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Robert C. Lanphier, Partner
Portfolio Manager
Douglas J. Kryscio, CFA, Partner
Senior Client Relationship Manager
40807Custom Cover – 2 Line Title
Mid Cap Growth
Charlotte Firefighters' Retirement System
January 18, 2018
FOR USE WITH INSTITUTIONAL INVESTORS ONLY. As used in this document, “William Blair” refers to William Blair Investment Management, LLC and the Investment Management division of William Blair & Company, L.L.C. unless otherwise noted. For more information about William Blair, please see http://www.williamblair.com/About-William-Blair.aspx
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Compliance Attestation
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Contents
SECTION I
Overview
SECTION II
Philosophy and Process
SECTION III
Portfolio Characteristics and Performance
SECTION IV
Appendix
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Overview
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Firm Overview: Built for Client Success
• Founded in 1935
• Investment roots in small and mid cap growth
• 100% active employee owned
• Diversified, merit-based ownership structure
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Assets Under Management
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$73.9 billion in assets under managementAs of September 30, 2017
As used on this page, “William Blair” refers to William Blair Investment Management, LLC and the Investment Management division of William Blair & Company, L.L.C. unless otherwise noted. For more information about William Blair, please see http://www.williamblair.com/About-William-Blair.aspx. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Strategy availability may be limited to certain investment vehicles; not all investment vehicles may be available to all investors. Please contact your William Blair representative for more information. Unless otherwise noted, all data shown is as of the date of this material. Assets shown in U.S. dollar.
All Cap Growth $1.9 billion David Fording International Growth $16.3 billion Macro Allocation
John Jostrand (closed 6/12) Global Opportunity
Large Cap Growth $2.9 billion James Golan International Leaders $5.1 billion Dynamic Diversified Allocation
David Ricci Global Diversified Return
Mid Cap Growth $4.2 billion Dan Crowe International Developed Plus $1.3 billion
Robert Lanphier
David Ricci ADR Growth $205 million
Small-Mid Cap Growth $7.4 billion Dan Crowe
Robert Lanphier Intl. Small Cap Growth $3.3 billion
Small Cap Growth $855 million Mike Balkin (closed 3/11)
Ward Sexton Emerging Markets Growth $6.1 billion
Small-Mid Cap Value $75 million Chad Kilmer
Mark Leslie Emerging Markets Leaders $6.0 billion
David Mitchell
Small Cap Value $1.9 billion Chad Kilmer Emerging Markets Small Cap Growth $1.6 billion
(closed 9/17) Mark Leslie (closed 10/13)
David Mitchell Global Leaders $2.9 billion
Tax-Efficient Strategies $142 million Mark Fuller
Jackie Moss
Greg Pusinelli
Custom Portfolios $7.7 billion
Fixed Income $1.4 billion Christopher Vincent
Todd Kurisu
Kathy Lynch
Paul Sularz
$28.7 billion $42.9 billion $2.3 billionU.S. Strategies Non-U.S. Strategies Dynamic Allocation Strategies
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Mid Cap Growth Portfolio Team
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Henry Baby, CFAResearch Analyst – U.S. Small Cap Generalist12 years in industry3 years at William BlairMBA, University of ChicagoBS, Boston College
Mark Thompson, CFA, PartnerResearch Analyst – U.S. Small Cap Generalist18 years in industry11 years at William BlairMBA, BBA, University of Iowa
Research Associates (8)
Analysts average 17 years industry experience and 9 years at William Blair. As of October 2017.1Jim Jones and Corey Tobin also serve as Co-Directors of U.S. Growth Research. 29 years of experience at William Blair from November 2002 to 2011. Rejoined the firm in August 2012.
Portfolio Management Portfolio Specialists
Dan Crowe, CFA, Partner18 years in industry6 years at William BlairBS, University of Illinois
Robert Lanphier, Partner30 years in industry30 years at William BlairMBA, Kellogg School of Mgmt.BS, Purdue University
David Ricci, CFA, Partner23 years in industry23 years at William BlairMBA, Harvard UniversityScB, Brown University
Matt McLaughlin, CFA9 years in industry1 year at William BlairBA, Loras College
Tara Patock, CFA12 years in industry4 years at William BlairMBA, Univ. of ChicagoBBA, Loyola University
Patrick Quinn, CFA, Partner17 years in industry13 years at William BlairMBA, Univ. of ChicagoBS, Indiana University
Research Analysts
Consumer Financials Healthcare Industrials Information Technology Resources
U.S. Large Cap
RJ Bukovac, CFA, CPA, Partner29 years in industry10 years at William BlairMSA, DePaul UniversityBA, Cornell University
Nancy Aversa, CFA21 years in industry2 years at William BlairMBA, University of WindsorBC, University of Windsor
Lauren Thompson, CFA6 years in industry3 years at William BlairBS, University of Notre Dame
Mark Lane, Partner25 years in industry19 years at William BlairMBA, University of ChicagoBA, Northwestern University
Yan Krasov, CFA15 years in industry11 years at William BlairMBA, University of ChicagoBS, Northwestern University
Yan Krasov, CFA James Golan, CFA,Partner29 years in industry17 years at William BlairMBA, Kellogg School of ManagementBA, DePauw University
James Golan, CFA, Partner
U.S. Mid Cap
Travis Cope10 years in industry9 years at William BlairMA, University of St. Andrews
Nick Zimmerman, CFA13 years in industry<1 year at William BlairMS, University of WisconsinBS, University of Illinois
Colin Williams, CFA, Partner19 years in industry17 years at William BlairBA, Grove City College
Nick Zimmerman, CFA
U.S. Small Cap
Michael Lasota, CFA9 years in industry3 years at William BlairMBA, University of ChicagoBA, University of Chicago
Michael Hubbard6 years in industry6 years at William BlairBBA, University of Iowa
Kurt Wiese, CFA, CPA, Partner19 years in industry17 years at William BlairMBA, University of ChicagoBS, Indiana University
Jim Jones, CFA, Partner1
17 years in industry7 years at William BlairMBA, University of North CarolinaBS, Miami University
Corey Tobin, Partner1
18 years in industry15 years at William Blair2
MBA, Kellogg School of ManagementMS, University of ChicagoBBA, University of Michigan
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Philosophy and Process
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Investment Philosophy
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Quality Growth
Superior, longer-term earnings growth
• Strong management
• Sustainable business model
• Solid financials
Traditional Quality Growth
A better company than the market expects
• Faster growing
• More durable growth rates
Fallen Quality Growth
Short term issue
• Growth is non-linear
• Market overreacts
• Deep company knowledge
Undiscovered Quality Growth
Lack of readily accessible information
• Minimal analyst coverage
• Low institutional ownership
Market Inefficiencies We Seek to Exploit
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Mid Cap Growth Investment Process
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Screening for Potential Quality
Growth Companies
Preliminary Bottom-up
Analysis
Thorough Fundamental Analysis
Portfolio Construction
& Risk Control
Portfolio Monitoring
& Sell Discipline
Institutional Knowledge
• Analyst and PM networks and experience
Quantitative Screens
• Quality & Growth
Identify Potential Candidates for Deeper Research
• Sourced by analysts and PMs via internal and external networks, conferences, screens
• Investigated by the analyst or PM through company filings, internal and external discussions
• Highest priority ideas nominated for the Research Agenda
Iterative Process
• Analyst led with PM research sponsor
• Weekly team meetings, daily interaction
• Analyst produces research report, assigns stock rating
Intensive Due Diligence
• Company assessment
– Company visits, management meetings, independent checks
• Valuation assessment
– Understand perceived business quality and long term fundamental expectations discounted in stock price
Portfolio Construction
• PM team decision with analyst input
Risk Control
• Absolute: continually
• Benchmark relative: monthly
Monitoring
• Continual research and monitoring by PMs and analysts
Sell Discipline
• PM team decision with analyst input
Portfolio40–60 quality
growth holdings
1 2 3 4 5
Buy List75–100 fully vettedstock opportunities
Research Agenda10–20 high priority investment
ideas at any given time
Live, working document that serves as a roadmap for company research
Eligibility List400–500 potential
quality growth companies
Investable Universe
≈900 companiesprimarily within the range of the Russell Midcap Index
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Portfolio Characteristics and Performance
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Portfolio CharacteristicsDecember 31, 2017
1. This measure represents the weighted average of forecasted growth in earnings expected to be experienced by stocks within the portfolio over the next 3-5 years. This projectedearnings growth should not be considered an indication of future performance. From a portfolio perspective, the portfolio P/E ratio and EPS Growth Rate are weighted averages of theindividual holdings’ P/E ratios and EPS Growth Rates.
Calculated in FactSet; Market cap calculated in Eagle. The projected P/E value is calculated using First Call Data.
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Charlotte Firefighters’ Retirement
SystemRussell Midcap Growth Index
Growth
EPS Growth Rate (3-year historic) 15.1% 13.3%
EPS Growth Rate (LT forecast)1 17.1% 15.8%
Quality
Return on Invested Capital 12.5% 11.7%
Free Cash Flow Margin 13.2% 10.5%
Debt to Total Capital Ratio 45.8% 48.9%
Valuation
P/E (1-year forecast) 24.3x 21.5x
Capitalization ($B)
Weighted Average Market Cap $14.2 $15.6
Weighted Median Market Cap $12.2 $13.6
Portfolio Positions
Number of Securities 53 421
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Top 15 HoldingsAs of December 31, 2017
Calculated in Eagle. Holdings include cash. Individual securities listed in this report are for informational purposes only. Holdings are subject to change at any time. This information does not constitute, and should not be construed as, investment advice or recommendations with respect to the securities listed.
Top 15 Holdings – Charlotte Firefighters’ Retirement System
Charlotte Firefighters’ Retirement System
% In Portfolio
Russell Mid Cap Growth
% In Index
Copart Inc 3.52 0.28
Progressive Corp/The 3.40 1.05
Verisk Analytics Inc 3.32 0.47
Ross Stores Inc 3.25 0.98
Red Hat Inc 3.01 0.69
Vantiv Inc 2.88 0.38
SBA Communications Corp 2.85 0.63
BWX Technologies Inc 2.84 0.18
CoStar Group Inc 2.83 0.34
Ball Corp 2.78 0.23
Zoetis Inc 2.71 1.14
Six Flags Entertainment Corp 2.60 0.14
Concho Resources Inc 2.56 -
Equifax Inc 2.51 0.45
Middleby Corp/The 2.48 0.24
Total 43.54 7.21
Charlotte Firefighters’ Retirement System
Russell Mid Cap Growth Index
Number of Securities 53 421
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Institutional Mid Cap Growth Strategy Batting Average
Rolling 5-Year Returns Since Inception (April 1, 1997)
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-10
-5
0
5
10
15
20
25
-10 -5 0 5 10 15 20 25
Mid
Cap
Gro
wth
Co
mp
osi
teA
nn
ual
ized
Ret
urn
s (%
US
D G
ross
)
Russell Midcap GrowthAnnualized Returns (%)
Bear Markets
Normal Up Markets
SpeculativeUp Markets
As of December 31, 2017
Rolling 5-year returns graph calculated using quarterly data. Market environment returns reflect average annualized returns for rolling 5-year periods within each market environmentcategory. Overall batting average reflects the percentage of rolling 5-year periods in which Mid Cap Growth outperformed the Russell Midcap Growth Index.
Past performance is not indicative of future returns. Returns for periods greater than one year are annualized. Gross performance results shown do not reflect the deduction ofinvestment management fees, assume the reinvestment of dividends and capital gains, and are net of transaction costs. Performance results will be reduced by the fees incurred in themanagement of the account. For example, assuming an annual gross return of 8% and an annual management/advisory fee of .40%, the net annualized total return of the portfolio would be7.58% over a 5‐year period. Net investment performance represents the deduction of the highest possible fee. Investment management fees are described in William Blair's Form ADV Part2A.. The Russell Midcap Growth Index is an unmanaged index registered to Russell/Mellon. It measures the performance of those Russell Midcap companies with higher price-to-book ratiosand higher forecasted growth values. The stocks are also members of the Russell 1000 Growth Index. Please see composite disclosure in appendix for a complete description of thecomposite.
Overall Batting Average: 63%
Mid Cap Growth Composite 4.16
Russell Midcap Growth -3.42
Relative Performance 7.58
Mid Cap Growth Composite 8.84
Russell Midcap Growth 6.52
Relative Performance 2.32
Mid Cap Growth Composite 16.55
Russell Midcap Growth 18.35
Relative Performance -1.80
Market Environment
Bear Markets (<0% return)
Normal Up Markets (0-15% return)
Speculative Up Markets (>15% return)
December 2017 performance is preliminary.
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Performance SummaryFor periods ending December 31, 2017
1. Charlotte Firefighters’ Retirement System Performance Inception: 6/27/13.
As of 7/1/2015, discretionary investment management of the portfolio is provided by William Blair Investment Management, LLC. Prior to such date, such discretionary investment management was provided by William Blair & Company, L.L.C., an affiliate of William Blair Investment Management, LLC.
Past performance is not indicative of future returns. Net investment performance represents the deduction of the account’s actual fee. Investment management fees are described in William Blair's Form ADV Part 2A. Returns for periods greater than one year are annualized.
The Russell Midcap Growth Index measures the performance of those Russell Midcap companies with higher price-to-book ratios and higher forecasted growth values. This benchmark is a comparable market proxy.
Assets
Charlotte Firefighters’ Retirement System $21,460,467
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Performance (%)
Annualized
4Q17 1 Year 3 YearSince
Inception1
Charlotte Firefighters’ Retirement System (Net) 5.63 21.39 7.14 9.68
Russell Midcap Growth Index 6.81 25.27 10.30 13.53
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Institutional Mid Cap Growth AttributionDecember 31, 2017
Source: William Blair, Opturo.
Past performance is not indicative of future returns. The above information is based on the strategy's representative portfolio. Holdings are subject to change at any time. 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. The above securities do not represent all of the securities purchased, sold or recommended for all William Blair clients.
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QTD Contributors YTD Contributors
• Stock selection in Industrials including Copart and Verisk Analytics
• Other top contributors: Ross Stores (Consumer Discretionary), SBA Communications (Real Estate) and Progressive (Financials)
• Top contributors: Red Hat (Information Technology), Copart (Industrials) and Costar Group (Information Technology)
• Stock selection in Health Care including Centene and Align Technology
• Our higher growth bias, and resulting lower dividend yield exposure, was a tailwind
QTD Detractors YTD Detractors
• Consumer Discretionary stock selection including Newell Brands, Hanesbrands and CarMax
• Other top detractors: Ball Corporation (Materials) and Guidewire Software (Information Technology)
• Consumer Discretionary stock selection including O’Reilly Automotive, Newell Brands and Tractor Supply
• Other top detractors: Ball Corporation (Materials) and Signature Bank (Financials)
• Our typical underweight to the Semiconductor industry, including not owning NVIDIA, detracted meaningfully from relative returns
• Our emphasis on durable business models was a headwind as companies with more volatile fundamentals outperformed
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Appendix
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Charlotte Firefighters’ Retirement SystemAs of December 31, 2017William Blair Relationship Review
*Includes client contributions, withdrawals and any expenses that are paid out of the account, such as management fees, custody fees, audit fees and legal fees.The above information is intended to supplement, but in no way supersede your custodian statements, which are the official record of your account.
Original Investment (06/27/2013) $22,240,779
+/- Net Contributions/(Withdrawals)* ($11,503,085)
+/- Market Appreciation/(Depreciation) $10,722,773
Market Value $21,460,467
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Charlotte Firefighters’ Retirement System – HoldingsDecember 31, 2017
Individual securities listed in this report are for informational purposes only. Holdings are subject to change at any time. This information does not constitute, and should not be construed as, investment advice or recommendations with respect to the securities listed. The benchmark above is the Russell Midcap Growth Index.
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Portfolio
Weight
Benchmark
Weight
Portfolio
Weight
Benchmark
Weight
Portfolio
Weight
Benchmark
Weight
Consumer Discretionary 19.07 17.57 Health Care (Cont'd) Information Technology (Cont'd)
Ross Stores Inc. 3.25 0.98 BioMarin Pharmaceutical Inc. 1.42 0.50 Ultimate Software Group Inc. 2.24 0.20
Six Flags Entertainment Corporation 2.60 0.14 Align Technology Inc. 1.40 0.57 Booz Allen Hamilton Holding Corporation 2.22 0.16
Domino's Pizza Inc. 2.27 0.27 Teleflex Incorporated 1.39 0.06 Guidewire Software Inc. 2.04 0.07
Tractor Supply Company 1.68 0.30 Encompass Health Corporation 1.38 - MAXIMUS Inc. 1.87 -
Live Nation Entertainment Inc. 1.58 0.18 ABIOMED Inc. 1.32 0.25 Microchip Technology Incorporated 1.43 0.65
Vail Resorts Inc. 1.48 0.27 West Pharmaceutical Services Inc. 1.06 0.23 Analog Devices Inc. 1.41 1.05
CarMax Inc. 1.46 0.38 IDEXX Laboratories Inc. 1.02 0.44 Arista Networks Inc. 1.27 0.40
Hanesbrands Inc. 1.35 0.24 Charles River Laboratories International Inc. 0.92 0.17 CSRA Inc. 1.10 0.16
Ulta Beauty Inc 1.25 0.42 Mettler-Toledo International Inc. 0.89 0.51 Coherent Inc. 1.05 0.22
Newell Brands Inc 1.17 - Industrials 19.87 17.24 j2 Global Inc. 1.00 -
Aptiv PLC 0.98 0.73 Copart Inc. 3.52 0.28 Take-Two Interactive Software Inc. 0.91 0.39
Consumer Staples - 4.21 Verisk Analytics Inc 3.32 0.47 Materials 5.95 6.40
Energy 2.56 2.52 BWX Technologies Inc. 2.84 0.18 Ball Corporation 2.78 0.23
Concho Resources Inc. 2.56 - Equifax Inc. 2.51 0.45 Vulcan Materials Company 2.10 0.51
Financials 6.36 7.27 Middleby Corporation 2.48 0.24 Axalta Coating Systems Ltd. 1.07 0.22
Progressive Corporation 3.40 1.05 Fortive Corp. 1.89 0.65 Real Estate 2.85 3.33
East West Bancorp Inc. 1.68 0.02 Xylem Inc. 1.73 0.21 SBA Communications Corp. 2.85 0.63
Affiliated Managers Group Inc. 1.27 - Westinghouse Air Brake Technologies Corporation 1.58 0.07 Telecommunication Services - 0.22
Health Care 17.16 13.21 Information Technology 25.26 27.96 Utilities - 0.05
Zoetis Inc. 2.71 1.14 Red Hat Inc. 3.01 0.69 Cash & Equivalents 0.91 -
Centene Corporation 2.22 0.07 Vantiv Inc. 2.88 0.38 Total: 100.00 100.00
Veeva Systems Inc 1.44 0.19 CoStar Group Inc. 2.83 0.34
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Biographies – Mid Cap Growth Team
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Robert C. Lanphier, Partner
Rob Lanphier is a portfolio manager on the Mid Cap Growth and Small-Mid Cap Growth strategies. He co-founded the Mid Cap Growth strategy in 1997 and the Small-Mid Cap Growth
strategy in 1998. Before that, he was with William Blair’s sell-side institutional sales group for eight years. He joined William Blair in 1987. Before joining the investment industry, Rob
was with Emerson Electric Corporation for nearly six years. Education: B.S., with honors, Purdue University; M.B.A., Northwestern University’s Kellogg Graduate School of
Management.
David Ricci, CFA, Partner
David Ricci is a portfolio manager on the Mid Cap Growth and Large Cap Growth strategies. He joined the Mid Cap Growth strategy in 2005 and the Large Cap Growth strategy in 2011.
Previously, he was the group head for the consumer sector, focusing on specialty retail and e-commerce companies, in William Blair’s sell-side research group. David joined William
Blair in 1994. Before joining the investment industry, he had extensive experience with Procter & Gamble, Melville, and Bain & Company. He is a member of the CFA Institute and the CFA
Society of Chicago. Education: Sc.B., magna cum laude, Brown University; M.B.A., Harvard Business School.
Dan Crowe, CFA, Partner
Dan Crowe is a portfolio manager on the Mid Cap Growth and Small-Mid Cap Growth strategies. Dan had previously served as an Associate Portfolio Manager on our Mid Cap Growth
strategy and before that as an associate portfolio manager on our Small Cap Growth strategy and a research analyst. His research focus was on the U.S. small cap space across all
sectors. Dan joined William Blair as a generalist research analyst in May 2011. Before joining William Blair, he was a midcap portfolio manager at Pyramis Global Advisors, and before
that a portfolio manager and analyst at The Boston Company/Founders Asset Management. He began his career as a generalist analyst at Marsico Capital Management. Dan is a member
of the CFA Institute and the CFA Society of Chicago. Education: B.S., mechanical engineering, University of Illinois at Urbana-Champaign.
Tara Patock, CFA
Tara Patock is a Portfolio Specialist for the firm’s U.S. equity growth strategies. She joined William Blair in 2013 to work with the firm’s domestic equity growth teams. Previously, Tara
was a consultant with Pavilion Advisory Group. Before her role at Pavilion, Tara was a registered sales associate with Oppenheimer & Co. Tara is a member of the CFA Institute and the
CFA Society of Chicago. Education: B.B.A., summa cum laude, economics and finance, Loyola University Chicago; M.B.A., with honors, University of Chicago’s Booth School of Business.
Patrick Quinn, CFA, Partner
Patrick Quinn is a Portfolio Specialist for the firm’s U.S. equity growth strategies. He joined William Blair in 2004 to work with the firm’s domestic equity growth teams. Previously,
Patrick was an institutional equity trader with Strong Capital Management. Patrick is a member of the CFA Institute and the CFA Society of Chicago. Education: B.S., accounting and
finance, Indiana University; M.B.A., with honors, University of Chicago’s Booth School of Business.
Matt McLaughlin, CFA, CAIA
Matt McLaughlin is a Portfolio Specialist for the firm’s U.S. equity growth strategies. He joined William Blair in 2016 to work with the firm’s domestic equity growth teams. Previously,
Matt was Vice President, Research with Harbor Capital Advisors. Matt is a member of the CFA Institute, the CFA Society of Chicago, and the CAIA Association. Education: B.A., finance,
and marketing, Loras College.
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Biographies – U.S. Equity Research Team
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RJ Bukovac, CFA, CPA, Partner
RJ Bukovac is a research analyst focused on U.S. large- and mid-cap consumer companies. He joined William Blair as a research analyst in 2007. Previously, he worked in the research
department and within the portfolio teams of Putnam Investments for 10 years. During his time at Putnam, RJ covered a broad range of domestic and international equities, including
industrials, consumer cyclicals, consumer staples, and diversified media. Before that, he was an analyst for privately held businesses, and he determined fair market values for purposes
of reorganizations, divestitures, and mergers and acquisitions in Price Waterhouse’s Chicago valuation consulting practice for nine years. He is a member of the CFA Institute, the CFA
Society of Chicago, and the Illinois CPA Society and AICPA. Education: B.A., economics and finance, Cornell University; M.S.A., DePaul University.
Henry Baby, CFA
Henry Baby is a domestic small-cap generalist research analyst. He joined William Blair in December 2014 after running his own firm Six Corners Capital for more than five years. Before
joining Six Corners Capital, Henry was an equity analyst at RMB Capital Management and Holland Capital Management in Chicago. He is a member of the CFA Institute and the CFA Society
of Chicago. Education: B.S., finance, Boston College; MBA, University of Chicago Booth School of Business.
Nancy Aversa, CFA
Nancy Aversa is a research analyst focused on U.S. large- and mid-cap consumer companies. She joined William Blair in 2015. Previously, Nancy worked in the research department and
on the portfolio teams of Federated Investors for 10 years. During her time at Federated, Nancy covered a broad range of domestic equities within the consumer cyclicals and consumer
staples sectors for both long-only and short-only portfolio strategies. Before that, she was a consumer research analyst with Victory Capital Management. Nancy started her career in
investment banking with McDonald Investments. She is a member of the CFA Institute and the CFA Society of Chicago. Education: Bachelor of Commerce, University of Windsor; MBA,
University of Windsor.
James S. Golan, CFA, Partner
Jim Golan is a portfolio manager on William Blair’s Large Cap Growth strategy and a research analyst covering U.S. large-cap technology and resources. From 2000 until he took on his
current role in 2005, Jim served as a research analyst focusing on financial, technology, industrial, and resource companies. Before joining William Blair in 2000, he worked at Citigroup
Global Asset Management, where he was a global research team leader for the telecommunications sector and a key member of the team that devised valuation metrics for standardizing
the analysis of domestic and international companies. Jim began his career at Kemper Financial as a research analyst covering telecommunications, technology, energy, industrial, food,
and beverage companies. He is a member of the CFA Institute and the CFA Society of Chicago. Education: B.A., economics, DePauw University; MBA, finance, Northwestern University’s
Kellogg Graduate School of Management.
Travis Cope
Travis Cope is a research analyst focused on U.S. mid-cap healthcare companies. He joined William Blair in 2008 as a research associate working primarily with the U.S. growth team,
where he was generalist analyst covering emerging market small-cap companies and non-U.S. small-cap resources companies. Before joining the firm, he was an analyst at Macquarie
Bank in Chicago, where he engaged in corporate restructuring advisory activity. Education: M.A., international relations and modern history, University of St. Andrews, Scotland.
Michael Hubbard
Michael Hubbard is a research analyst on the financials sector team, where he focuses on U.S. small-cap companies. He joined William Blair in 2007, working as a research analyst for the
firm’s sell side, where he covered specialty technology and healthcare IT for two years. In 2013, after serving in the U.S. Marine Corps for four years, Michael rejoined William Blair as a
research associate on the technology sector team, where he focused on U.S. companies and later emerging market small-cap companies. He founded and leads the company’s veteran
employee resource group. Education: B.B.A., finance, University of Iowa.
Jim Jones, CFA, Partner
Jim Jones is a research analyst focused on U.S. small-cap industrials and a co-director of research for the U.S. Growth Equity team. He joined William Blair as a research analyst in 2010.
Previously, Jim was an investment analyst at Federated Investors for four years. Before that, he was a research analyst at Credit Suisse and an associate at Ashton Partners. He is a
member of the CFA Institute and the CFA Society of Chicago. Education: B.S., accounting, Miami University; MBA, University of North Carolina.
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Biographies – U.S. Equity Research Team
31722
Michael Lasota, CFA
Michael Lasota is a research analyst on the consumer sector team, where he focuses on U.S. small-cap companies. He joined William Blair as a research analyst in April 2014. Previously,
Michael was an investment analyst at T. Rowe Price for nearly six years, where he covered hotel, cruise, and real estate companies. Before that, he was an associate at Boston Consulting
Group for two years. Michael is a member of the CFA Institute. Education: B.A., economics, University of Chicago; MBA, University of Chicago Booth School of Business.
Yan Krasov, CFA
Yan Krasov is a research analyst focused on U.S. large-cap industrials and healthcare companies. He joined William Blair in September 2006 as a research associate. Before joining the
firm, Yan spent four years at JPMorgan Securities in Chicago, where he began his career in the firm’s institutional equity sales and in the private client services groups. He is a member of
the CFA Institute and the CFA Society of Chicago. Education: B.S., speech and economics, Northwestern University; MBA, University of Chicago Booth School of Business.
Lauren Thompson, CFA
Lauren Thompson is a research analyst on the consumer sector team, where she focuses on U.S. mid-cap companies. She joined William Blair as a research associate in September 2014.
Previously, Lauren was an equity research associate at Credit Suisse, first on the small-/midcap strategy team and later covering the broadline retail sector. She is a member of the CFA
Institute and CFA Society of Chicago. Education: B.S, mathematics and economics, University of Notre Dame.
Mark Lane, Partner
Mark Lane is a research analyst focused on U.S. large- and mid-cap financials. From June 2013 to June 2017, Mark also served as the director of research for the U.S. Growth Equity team.
Before joining the team, he was a financials sector analyst with the firm’s sell-side research department, where he specialized in asset management, brokerage, exchanges, and
investment banking. Before joining William Blair in 1998, Mark worked as a senior underwriter for The St. Paul Companies, where he analyzed specialty property-casualty insurance
risks. He also worked at Goldman Sachs as an analyst in the Chicago high-net-worth money-management group. Education: B.A., economics, Northwestern University; MBA, University
of Chicago Booth School of Business.
Mark C. Thompson, CFA, Partner
Mark Thompson is a research analyst and small-cap growth associate portfolio manager. His research focus is on the U.S. small-cap space across all sectors. He joined William Blair as a
research analyst in 2006. Previously, he was a research generalist at Kidron Capital for three years. Before that, he was a research analyst covering healthcare at American Express for
two years. Mark is a member of the CFA Institute and the CFA Society of Chicago. Education: B.B.A., finance (with an emphasis in accounting), University of Iowa; MBA, finance,
University of Iowa.
Corey S. Tobin, Partner
Corey Tobin is a research analyst focused on U.S. small-cap technology companies and a co-director of research for the U.S. Growth Equity team. Before rejoining William Blair in 2012,
he was the senior vice president of healthcare solutions and corporate planning for Trustwave Holdings, Inc., a provider of data security and compliance solutions. In this role, he led
Trustwave’s administrative and planning functions, such as its financial planning and analysis, human resources, sales operations, facilities, investor relations, and special projects
areas. From 2001 through 2011, Corey served in William Blair’s sell-side research group, focusing on specialty software and healthcare IT companies; in this role he was recognized by
The Wall Street Journal, The Financial Times, and Forbes. Before William Blair, Corey was an associate at private-equity firm Willis Stein & Partners, an analyst in the M&A investment
banking group of Merrill Lynch, and an associate in the financial advisory services practice at Coopers & Lybrand (now PricewaterhouseCoopers). Education: B.S., business
administration, high distinction, University of Michigan; MBA, Northwestern University Kellogg Graduate School of Management; M.S., computer science, with recognition, University of
Chicago.
Kurt M. Wiese, CFA, CPA, Partner
Kurt Wiese is a research analyst focused on U.S. small-cap healthcare companies. He joined the team in 2001 after serving as a member of William Blair’s corporate finance healthcare
team, where he was engaged in all aspects of transaction execution. He joined William Blair in 2000. Before that, he worked in the Chicago audit practice of PricewaterhouseCoopers for
two years. Kurt is actively involved within the Chicago community through his philanthropic work at the Chicago Jesuit Academy, a full-scholarship, college-prep middle school for
underprivileged boys on Chicago’s West Side. Kurt was a participant at the Center for Japanese Language and Culture at Nanzan University in Nagoya, Japan. Education: B.S., accounting
and finance, Indiana University; MBA, University of Chicago Booth School of Business.
000011AD 22
Biographies – U.S. Equity Research TeamColin Williams, CFA, Partner
Colin Williams is a research analyst on the technology sector team focused on U.S. mid-cap companies. He initially joined William Blair in 2000 as a research associate in the firm’s sell-
side research group. In 2002, he moved to the firms’ investment management group as a research analyst. In 2006, he began co-managing the Small Cap Growth strategy. In 2008, he
requested to resume his research responsibilities. Previously, Colin held several finance positions of increasing responsibility at Allegiance Healthcare, a division of Cardinal Health. He
is a member of the CFA Institute and the CFA Society of Chicago. Education: B.A., economics, Grove City College.
240869
Nick Zimmerman, CFA
Nick Zimmerman is a research analyst focused on U.S. small- and mid-cap resources and mid-cap industrials companies. He joined William Blair as a research analyst in 2017. Before
joining William Blair, Nick was an equity analyst at Holland Capital Management, where he covered energy, materials, aerospace and defense, and transportation companies. He is a
member of the CFA Institute and the CFA Society of Chicago. Education: B.S., finance, with high honors, University of Illinois at Urbana-Champaign; M.S., finance, University of Wisconsin-
Madison.
000011AE 23
Biographies
204989
Systematic Research:
Strategy Research:
Spiro Voulgaris, Partner
Spiro Voulgaris is a Senior Quantitative Analyst leading the Systematic Research team. He joined William Blair in 2007. Prior to joining the firm, Spiro was a Senior Quantitative Analyst
with Neuberger Berman for five years and subsequently worked alongside the same investment professionals for an additional three years while with Northern Trust. He was also with
Lehman Brothers for six years where he was a Strategist and Quantitative Analyst for their global and U.S. Investment Strategy teams in London and New York. Prior to that, Spiro spent
three years as a research analyst with the Center for Research in Securities Prices (CRSP). Education: B.A., Economics, University of Chicago; M.B.A., with a concentration in Statistics
and International Finance, University of Chicago Booth School of Business.
Andrew Kominik, CFA
Andrew Kominik is a Quantitative Portfolio Analyst on the Systematic Research team. He primarily supports equity management teams in the use of internal and external quantitative
models to evaluate portfolio risk and performance. Andrew also develops and programs multifactor quantitative models that are used by the fundamental equity analysts and portfolio
managers. He joined William Blair in 2003 and previously served as a marketing analyst and portfolio construction analyst. He is a member of the CFA Institute and the CFA Society of
Chicago. Education: B.A., History, Brandeis University; M.B.A., with concentrations in Econometrics & Statistics and Finance, University of Chicago Booth School of Business.
Olga Bitel
Olga Bitel joined William Blair in 2009. As Investment Management’s Global Strategist, she is responsible for economic research and analysis across all regions and sectors. She distills
macroeconomic and geopolitical developments into actionable insights for Global, International and Emerging Markets equities portfolios within a multifaceted strategic framework.
Additionally, she provides insight on cyclical turning points and structural trends as inputs into portfolio construction in predominantly bottom-up investment approaches. Olga
represents the firm with current and prospective clients in one-on-one settings, via conference calls, and written communications. With her contributions to the William Blair blog
“Investing Insights,” she is frequently quoted in the media. She is a frequent speaker at major global investment conferences with influential colleagues in the industry, heads of state,
and global political figures. Prior to joining William Blair, Olga was a senior economist at the National Institute of Economic and Social Research in London, United Kingdom, where she
produced macroeconomic forecasts for most Asian economies and led thematic research projects for some of the world’s best known international organizations including OPEC, the
IMF among others. Education: B.A., University of Chicago; M.Sc. economics, London School of Economics and Political Science.
Jeffrey Hill
Jeffrey Hill is a Senior Quantitative Business Analyst on the Systematic Research team. He joined William Blair in 2014. Jeff provides business and technical support across all needs for
the team with a focus on portfolio attribution. Prior to joining William Blair he spent 15 years at UBS Global Asset Management within the Global Investment Services team. During this
time he managed an international development team that focused on building bespoke risk management, portfolio rebalancing, and asset allocation solutions. The UBS role also required
Jeff to function as the bridge between the technical, investment, and sales teams as the tools were built and used both within UBS and for external clients. Education: Bachelor of Science
in Industrial Technology, Illinois State University.
Andrew Wickman, CFA
Andrew Wickman is a Quantitative Research Associate on the Systematic Research team. He develops and programs multifactor quantitative models that are used by the fundamental
equity analysts and portfolio managers, in addition to supporting the strategic thought leadership of the team. Prior to joining William Blair in 2015, he was a consultant at FactSet
Research Systems for four years supporting investment management research analysts and portfolio managers. He is a member of the CFA Institute and the CFA Society of Chicago.
Education: B.S., Economics, University of Kentucky.
000011C8 24
Biographies – Client Service Team
191615
Douglas J. Kryscio, CFA, Partner
Doug Kryscio is a senior client relationship manager. Before joining William Blair in 2011, he was a partner and Midwest and Great Lakes market business leader with Mercer
Investment Counseling for 11 years. While at Mercer, Doug was also a senior analyst, associate, and principal. Before joining Mercer, he was a portfolio manager for First Chicago. He is a
member of the CFA Institute and the CFA Society of Chicago. Education: B.B.A., finance, with department honors, University of Kentucky; M.B.A., finance, with distinction, DePaul
University. Distinctions: Phi Kappa Phi and Delta Mu Delta National Honor Society.
Julie Stevens, CFA
Julie Stevens joined William Blair in 2000 as a member of Investment Management’s Operations team. She is the Head of Client Services. She has been a member of the Client Services team
since May of 2004. Previously, she spent three years at Bank One as a Financial Analyst for the Asset Liability Management Department. She is a member of the CFA Institute and the CFA
Society of Chicago. Education: B.S., Indiana University; M.B.A., University of Chicago Booth School of Business.
Cliff Kalish, CFA
Cliff Kalish is a client relationship manager. Before joining William Blair in 2011, Cliff was a client relationship manager at Calamos Investments for six years. Before that, Cliff was a
research analyst at Ellwood Associates for five years. Cliff is a member of the CFA Institute and the CFA Society of Chicago. Education: B.S., consumer economics with an option in
finance, University of Illinois at Urbana-Champaign.
Stephen J. Weeks
Steve Weeks is a senior client relationship manager. Before joining William Blair in 2015, Steve was senior vice president of marketing, consultant relations, and client services at
Columbus Circle Investors (CCI). Prior to joining CCI in April 2005, Steve was a director and senior investment specialist for Principal Global Investors and one of the founding partners
of GlobeFlex Capital, L.P., where he was responsible for institutional marketing and client service. He is a current board advisor to the National Conference on Public Employee
Retirement Systems (NCPERS). Education: B.S., finance, University of Arizona.
Dana Denizman
Dana Denizman joined William Blair in 1999 as a member of the Small Cap Growth Team. Currently, she is a Senior Client Services Associate, responsible for both international and
domestic accounts, and has been a member of the Client Services Team since May 2004. Previously, she spent four years at PaineWebber in various positions, including Registered Sales
Assistant, Branch Office Administrator and in the Management Development Program. Prior to that, Dana spent four years at American Century as a Client Service Representative.
Education: B.A., University of Iowa.
James Dominguez
James Dominguez is a client relationship manager. Before joining William Blair in 2016, he served as a Vice President and Relationship Manager for Northern Trust Asset Management
working with Public Pension plans and Taft-Hartley plans. While at Northern Trust, James also served as an Associate Relationship Manager within the Institutional Sales and Client
Service group and as a Senior Investment Manager Liaison within Investment Operations. Prior to Northern Trust, James was the managing director of a national employment and
training organization where he oversaw the service delivery of five workforce programs for the City of Chicago’s Mayor's Office of Workforce Development. Education: B.A.,
psychology, Roosevelt University; M.B.A., financial analysis, DePaul University’s Kellstadt Graduate School of Business.
Robert J. Duwa, CFA, Partner
Robert Duwa is head of institutional client relationship management. Previously, Bob was a Portfolio Specialist on the Global Equity team. Bob joined William Blair in 2010 as a Senior
Client Relationship Manager responsible for institutional clients. Previously, he was a Senior Consultant and Practice Leader with DeMarche Associates, Inc. for 11 years, where he was
responsible for the strategic investment direction for institutional clients. At DeMarche, he was also president and founder of Discretionary Management Services, a registered
investment advisor providing OCIO services. Prior to DeMarche, Bob worked in institutional investment management for Boatmen’s Trust Company. He is a member of the CFA
Society of Chicago. Education: B.A. Finance, Loras College.
000011B6 25
Biographies – Client Service Team
236826
Thomas Riesenberg
Tom Riesenberg is a Senior Client Service Associate responsible for both international and domestic accounts. He joined Investment Management in November 2014. Previously, Tom
was an International Accounting Analyst at William Blair for three years. Prior to that, Tom was a Financial Reporting Analyst at the Northern Trust Company for four years.
Education: B.S.B.A. in Finance, Creighton University.
Jennifer Pinner
Jennifer Pinner joined William Blair in 2014 as a member of Investment Management Institutional Client Service. She is a Client Service Associate, responsible for both international and
domestic accounts. Previously, she spent eight years at Northern Trust in various positions, including Senior Consultant and Senior Account Manager for the Corporate and
Institutional Services team. Education: B.S., DePaul University; M.B.A., Saint Xavier University Graham School of Management.
Luke Hepler
Luke Hepler joined William Blair in 2015 as a member of Invesment Management Institutional Client Service. He is a Client Service Associate, responsible for both international and
domestic accounts. Previously, Luke was a Research Analyst at Ellwood Associates. Education: B.S., Finance, Northern Michigan University.
Matt Brady
Matt Brady joined William Blair in May 2015. He is a member of the Client Services Team as a Client Service Associate. He is responsible for both international and domestic accounts.
Previously, Matt was an Analyst on the Product Development & Management Team for BMO Global Asset Management. Education: BBA, Finance and Risk Management, University of
Wisconsin-Madison.
000011B7 26
Growth Equity Research Team
221973
StrategyResearch
Directors ofResearch
Institutional Portfolio ManagersSystematicResearch
PortfolioSpecialists
Olga Bitel, Global Strategist Jim Jones, CFA, PartnerD.J. Neiman, CFA, PartnerCorey Tobin, Partner
Research ManagerKristina Blaschek
Mike Balkin, PartnerDan Crowe, CFA, PartnerSimon Fennell, PartnerAndy Flynn, CFA, PartnerDavid Fording, CFA, PartnerJames Golan, CFA, PartnerJohn Jostrand, CFA, PartnerRobert Lanphier, Partner
Ken McAtamney, PartnerTodd McClone, CFA, PartnerDavid Merjan, CFA, PartnerJack Murphy, CFA, PartnerCasey Preyss, CFA, PartnerDavid Ricci, CFA, PartnerWard Sexton, CFA, PartnerJeff Urbina, CFA, Partner
Spiro Voulgaris, PartnerAndrew Kominik, CFAJeffrey HillAndrew Wickman, CFA
Ryan Dimas, CFA, CAIARomina GraiverMatt McLaughlin, CFATara Patock, CFABlake Pontius, CFAPatrick Quinn, CFA, Partner
Portfolio Managers average 26 years industry experience and 17 years at William Blair; Analysts average 16 years industry experience and 10 years at William Blair. Years of experience excludes research associates. As of January 2018.
Research Teams Consumer Financials Healthcare IndustrialsInformation Technology
Resources
U.S. Large Cap
Nancy Aversa, CFA
RJ Bukovac, CFA, CPA, Partner
Lauren Thompson, CFA
Mark Lane, Partner
Yan Krasov, CFA Yan Krasov, CFA James Golan, CFA,Partner
James Golan, CFA, Partner
U.S. Mid CapTravis Cope Nick Zimmerman, CFA Colin Williams, CFA,
Partner Nick Zimmerman, CFA
U.S. Small Cap
Michael Lasota, CFA Michael Hubbard Kurt Wiese, CFA, CPA, Partner
Jim Jones, CFA, Partner Corey Tobin, Partner
U.S. Small Cap Generalists
Henry Baby, CFA Mark Thompson, CFA, Partner
U.S. Research Associates (9)
Global Large/Mid
Kwesi Smith, CFA
Dan Su, CFA
Joel Gomberg, CFA, Partner
D.J. Neiman, CFA, Partner
Thomas Sternberg, CFA, Partner
Camilla Oxhamre Cruse, Ph.D.
Andrew Siepker, CFA
Anil Daka, CFA
William Benton, CFA, CPA, Partner
William De Allaume, CFA
Alaina Anderson, CFA, Partner
GlobalSmall Cap
Rita Spitz, CFA, Partner Daniel Hill, CFA Richard Reznik, Ph.D. Taylor Cope, CFA Drew Buckley, CFA, CPA Taylor Cope, CFA
EM Small Cap Generalists
Greg Scolaro, CFA, CPA Bryan Shea
China Generalists
Vivian Lin Thurston, CFA Richard Reznick, Ph.D.
Global Research Associates (7)
00000FA1 27
Institutional Mid Cap Growth Strategy Performance for periods ending December 31, 2017
*Annualized standard deviation of monthly returns.
**Partial year performance from April 1 to December 31, 1997.
Past performance is not indicative of future returns. Returns for periods greater than one year are annualized. Gross performance results shown do not reflect the deduction of investment management fees, assume the reinvestment of dividends and capital gains, and are net of transaction costs. Performance results will be reduced by the fees incurred in the management of the account. For example, assuming an annual gross return of 8% and an annual management/advisory fee of .40%, the net annualized total return of the portfolio would be 7.58% over a 5‐year period. Net investment performance represents the deduction of the highest possible fee. Investment management fees are described in William Blair's Form ADV Part 2A. The Russell Midcap Growth Index is an unmanaged index registered to Russell/Mellon. It measures the performance of those Russell Midcap companies with higher price-to-book ratios and higher forecasted growth values. The stocks are also members of the Russell 1000 Growth Index. Please see composite disclosure in appendix for a complete description of the composite.
216369
AnnualizedStrategy Inception
Composite Performance (% USD) Qtr 1 Yr 3 Yr 5 Yr 10 Yr (Apr 1 97)
Mid Cap Growth (Gross) 5.84 22.38 7.90 12.31 8.97 10.62Russell Midcap Growth Index 6.81 25.27 10.30 15.30 9.10 9.29 Relative Performance (Gross) -0.97 -2.89 -2.40 -3.00 -0.13 1.34
AnnualizedStrategy Inception
Risk (Standard Deviation)* % USD 5 Yr 10 Yr (Apr 1 97)
Mid Cap Growth (Gross) 10.27 16.12 16.36Russell Midcap Growth Index 10.73 17.94 20.89
Annual Composite Performance (% USD) 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
Mid Cap Growth (Gross) 22.38 1.42 1.21 9.04 30.43 12.19 2.80 25.98 38.07 -34.12 16.34Russell Midcap Growth Index 25.27 7.33 -0.20 11.90 35.74 15.81 -1.65 26.38 46.29 -44.32 11.43 Relative Performance (Gross) -2.89 -5.91 1.41 -2.86 -5.31 -3.61 4.45 -0.40 -8.22 10.21 4.91
Annual Composite Performance (% USD) 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997**
Mid Cap Growth (Gross) 10.39 15.88 11.98 30.31 -20.25 7.05 18.64 6.17 16.92 26.02Russell Midcap Growth Index 10.66 12.10 15.48 42.71 -27.41 -20.15 -11.75 51.29 17.86 27.18 Relative Performance (Gross) -0.27 3.78 -3.50 -12.40 7.16 27.20 30.39 -45.12 -0.94 -1.16
December 2017 performance is preliminary.
00000C80 28
Mid Cap Growth – 2016 PerformanceDividend Yield Dynamic
To illustrate the dividend headwind in 2016:
Source: FactSet, December 31, 2016.
Past performance is not indicative of future returns. The Russell Midcap Growth Index is an unmanaged index registered to Russell/Mellon. It measures the performance of those Russell Midcap companies with higher price-to-book ratios and higher forecasted growth values. The stocks are also members of the Russell 1000 Growth Index. This benchmark is a comparable market proxy. The attribution table by Dividend Yield is based on the strategy’s representative portfolio. A direct investment in an unmanaged index is not possible.
Mid Cap Growth Russell Midcap Growth Russell Midcap Growth Allocation
Average Weight (%) Average Weight (%) Total Return (%) Effect
>3% 2.1 8.1 12.8 -0.30
2%–3% 2.2 17.4 14.5 -0.98
1%–2% 25.3 23.1 9.4 0.14
0%–1% 16.1 12.6 15.2 0.16
0% 51.6 38.8 -0.8 -0.98
Total 7.3 -1.96
Issuer Dividend
Yield
5358267000845E2 29
Mid Cap Growth – 2016 PerformanceCyclical Dynamic
Investors favored more cyclically‐oriented areas of the market in 2016 as evidenced by the 15 best performing industries in the Russell Midcap Growth Index. While our strategy is not void of companies within these industries, we have a bias towards companies with more durable growth that are less dependent on the macroeconomic environment.
Source: FactSet, December 31, 2016.
Past performance is not indicative of future returns. The above information is based on the Russell Midcap Growth Index. A direct investment in an unmanaged index is not possible.
Industry Total Return (%)
Semiconductors & Semiconductor Equipment 55.5
Oil Gas & Consumable Fuels 52.0
Technology Hardware Storage & Peripherals 48.9
Metals & Mining 48.7
Automobiles 46.8
Construction Materials 46.3
Insurance 40.6
Construction & Engineering 31.5
Airlines 27.1
Trading Companies & Distributors 27.1
Machinery 25.7
Banks 20.6
Aerospace & Defense 20.1
Electronic Equipment Instruments & Components 20.1
Air Freight & Logistics 19.3
5358267000C618A 30
*All figures shown above are cumulative.
Inception date: April 1, 1997.
Source: FactSet. Past performance is not indicative of future returns. Gross investment performance assumes reinvestment of dividends and capital gains, is gross of investmentmanagement fees and net of transaction costs. Performance results will be reduced by the fees incurred in the management of the account. For example, assuming an annual gross return of8% and an annual management/advisory fee of .40%, the net annualized total return of the portfolio would be 7.58% over a 5‐year period. Net investment performance represents thededuction of the highest possible fee. Investment management fees are described in William Blair's Form ADV Part 2A. Returns for periods greater than one year are annualized. The RussellMidcap Growth Index is an unmanaged index registered to Russell/Mellon. It measures the performance of those Russell Midcap companies with higher price-to-book ratios and higherforecasted growth values. The stocks are also members of the Russell 1000 Growth Index. A direct investment in an unmanaged index is not possible.
Mid Cap Growth Performance – 2012 to 2014
Key factors that affected relative performance for period:
• -551 bps: Style impact – underweight to low valuation stocks as the cheapest stocks outperformed (106% vs. 52% for the lowest vs. highest valuation quintiles). We are typically underweight the cheapest segment of the market given our quality/sustainable growth philosophy
• -309 bps: Style impact – our typical lower debt/capital as more highly levered stocks outperformed (103% vs. 56% for the highest debt quintile vs. lowest debt quintile). Also highlighting the same “low quality” nature of this three year period was the fact that profitable companies returned 72% while unprofitable companies returned 146% .
• -245 bps: Cash – averaged 3.0% over the three-year period
• -158 bps: Our typical underweight to Biotechnology
• Stock selection – Our goal is to control what we can control and that is stock selection. We added an experienced investor, Dan Crowe, as an independent voice in making MCG portfolio decisions and have added analytical resources in our largest area of weakness, Consumer. In addition, we have become more self-aware due to lessons learned from some of our bigger detractors over this time period (HMS Holdings, Polypore, Select Comfort and Citrix Systems), including minimizing stock-specific risk by better assessing the potential compounding effects of fundamental issues in higher multiple stocks.
5358267
Performance (%) Annualized Cumulative
Mid Cap Growth Composite (Gross) 16.86 59.57
Russell MidCap Growth 20.71 75.91
Relative Performance -3.85 -16.34
000C6189 31
222748
Investment Process – Company AssessmentIdentifying Durable Business Franchises
Strong Management
Sustainable Business Model Solid Financials
Record of Success
Common Goals with
Shareholders
SignificantEquity
Ownership
Ability to Reinvent
SolidCorporate
Culture
Leadership & Execution
Capabilities
Market Opportunity
Leadershipin its Field
Value-Added Products &
Services
Flexible Pricing
High Barriers to Entry
Sustainable Competitive Advantages
Predictable Earnings
Conservative Accounting
Recurring Revenue
SuperiorCash Flow
High Returnon Investment
Low Debt
00001175 32
Investment Process – Valuation Assessment
We apply a valuation discipline to our buy and sell decisions. Some of the metrics include:
• Stock relative to its historical valuation
• Stock relative to its peer group
• Stock relative to the market
• Stock relative to other companies with similar financial characteristics
• Does the market price reflect our view of the company’s long-term fundamentals?
• Is the risk/reward favorable?
223980
00001176 33
Investment ProcessMid Cap Growth Portfolio Construction & Risk Control
Portfolio allocations exclude cash.
Weights shown are percentages of total net assets. Sector weights may vary over time as benchmark index weights shift. The data shown above is taken from a representative account. Calculated in FactSet based on Global Industry Classification Sectors (GICS).
Portfolio Construction
Position Limit Parameters
Typical Initial Position 0.5-1.5%
Position Limit at Market 5%
Portfolio Holdings 40–60
Market Cap Range
Primarily within the range of the Russell Midcap Index at time of purchase
Sector Weight Parameters
Sector weights are generally .5x to 2x the benchmark weights of the major economic sectors
232042
Risk Control
Absolute
• Best possible understanding of company
• Valuation discipline
• Position size parameters
Benchmark Relative
• Sector, industry and market cap weights
• Barra multi-factor risk analysis
• Internally-developed quantitative models
• Timely analysis of custom risk factors
– Days to Cover, HF ownership, Self-Funding, Capital Market Dependency
000011A1 34
Investment Process – Sell Discipline
221981
Are fundamentals intact?
• Change in management
• Change in competitive environment
• Change in company strategy
• Change in growth rate
Is valuation attractive?
• Absolute and relative multiples
• Relative to other companies with similar financial characteristics
Are portfolio construction parameters met?
• Positions outside of parameters
00001178 35
Institutional Mid Cap Growth Strategy Performance
Past performance is not indicative of future returns. Returns for periods greater than one year are annualized. Gross performance results shown do not reflect the deduction of investment management fees, assume the reinvestment of dividends and capital gains, and are net of transaction costs. Performance results will be reduced by the fees incurred in the management of the account. For example, assuming an annual gross return of 8% and an annual management/advisory fee of .40%, the net annualized total return of the portfolio would be 7.58% over a 5‐year period. Net investment performance represents the deduction of the highest possible fee. Investment management fees are described in William Blair's Form ADV Part 2A.. The Russell Midcap Growth Index is an unmanaged index registered to Russell/Mellon. It measures the performance of those Russell Midcap companies with higher price-to-book ratios and higher forecasted growth values. The stocks are also members of the Russell 1000 Growth Index. Please see composite disclosure in appendix for a complete description of the composite.
Mid Cap Growth Composite vs. Russell Midcap Growth IndexQuarterly and Annual Returns (%)
236546
Mid Cap
Growth
Composite
(USD
Gross)
Index Relative
Performance
Mid Cap
Growth
Composite
(USD
Gross)
Index Relative
Performance
Mid Cap
Growth
Composite
(USD
Gross)
Index Relative
Performance
Mid Cap
Growth
Composite
(USD
Gross)
Index Relative
Performance
Q1 -- -- -- Q1 -3.32 -0.02 -3.30 Q1 -3.54 -3.36 -0.18 Q1 6.69 5.38 1.31Q2 18.47 14.72 3.75 Q2 13.19 18.76 -5.56 Q2 18.84 20.67 -1.83 Q2 -1.23 -1.14 -0.09Q3 6.70 13.99 -7.29 Q3 7.39 7.16 0.23 Q3 14.72 17.58 -2.86 Q3 -7.55 -7.99 0.44Q4 -0.31 -2.75 2.44 Q4 10.88 12.16 -1.28 Q4 4.99 6.69 -1.70 Q4 3.89 4.12 -0.23
1997 26.02 27.18 -1.16 2003 30.31 42.71 -12.40 2009 38.07 46.29 -8.22 2015 1.21 -0.20 1.41
Q1 12.48 11.94 0.54 Q1 2.24 4.83 -2.59 Q1 7.28 7.67 -0.39 Q1 -1.37 0.58 -1.95Q2 2.66 -0.06 2.72 Q2 3.41 1.05 2.35 Q2 -8.52 -10.20 1.68 Q2 1.24 1.56 -0.32Q3 -16.77 -16.69 -0.07 Q3 -3.65 -4.33 0.68 Q3 12.82 14.65 -1.83 Q3 2.40 4.59 -2.19Q4 21.66 26.47 -4.81 Q4 9.92 13.94 -4.02 Q4 13.78 14.01 -0.23 Q4 -0.81 0.46 -1.27
1998 16.92 17.86 -0.94 2004 11.98 15.48 -3.50 2010 25.98 26.38 -0.40 2016 1.42 7.33 -5.91
Q1 -7.98 3.42 -11.39 Q1 -1.61 -1.67 0.06 Q1 9.94 7.85 2.08 Q1 5.49 6.89 -1.40Q2 9.92 10.42 -0.50 Q2 5.00 3.43 1.57 Q2 2.48 1.61 0.88 Q2 5.12 4.21 0.91Q3 -10.39 -5.01 -5.38 Q3 6.45 6.55 -0.10 Q3 -16.82 -19.33 2.50 Q3 4.27 5.28 -1.01Q4 17.14 39.47 -22.34 Q4 5.37 3.44 1.92 Q4 9.70 11.24 -1.54 Q4 5.84 6.81 -0.97
1999 6.17 51.29 -45.12 2005 15.88 12.10 3.78 2011 2.80 -1.65 4.45 2017 22.38 25.27 -2.89
Q1 9.18 21.12 -11.94 Q1 10.45 7.61 2.84 Q1 13.26 14.52 -1.26Q2 0.71 -7.41 8.11 Q2 -5.47 -4.69 -0.77 Q2 -5.02 -5.60 0.59Q3 11.26 2.52 8.73 Q3 0.09 0.89 -0.80 Q3 4.13 5.35 -1.21Q4 -3.01 -23.25 20.24 Q4 5.62 6.95 -1.32 Q4 0.15 1.69 -1.54
2000 18.64 -11.75 30.39 2006 10.38 10.66 -0.27 2012 12.19 15.81 -3.62
Q1 -7.59 -25.08 17.50 Q1 5.88 3.96 1.92 Q1 11.37 11.51 -0.14Q2 12.79 16.18 -3.39 Q2 7.59 6.74 0.84 Q2 1.63 2.87 -1.23Q3 -13.35 -27.80 14.45 Q3 5.98 2.15 3.83 Q3 7.74 9.34 -1.60Q4 18.53 27.06 -8.53 Q4 -3.63 -1.70 -1.94 Q4 6.97 8.23 -1.27
2001 7.05 -20.15 27.20 2007 16.34 11.43 4.91 2013 30.43 35.74 -5.31
Q1 0.42 -1.77 2.18 Q1 -10.94 -10.95 0.01 Q1 0.42 2.04 -1.63Q2 -11.77 -18.26 6.49 Q2 4.50 4.65 -0.14 Q2 2.45 4.37 -1.92Q3 -16.03 -17.18 1.15 Q3 -8.59 -17.75 9.16 Q3 -1.81 -0.73 -1.08Q4 7.21 9.16 -1.95 Q4 -22.56 -27.36 4.80 Q4 7.94 5.84 2.10
2002 -20.25 -27.41 7.16 2008 -34.12 -44.32 10.21 2014 9.04 11.90 -2.86
December 2017 performance is preliminary.
00000C91 36
Glossary – Indices
29452
Bank of America Merrill Lynch 1-Year U.S. Treasury Note Index: An unmanaged index comprised of a single U.S.Treasury Bill issued at the beginning of each month and held for a full month. Each month the index is rebalanced and theissue selected is the outstanding U.S. Treasury Note that matures closest to, but not beyond one year from therebalancing date.
Bank of America Merrill Lynch 3-Month Treasury Bill Index: An unmanaged index tracking 3-month U.S.government securities.
Bloomberg Barclays U.S. Aggregate Bond Index: A broad-based benchmark that measures the investment grade, U.S.dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities,mortgage-backed securities (agency fixed-rate and hybrid ARM pass-throughs), asset-backed securities and commercialmortgage backed securities.
Bloomberg Barclays Intermediate Govt./Credit Bond Index (formerly the Lehman Index): A fixed-rate governmentand corporate bonds rated investment grade or higher.
Bloomberg Barclay’s Multiverse Index: Provides a broad-based measure of the global fixed-income bond market. Theindex represents the union of the Global Aggregate Index and the Global High-Yield Index and captures investment gradeand high yield securities in all eligible currencies. Standalone indices such as the Euro Floating-Rate ABS Index and theChinese Aggregate Index are excluded. The Multiverse Index family includes a wide range of standard and customizedsub-indices by sector, quality, maturity, and country.
Bloomberg Barclays U.S. Intermediate Aggregate Bond Index: A broad-based benchmark that measures theinvestment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-relatedand corporate securities, mortgage-backed securities (agency fixed-rate and hybrid ARM pass-throughs), asset-backedsecurities and commercial mortgage backed securities with maturities between one and 10 years.
Merrill Lynch 1-Year U.S. Treasury Note Index: Comprised of a single U.S. Treasury Bill issued at the beginning of eachmonth and held for a full month. Each month the index is rebalanced and the issue selected is the outstanding U.S.Treasury Note that matures closest to, but not beyond one year from the rebalancing date.
Merrill Lynch 3-Month Treasury Bill Index: An unmanaged index tracking 3-month U.S. government securities.
MSCI (Morgan Stanley Capital International): MSCI indices are the most widely used benchmarks by global portfoliomanagers. MSCI offers international investors performance benchmarks for 51 national stock markets as well asregional, sector, industry group, and industry aggregations.
MSCI All Country World ex-US EAFE Index: An unmanaged index that includes developed and emerging marketsoutside the United States.
MSCI All Country World ex-US Small Cap Index: A free float-adjusted market capitalization index designed to measureglobal developed and emerging market small capitalization equity performance, excluding the U.S.
MSCI EAFE Index: A free float-adjusted market capitalization index which captures large and mid cap representationacross Developed Markets countries around the world, excluding the U.S. and Canada.
MSCI EAFE IMI Index: A free float-adjusted market capitalization index which captures large, mid and small caprepresentation across Developed Markets countries around the world, excluding the U.S. and Canada.
MSCI EAFE Growth Index: A free float-adjusted market capitalization index that is designed to measure the equitymarket performance of developed markets, excluding the U.S. & Canada.
MSCI All Country World ex-US Index: An unmanaged index that includes developed and emerging markets, excludingthe U.S.
MSCI All Country World ex-US Growth Index: A free float-adjusted market capitalization index that is designed toprovide a broad measure of equity-market performance throughout the world, excluding the U.S. It includes those MSCIAll Country World ex-US securities with higher price-to-book ratios and higher forecasted growth rates.
MSCI All Country World ex-US IMI Index: A free float-adjusted market capitalization index that is designed to measureequity market performance in the global developed and emerging markets, excluding the U.S.
MSCI All Country World IMI Index: A free float-adjusted market capitalization index that is designed to measure equitymarket performance in the global developed and emerging markets.
MSCI All Country World ex-US IMI Growth Index: A free float-adjusted market capitalization index that is designed tomeasure equity market performance in the global developed and emerging markets, excluding the U.S. It includes thoseMSCI All Country World ex-US IMI Index securities with higher price-to-book ratios and higher forecasted growth rates.
MSCI World ex-US Growth Index: A free float-adjusted market capitalization weighted index that is designed tomeasure the equity market performance of developed markets, excluding the U.S., with higher price-to-book ratios andhigher forecasted growth rates.
MSCI World ex-US Index: A free float-adjusted market capitalization weighted index that is designed to measure theequity market performance of developed markets, excluding the U.S.
MSCI Emerging Markets Index: A free float-adjusted market capitalization index that is designed to measure equitymarket performance in the global emerging markets.
MSCI Emerging Markets IMI Index: A free float-adjusted market capitalization index which captures large, mid andsmall cap equity market performance in the global emerging markets.
MSCI Emerging Markets Small Cap Index: A free float-adjusted market capitalization index that is designed to measure equity market performance of small cap companies in emerging markets.
MSCI Emerging Markets Large Cap Index: A free float-adjusted market capitalization index that is designed to measure equity market performance of large cap companies in emerging markets.
MSCI World ex-US Small Cap Index: An unmanaged index that includes non-US developed markets.
Russell 1000 Index: Measures the performance of the 1000 largest companies in the Russell 3000 Index, which represents approximately 90% of the total market capitalization of the U.S. market.
Russell 1000 Growth Index: Measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values.
Russell 1000 Value Index: Measures the performance of the large cap value segment of the U.S. equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.
Russell 2000 Index: Measures the performance of the 2000 smallest companies in the Russell 3000 index, which represents approximately 8% of the total market capitalization of the Russell 3000 index.
Russell 2000 Growth Index: Measures the performance of those Russell 2000 companies with higher price-to book ratios and higher forecasted growth values.
Russell 2000 Value Index: Measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values.
Russell 2500 Index: Measures the performance of the 2500 smallest companies in the Russell 3000 Index.
Russell 2500 Growth Index: Measures the performance of those Russell 2500 companies with higher price-to book ratios and higher forecasted growth values.
Russell 2500 Value Index: Measures the performance of those Russell 2500 companies with lower price-to book ratios and lower forecasted growth values.
Russell 3000 Index: Measures the performance of the 3000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market.
Russell 3000 Growth Index: Measures the performance of those Russell 3000 companies with higher price-to-book ratios and higher forecasted growth values.
Russell Midcap Index: Measures the performance of the 800 smallest companies in the Russell 1000 Index, which represent approximately 27% of the total market capitalization of the Russell 1000 companies.
Russell Midcap Growth Index: Measures the performance of those Russell Midcap companies with higher price-to-book ratios and higher forecasted growth values.
Russell Midcap Value Index: Measures the performance of the mid-cap value segment of the U.S. equity universe. It includes those Russell Midcap Index companies with lower price-to-book ratios and lower forecasted growth values.
S&P 500 Index: The Standard & Poor's 500 Index (S&P 500) is an index of 500 stocks chosen for market size, liquidity and industry grouping, among other factors. The S&P 500 is designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe. Companies included in the index are selected by the S&P Index Committee, a team of analysts and economists at Standard & Poor's. The S&P 500 is a market value weighted index—each stock's weight is proportionate to its market value.
A direct investment in an unmanaged index is not possible.
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Composite Presentation ReportInstitutional Mid Cap Growth
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Institutional Mid Cap Growth StrategyPerformance for periods ending December 31, 2017
*Partial year performance from April 1 to December 31, 1997.
Past performance is not indicative of future returns. Net investment performance represents the deduction of the highest possible fee. Actual client net returns may be higher or lower depending on fees charged to your account and the amount invested.
Returns for periods greater than one year are annualized. Gross performance results shown do not reflect the deduction of investment management fees, assume the reinvestment of dividends and capital gains, and are net of transaction costs. Performance results will be reduced by the fees incurred in the management of the account. For example, assuming an annual gross return of 8% and an annual management/advisory fee of .40%, the net annualized total return of the portfolio would be 7.58% over a 5‐year period. Net investment performance represents the deduction of the highest possible fee. Investment management fees are described in William Blair's Form ADV Part 2A.. The Russell Midcap Growth Index is an unmanaged index registered to Russell/Mellon. It measures the performance of those Russell Midcap companies with higher price-to-book ratios and higher forecasted growth values. The stocks are also members of the Russell 1000 Growth Index. Please see composite disclosure in appendix for a complete description of the composite.
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Annualized
Strategy Inception
Composite Performance (% USD) Qtr 1 Yr 3 Yr 5 Yr 10 Yr (Apr 1 97)
Mid Cap Growth (Gross) 5.84 22.38 7.90 12.31 8.97 10.62
Mid Cap Growth (Net) 5.60 21.29 6.93 11.30 7.99 9.60
Russell Midcap Growth Index 6.81 25.27 10.30 15.30 9.10 9.29
Relative Performance (Gross) -0.97 -2.89 -2.40 -3.00 -0.13 1.34
Annual Composite Performance (% USD) 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
Mid Cap Growth (Gross) 22.38 1.42 1.21 9.04 30.43 12.19 2.80 25.98 38.07 -34.12 16.34Mid Cap Growth (Net) 21.29 0.51 0.31 8.07 29.27 11.18 1.88 24.85 36.83 -34.73 15.31Russell Midcap Growth Index 25.27 7.33 -0.20 11.90 35.74 15.81 -1.65 26.38 46.29 -44.32 11.43
Annual Composite Performance (% USD) 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997*
Mid Cap Growth (Gross) 10.39 15.88 11.98 30.31 -20.25 7.05 18.64 6.17 16.92 26.02Mid Cap Growth (Net) 9.41 14.85 10.94 29.05 -21.05 5.99 17.48 5.12 15.78 25.11Russell Midcap Growth Index 10.66 12.10 15.48 42.71 -27.41 -20.15 -11.75 51.29 17.86 27.18
5469575
December 2017 performance is preliminary.
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