing by two. Alpha: A measure of a portfolio’s return in excess of the market return, after both have been adjusted for risk. It is a mathematical estimate of the amount of return expected from a portfolio above and beyond the market return at any point in time. For example, an alpha of 1.25 indicates that a stock is projected to rise 1.25% in price in a year over the return of the market, or the return when the market return is zero. When an investment price is low relative to its alpha, it is undervalued, and considered a good selection. Beta: A quantitative measure of the volatility of the portfolio relative to the overall market, represented by a comparable benchmark. A beta above 1 is more volatile than the overall market, while a beta below 1 is less volatile, and could be expected to rise and fall more slowly than the market. Developed Markets: Using the Morgan Stanley Capital International (MSCI) geographic definition, this region includes: United Kingdom, Europe (Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Norway, Spain, Sweden and Switzerland), Japan, Pacific Asia (Australia, Hong Kong, New Zealand, and Singapore) and the Western Hemisphere (Canada and other Americas). Debt to Total Capital Ratio: This figure is the percentage of each company’s invested capital that consists of debt. Companies with a high Debt to Total Capital level may be considered more risky. From a portfolio perspective, the portfolio Debt to Total Capital Ratio is a weighted average of the individual holdings' Debt to Total Capital Ratio. Emerging Markets: Using MSCI’s geographic definition, this region includes: Emerging Markets Asia (China, India, Indonesia, Malaysia, S Korea, Taiwan, and Thailand), Emerging Markets Europe, Mid-East and Africa (Czech Republic, Hungary, Poland, Russia, Turkey, Egypt, Morocco, and S Africa), and Latin America (Argentina, Brazil, Chile, Columbia, Mexico, Peru and Venezuela). EPS (Earnings Per Share) Growth Rate (Projected): This measure represents the weighted average of forecasted growth in earnings expected to be experienced by the stocks within the portfolio over the next 3-5 years. From a portfolio perspective, the portfolio P/E ratio and EPS Growth Rate are weighted averages of the individual holdings’ P/E ratios and EPS Growth Rates. Data calculated in FactSet. EV/EBITDA: (Enterprise Value / Earnings Before Interest, Taxes and Depreciation-Amortization): The EV/EBITDA ratio is useful for global comparisons because it ignores the distorting effects of individual countries' taxation policies. It's used to find attractive takeover candidates. Enterprise value is a better measure than market cap for takeovers because it takes into account the debt which the acquirer will have to assume. Therefore, a company with a low EV/EBITDA ratio can be viewed as a good takeover candidate. EV/IC: (Enterprise Value / Invested Capital) Ratio: Enterprise Value (EV), which is market capitalization minus cash plus debt divided by Invested Capital (IC), which is the sum of common stock, preferred stock and long-term debt. This number will get you a simple multiple. If it is below 1.0, then it means that the company is selling below book value and theoretically below its liquidation value. Information Coefficient: A measure of the correlation between expected and actual returns. Information Ratio: A measure of risk-adjusted return. The annualized excess return of the portfolio relative to a respective benchmark, divided by the annualized tracking error relative to that same benchmark. The higher the measure, the higher the risk-adjusted return.

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Glossary – Terms

PBV: (Price/Book Value) Ratio: The PBV Ratio measures the value of a company's common stock relative to its shareholder's equity. A price-to-book multiple above one means that the price of the company's common stock is higher than its common shareholder's equity. A price-to-book multiple below one means that the price of the company's common stock are less than its break-up value, and the shares may be undervalued. PCF: (Price/CashFlow): Some analysts favor the price/cash flow over the price-earnings (PE) ratio as a measure of a company’s value. Cash flow is a measure of a company's financial health. It equals cash receipts minus cash payments over a given period of time. P/E: (Price/Earnings) Ratio: This is the most common measure of how expensive a stock is. Simply, it is the cost an investor in a given stock must pay per dollar of current annual earnings. A high P/E generally indicates that the market is paying more to obtain the stock because it has confidence in the company’s ability to increase its earnings. Conversely, a low P/E often indicates that the market has less confidence that the company’s earnings will increase rapidly or steadily, and therefore will not pay as much for its stock. R-squared: A measurement of how closely the portfolio’s performance correlates with the performance of its benchmark, such as the MSC AC World Free ex US Index. In other words, it is a measurement of what portion of a portfolio’s performance can be explained by the performance of the overall market or index. Ranges from 0 to 1, where 0 indicates no correlation and 1 indicates perfect correlation. Risk (Standard Deviation): A measure of the portfolio’s risk. A higher standard deviation represents a greater dispersion of returns, and thus a greater amount of risk. The annualized standard deviation is calculated using monthly returns. Sharpe-Ratio: A risk-adjusted measure calculated using standard deviation and excess return (Portfolio return – Risk Free Rate) to determine reward per unit of risk. The higher the Sharpe ratio, the better the portfolio’s historic risk-adjusted performance. Tracking Error: Tracking Error measures the extent to which a portfolio tracks its benchmark. The tracking error of an index portfolio should be lower than that of an active portfolio. The tracking error will always be greater than zero if the portfolio is anything other than a replication of the benchmark. Trailing 1-Year Turnover: This figure reflects the portfolio’s trading activity by calculating the amount of the portfolio’s holdings bought or sold over the prior year, expressed as a percentage of the portfolio’s average market value. Turnover figures may be related to the amount of trading costs experienced by the portfolio. Weighted Average Market Capitalization: Market capitalization refers to the total market value of each company's outstanding shares. The Weighted Average Market Capitalization for a portfolio is calculated as the average market capitalization of the stocks within the portfolio, weighted by the amount of each stock owned. Weighted Median Market Capitalization: This calculation represents the median market capitalization of the stocks in the portfolio, weighted by the amount of each stock owned.

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