International Small Cap Growth Fund - September 2021 Simon Fennell, Partner Andy G. Flynn, CFA, Partner D.J. Neiman, CFA, Partner
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International Small Cap Growth Fund
Portfolio Review
September 2021
Simon Fennell, Partner
Andy G. Flynn, CFA, Partner
D.J. Neiman, CFA, Partner
Portfolio Managers
13715114William Blair International Small Cap Growth Fund Important Disclosures September 2021
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 holds equities which may
decline in value due to both real and perceived general market, economic, and industry conditions. International investing
involves special risk considerations, including currency fluctuations, lower liquidity, economic and political risk. Investing in
emerging markets can increase these risks, including higher volatility and lower liquidity. Investing in smaller companies
involves special risks, including higher volatility and lower liquidity. Convertible securities may be called before intended,
which may have an adverse effect on investment objectives. Diversification does not ensure against loss.
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.
Most recent month-end performance information for the Fund is available by visiting the William Blair Funds Web site at
www.williamblairfunds.com, or by calling the William Blair Funds at 1-800-742-7272.
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 © 2021 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.
2 13715114William Blair International Small Cap Growth Fund Summary & Outlook September 2021
Market Review Chinese government announced new regulatory moves
which negatively impacted companies in the technology
Global equities declined (-1.11%) in the third quarter as and private education sectors. Hampered investor
volatility picked up in September, erasing gains in July and sentiment was further compounded in late September on
August. Developed Markets were flat (-0.19%) but concerns over the collapse of Evergrande, one of China’s
outperformed Emerging Markets (-7.39%) primarily due to largest real estate developers, and the potential impact on
weakness within China. From a global sector perspective, China’s financial system. Conversely, India continued to
Consumer Discretionary (-5.13%) and Materials (-4.45%) advance (+12.64%) amid a slowdown in the country’s new
lagged. Conversely, Energy continued to outperform COVID-19 cases and a significant liquidity boost from the
(+2.87% for the quarter and +34.26% year-to-date) as country’s central bank and foreign inflows.
rising demand and supply constraints drove stronger crude
oil prices.
Performance
US equities were flat (-0.06%) for the quarter as economic
data remained healthy, albeit past the peak rate of growth, Third quarter outperformance of the International Small
and solid corporate earnings helped offset volatility Cap Growth (Class N) versus the MSCI ACWI ex US Small
induced by the rise of new Delta variant cases. At the much- Cap (net) was primarily driven by positive stock selection
anticipated Jackson Hole symposium, Federal Reserve across most sectors. The Industrials and Health Care were
Chairman Jerome Powell noted that the economy has made the most notable sources of relative return. Industrials
“substantial further progress” on inflation, while the labor sector performance was bolstered by Japanese professional
market has also made “clear progress”. The Fed also services company Benefit One. Benefit One is a provider of
announced that the tapering of quantitative easing could HR-related services, in the form of outsourced fringe
start this year and finish in mid-2022. benefits. A structural tightening of the Japanese labor
market has increased the need for employers to attract
Japanese equities were flat in July and August but advanced hires using the types of services offered by Benefit One.
strongly in September to close out a solid third quarter Future regulatory changes should also drive increased
(+4.35%). Strength within Japan was primarily due to the demand. As the business has a fixed cost base and low
announcement that Prime Minister Suga would not be variable costs, operating leverage is high, supporting a rate
running for re-election in November. Despite a very short of profit growth at the top end of the peer group.
time in office (less than a year), Suga’s approval ratings
were very low following the administration’s handling of Within Health Care, Israeli-based InMode was the top
the coronavirus pandemic. contributor. InMode is an Israeli-based leading medical
device company specializing in aesthetic surgery. The
Emerging Markets sharply declined (-7.39%) primarily due company has developed proprietary minimally invasive
to weakness within China (-17.99%). In late July, the and non-invasive technologies for various aesthetic
3 13715114William Blair International Small Cap Growth Fund Summary & Outlook September 2021
applications including fat reduction, skin tightening and Outlook
muscle toning. While the company is currently focusing on
the large TAM for the medical aesthetics market, the Corporate performance has been strong as the global
products are applicable in a wide array of indications such economies continue to resume normalized activity. We
as women’s health, ENT (Ear, Nose & Throat) and have seen strength in the cyclical areas of the economy,
ophthalmology which could significantly expand the while at the same time companies with leading business
targeted market going forward. models and practices have continued to press their
structural competitive advantage. This has driven positive
Partially offsetting these effects was an overweight momentum for the market this year, and companies with
allocation to the Latin American region, coupled with below strong returns and differentiated positioning like those we
average stock selection within the Consumer Discretionary seek to invest in have generally enjoyed even stronger
sector. Weakness within Consumer Discretionary was corporate and stock market performance on balance.
primarily due to Westwing. Westwing is an ecommerce While we do not expect the backdrop to change materially,
company that provides an inspirational, curated “shoppable we do point out two primary areas of intermediate-term
magazine" to eleven European markets. This is designed to focus for global equity investors: China policy and
encourage browsing and emotional engagement rather regulation risk, and the inflation outlook.
than just targeted purchasing. Westwing is disrupting the
traditional home and living industry, aiming to shift China
customers increasingly online by leveraging its very strong
customer relationships. The share price declined amid We view the China investment opportunities and risks
concern over increased shipment costs may potentially within the framework of what has, and what hasn’t
have a short-term impact on contribution margins. changed. In turn we reference our investability model to
determine exploitability and accessibility for returns in
Positioning Chinese equities.
During the third quarter, Financials exposure was Favorable elements of what hasn’t changed include China’s
increased through the purchase of Indian Energy Exchange. commitment to economic growth, accelerated corporate
Information Technology exposure was also increased. This innovation across many industries, and liberalization of
was offset by a reduction to Industrials exposure through capital markets to compete on a global stage. At the same
the liquidations of Vat Group and Airtac International time, the nature of the autocratic regime and state-planned
Group. From a geographic perspective, notable adjustments economy has facilitated the execution of the China
were increases to the UK and Japan, offset by a decrease to Communist Party’s (CCP) objectives through policies and
Emerging Asia. The portfolio's weighting in Emerging regulations directing resources into innovative sectors and
Markets approximated +21.33% at the end of the period, facilitating the emergence of new industries and global
down from +24.18% at the beginning of the period. champions.
4 13715114William Blair International Small Cap Growth Fund Summary & Outlook September 2021
The absolute power of the state to enact and enforce policy about the threat that has arisen from the amount of power
and regulation is another constant characteristic of China. accumulated by some platform companies, the influence
The current regulatory crackdown on industries that have that foreign investors exert on them, and the potential
benefited from policy support (or at least the government’s systemic risks that exist with these new data-heavy
laissez-faire approach), while seemingly unexpected, is, business models.
when analyzed closely, consistent with the government’s
priorities and past attitudes and actions toward other With this, the Chinese authorities have indicated their
industries. intention to address perceived excesses and shortcomings
that have arisen from the previous policy period, while
Chinese leadership’s reprioritization of its objectives to doubling the size of China’s economy by 2035. Beijing’s
rebalance growth versus social issues is one example. Given priories are focused on three core issues: social stability,
China’s current stage of development, its focus is on national security, and sustainable domestic growth.
Common Prosperity and more balanced growth as opposed
to its prior target of fast growth. The fact that these objectives may at first sight seem
difficult to reconcile, coupled with the ample room for
Under the surface, China’s economic achievements have interpretation of the government’s intentions and apparent
seemingly caused growing tensions between the country’s lack of rules (given the principle-based nature of Chinese
socialist political and ideological goals and growing regulations), has created much angst and many hurdles for
capitalist (profit-led) economy. companies as they operate their businesses.
Increased inequality, changes in demographics, and the The drastic enforcement of this new wave of regulations in
emergence of new sectors and dominant private the new economy is, as expected, painful, messy, and a
corporations have become a significant part of the source of angst for companies and investors alike. It has led
economy, posing new and critical challenges to the Chinese to irreparable damage and loss in certain industries, such
authorities. as after-school tutoring (AST). The lack of coordination
among different regulators and institutions, conflicting
In particular, the digital economy industries and companies priorities, battles for power, and personal attitudes (a la
have reaped the benefits of an extremely supportive Jack Ma) have driven regulatory scrutiny in fits and starts,
regulatory backdrop, favorable taxation, and access to sending ambiguous messages to investors. We believe this is
foreign capital. While many of these companies have likely to continue.
benefited society at large by providing availability of goods,
cheaper prices, life-enhancing digital services (ecommerce, Also playing a role in the regulatory crackdown is a
payments, access to capital, etc.), Chinese leadership is now deepening rivalry between the United States and China, in
concerned about the potentially negative impact on our view. While China’s transformative growth trajectory
inequality and social values that some of these industries has posed domestic challenges, it has also raised concerns
have had. It also appears Chinese leadership is concerned for the rest of the world and particularly the United States.
5 13715114William Blair International Small Cap Growth Fund Summary & Outlook September 2021
As China became a strategic competitor to the United government’s objectives. Here, we assess the potential
States, tensions arose on trade and economic issues, then outcome and variability in a conventional financial model.
expanded to technological, geopolitical, ideological, and Industries that we believe may have elevated risk include
financial fronts. As a result, China’s regulatory crackdown media, online retailing, education, gaming, and healthcare,
has focused on industries with stronger foreign specifically pharmaceuticals. We are actively researching
connections, especially those in highly sensitive sectors. the variability and distribution of future outcomes of
revenues and profits for our portfolio holdings in these
In particular, Beijing’s desire to bring home some of its industries and adjusting our estimates accordingly.
largest and most attractive companies that are listed
overseas coincided with increased scrutiny from the United “Accessibility” refers to foreign investors’ ability to access
States on Chinese American depositary receipts (ADRs). economic value creation. Here, we assess the Chinese
This occurred with the passing of the Holding Foreign government’s intention of allowing foreign capital into
Companies Accountable (HFCA) Act, which sets a timeline certain industries, including threats to the VIE structure as
for the forced delisting of these companies. This has called well as the risk to ADR listings.
into question the legality and enforcement of the important
variable interest entity (VIE) structure, as well foreign Assuming foreign investors are not banned, but the degree
governments’ willingness to allow investment in Chinese of accessibility is in question, we discount the potential
companies. future earnings in the form of an increased equity risk
premium (ERP), and ultimately weighted average cost of
Where from here? capital (WACC) or discount rate.
One thing is clear: Not all industries and companies are We believe the market may have become too sanguine
equal on these fronts, and a thorough evaluation of their regarding China’s country risk, with the ERP as low as that
alignment with Beijing’s key objectives and priorities of many developed markets late last year. With the recent
should help determine the extent of the impact and viability market correction, it has risen back to its long-term
of entire industries. average.
For foreign investors, the new paradigm also calls into The assumption that the Chinese government intends to
question the investability of China. To assess this, we have a ban foreign capital is radically opposed to the consistent
framework that seeks to identify the exploitability and efforts from Beijing to open its capital markets, giving
accessibility of future corporate growth and returns. access to foreign investors and developing the
internationalization of the renminbi. Still, selective strategic
“Exploitability” moves beyond the typical definition of a industries may be affected by bans amid increased
company’s ability to innovate, create products and services, protectionism in the name of higher public interest. This
and grow profitably; in this case it also assesses the degree was the case with the AST (after school tutoring) industry.
of alignment between the corporation’s activities and the
6 13715114William Blair International Small Cap Growth Fund Summary & Outlook September 2021
Needless to say, while we continue to find China’s long- sustained, higher annual inflation in the medium term is
term growth and corporate performance opportunities weak because it does not consider supply adjustment.
attractive, our investability framework has identified
greater uncertainty and thus risk. In many of our We expect the supply responses to play out in the coming
investment strategies, we have cut our China weightings quarters to meet demand levels. First, in our view there is
materially, by many cases in half from prior high levels. We no reason to believe the current logistical bottlenecks will
feel this is the prudent response to many of the industries prove to be structural, rather they are recovering from the
and companies that may remain at risk of being in the complexity of a shutdown that we haven’t experienced in
crosshairs of more government regulatory scrutiny. At the decades. On the other hand, the two biggest risks of
same time we have rotated our Chinese investments into persistent inflation arise from labor and energy prices. In
those companies whose growth opportunities are aligned the US alone, we have seen an employment gap of close to
with government objectives. 10 million workers. The vast majority of those workers in
our estimation are only temporarily sidelined due to
We do recognize that the real and perceived interpretation COVID-related issues, ranging from childcare and safety
of these risks could change, in particular with more concerns, to paycheck relief benefits outweighing wages.
transparency of intention from the government. We have We are already beginning to see the gradual resumption of
spent a great deal of collective research time on these those workers back into the workforce and expect that to
important issues, and that will likely be the case well into play out through next year.
and beyond 2022.
As for energy prices, we do not believe there is a structural
Inflation lack of supply owing to the energy transition from fossil
fuels to renewables. Instead, we believe much of the move
As our economies gradually reopen and people are allowed in oil and gas prices is attributable to the geopolitical
to move more freely, the 2020 experience should reverse. complications from the Nord Stream 2 pipeline that has yet
We believe the challenges with goods production and to come on-line. While complicated, we believe the political
longer delivery times will get resolved within months, not incentives are largely aligned, and this will be resolved in
years, and goods price inflation will likely return to the pre- the coming months providing important relief to energy
COVID muted annual rate of sub-2%. Services prices will prices.
likely move sharply higher as restaurants, theatres, and
travel reopen. We may even see pockets of quite large price In the medium term, stronger economic growth of around
increases, as supply will not be able to adjust instantly to all 3% can translate into a sustainable annual inflation rate of
the pent-up demand, in leisure travel for example. 2%-3%. Every policymaker and consumer would be
pleased with that outcome. The central banks would
These pockets of much stronger price gains generate welcome this with open arms instead of worrying about
headlines, but we believe the argument that such isolated, inflation being too low as a result of weak growth. We
temporary pockets of price pressures will translate into
7 13715114William Blair International Small Cap Growth Fund Summary & Outlook September 2021
believe this is the most likely probability for the next growth, employment, and supply adjustment and more
several years. stable, mild inflation consistent with price stability, broadly
defined.
Recently the risk of stagflation has received a great deal of
attention. The bottom line is that the calamitous
experience of the 1970s had much to do with egregious Our current outlook calls for growth continuing to slow on
macroeconomic meddling, and inflation did not appear a sequential basis, supply chains resuming their historic
suddenly out of nowhere. Misguided price controls and efficiencies, and peaking corporate profit margins
wage freezes disincentivized supply adjustment and moderating. Coming from historically high valuations, we
destroyed demand growth. The 1970s bear no resemblance would expect only modest outcomes for equities over the
to what we are talking about today: stronger demand coming quarters.
8 13715114Market Performance September 2021
QTD YTD 2020 2019
AC World (DM+EM) -1.1 11.4 16.3 26.4
Developed Markets (DM) -0.2 13.1 15.9 27.5
Pacific ex JP -4.0 5.2 8.5 18.3
Japan 4.4 5.9 13.1 19.6
Europe ex UK -1.7 9.8 12.1 25.0
Regions
UK -0.2 12.2 -9.0 23.2
Canada -2.3 17.7 6.9 27.9
USA -0.1 15.0 20.5 30.4
Emerging Markets (EM) -7.4 0.7 18.4 17.6
Asia -8.6 -1.8 28.5 17.8
EMEA 3.8 20.8 -5.6 15.8
Latin America -13.5 -5.1 -14.1 19.4
Frontier Markets (FM) 4.5 21.4 2.1 13.8
Large Cap -1.1 11.0 16.5 26.7
Size
Small Cap -1.5 13.7 16.3 24.7
Communication Svcs -2.7 12.1 23.2 24.2
Discretionary -5.1 4.4 34.5 26.8
Staples -2.3 2.8 8.5 20.8
Energy 2.9 34.3 -28.4 11.6
Sectors
Financials 2.0 20.8 -3.5 22.9
Healthcare -0.5 8.7 17.5 23.2
Industrials -1.7 11.6 12.2 26.7
IT 0.4 12.9 45.2 46.5
Materials -4.4 8.2 21.5 20.0
Real Estate -1.3 12.9 -6.4 24.6
Utilities -0.3 0.6 4.1 21.3
Quality 1.8 -0.1 -8.9 5.6
Valuation -1.4 4.0 -10.3 -0.1
Style
Etrend 5.8 17.9 6.6 5.2
Momentum 4.9 13.8 10.3 4.9
Growth -1.0 -4.4 6.0 4.1
Composite 2.4 9.5 -9.0 4.3
Past performance is not a reliable indicator of future results Regional performance is based on IMI region/country indexes. Sector and style values are based on
the MSCI ACWI IMI Index. Size values are based on the MSCI ACWI Index. Style values reflect the Quintile 1 minus Quintile 5 spread of William Blair’s proprietary
quantitative models. Sectors are based on Global Industry Classification (GICS) sectors. Large Cap and Small Cap based on MSCI Global Investable Market Index
Methodology. Data in blue reflects the top 20% (highest) values by region, country, sector, and style. Data in red reflects the bottom 20% (lowest) values by region,
country, sector, and style. A direct investment in an unmanaged index is not possible. Name change from Telecommunication Services to Communication Services
effective after close of business on 9/28/18; industry and subindustry reclassifications effective 10/1/18.
9 13715114William Blair International Small Cap Growth Fund Performance September 2021
Periods ended 9/30/2021 September Quarter YTD 1 Year 3 Year 5 Year 10 Year
International Small Cap Growth Fund -4.96% 3.47% 11.00% 29.81% 15.64% 12.13% 10.97%
(WISNX) Class N
International Small Cap Growth Fund -4.89% 3.58% 11.27% 30.25% 15.97% 12.46% 11.30%
(WISIX) Class I
International Small Cap Growth Fund -4.91% 3.56% 11.32% 30.31% 16.08% 12.57% 11.44%
(WIISX) Class R6
MSCI ACWI ex US Small Cap (net) -3.04% 0.00% 12.23% 33.07% 10.33% 10.28% 9.44%
Inception 11/1/2005
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.
International Small Cap Growth Fund Expense Ratios:
Gross
Class N Shares 1.52%
Class I Shares 1.25%
Class R6 Shares 1.14%
Expenses shown are as of the most recent prospectus.
A direct investment in an index is not possible. The MSCI AC World ex-US Small Cap Index is a free float-adjusted market capitalization index
that that is designed to measure equity market performance in the global developed and emerging market small capitalization equities,
excluding the US.
10 13715114William Blair International Small Cap Growth Fund Performance Analysis (by sector) September 2021
The table below shows the calculated sector attribution of the International Small Cap Growth Fund vs. its benchmark.
International Small Cap Growth Fund vs. MSCI ACWI ex US Small Cap (net)
07/01/2021 to 09/30/2021
International Small Cap Growth
MSCI ACWI ex US Small Cap (net) Attribution Analysis
Fund
Issue
Average Total Contrib to Average Total Contrib to Allocation Selection Total
GICS Sector Weight Return Return Weight Return Return Effect Effect Effect
Communication Services 4.0% -1.6% -0.1% 4.1% 0.5% 0.0% 0.0% -0.1% -0.1%
Consumer Discretionary 16.4% -6.7% -1.2% 12.3% -4.1% -0.5% -0.2% -0.5% -0.6%
Consumer Staples 3.2% 2.3% 0.1% 5.6% -1.8% -0.1% 0.1% 0.1% 0.2%
Energy 0.0% 0.0% 0.0% 2.4% 8.1% 0.2% -0.2% 0.0% -0.2%
Financials 6.4% 11.1% 0.6% 10.3% 2.5% 0.3% -0.1% 0.5% 0.4%
Health Care 16.1% 9.3% 1.5% 7.6% -3.3% -0.3% -0.3% 2.0% 1.8%
Industrials 29.4% 10.0% 3.0% 21.2% 2.0% 0.4% 0.2% 2.3% 2.5%
Information Technology 17.3% 2.8% 0.3% 12.1% 0.5% 0.1% 0.0% 0.3% 0.3%
Materials 0.0% 0.0% 0.0% 10.8% -0.9% -0.1% 0.1% 0.0% 0.1%
Real Estate 2.9% 6.9% 0.1% 10.5% -0.3% 0.0% 0.0% 0.2% 0.2%
Utilities 1.7% -2.5% 0.0% 3.2% 0.7% 0.0% 0.0% 0.0% 0.0%
Cash 2.6% - 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Total 100.0% 4.4% 4.4% 100.0% 0.0% 0.0% -0.4% 4.8% 4.4%
Past performance does not guarantee future results. Performance cited represents past performance and current performance may be higher or lower than the
data quoted. Gross investment performance assumes reinvestment of dividends and capital gains, is gross of investment management fees and net of transaction costs.
Attribution by segment is based on estimated returns of equities held within the segments listed. All stocks held during a measurement period, including purchases and sales,
are included. Cash is not allocated among segments. Calculations are for attribution analysis only and are not intended to represent simulated performance history. The
actual returns may be higher or lower. We calculate attribution using our proprietary attribution system. Our proprietary attribution system runs transactions-based
attribution, taking into account all trading activity. Interaction effect is reallocated into Selection effect. Sectors are based on Global Industry Classification (GICS) Sectors.
International investing involves special risk considerations, including currency fluctuations, lower liquidity, economic and political risk.
11 13715114William Blair International Small Cap Growth Fund Performance Analysis (by region) September 2021
The table below shows the calculated regional attribution of the International Small Cap Growth Fund vs. its benchmark.
International Small Cap Growth Fund vs. MSCI ACWI ex US Small Cap (net)
07/01/2021 to 09/30/2021
International Small Cap Growth
MSCI ACWI ex US Small Cap (net) Attribution Analysis
Fund
Issue
Average Total Contrib to Average Total Contrib to Allocation Selection Total
Region Weight Return Return Weight Return Return Effect Effect Effect
Pacific Ex Japan 2.7% -3.9% -0.1% 9.2% -1.7% -0.2% 0.1% -0.1% 0.1%
Japan 15.6% 15.4% 2.4% 19.3% 3.4% 0.7% -0.1% 1.8% 1.6%
Europe+ME Ex U.K. 41.4% 7.9% 3.2% 28.9% 0.4% 0.1% 0.1% 3.1% 3.1%
U.K. 13.0% 0.7% -0.1% 11.4% 0.4% 0.1% 0.0% 0.0% -0.1%
W Hemisphere 2.7% -1.5% 0.0% 6.4% -1.5% -0.1% 0.0% 0.0% 0.0%
EM Asia 16.5% -1.6% -0.3% 18.9% -1.1% -0.2% 0.0% -0.1% -0.2%
EMEA 1.9% 2.2% 0.0% 3.4% 1.0% 0.0% 0.0% 0.0% 0.0%
Latin America 3.7% -15.4% -0.7% 2.4% -14.7% -0.4% -0.2% -0.1% -0.3%
Cash 2.6% - 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Total 100.0% 4.4% 4.4% 100.0% 0.0% 0.0% -0.2% 4.6% 4.4%
Past performance does not guarantee future results. Performance cited represents past performance and current performance may be higher or lower than the
data quoted. Gross investment performance assumes reinvestment of dividends and capital gains, is gross of investment management fees and net of transaction costs.
Attribution by segment is based on estimated returns of equities held within the segments listed. All stocks held during a measurement period, including purchases and sales,
are included. Cash is not allocated among segments. Calculations are for attribution analysis only and are not intended to represent simulated performance history. The
actual returns may be higher or lower. We calculate attribution using our proprietary attribution system. Our proprietary attribution system runs transactions-based
attribution, taking into account all trading activity. Interaction effect is reallocated into Selection effect. International investing involves special risk considerations,
including currency fluctuations, lower liquidity, economic and political risk.
12 13715114William Blair International Small Cap Growth Fund Top Contributors/Detractors September 2021
The tables below show the top contributors and detractors for the International Small Cap Growth Fund vs. its benchmark.
Top Five Contributors (%) for the Period: 07/01/2021 to 09/30/2021
Issuer Sector Country Contribution To
Relative Return
Inmode Ltd Health Care Israel 0.97
Benefit One Inc Industrials Japan 0.81
BayCurrent Consulting Inc Industrials Japan 0.57
Rakus Co Ltd Information Technology Japan 0.43
Vitrolife AB Health Care Sweden 0.39
Top Five Detractors (%) for the Period: 07/01/2021 to 09/30/2021
Issuer Sector Country Contribution To
Relative Return
Venus MedTech Hangzhou Inc Health Care China -0.36
Westwing Group AG Consumer Discretionary Germany -0.33
BASE Inc Information Technology Japan -0.32
AK Medical Holdings Ltd Health Care China -0.30
boohoo Group PLC Consumer Discretionary United Kingdom -0.29
Index: MSCI ACWI ex US Small Cap (net)
Past performance does not guarantee future results. Performance cited represents past performance and current performance may be lower or higher
than the data quoted. Gross investment performance assumes reinvestment of dividends and capital gains, is gross of investment management fees and net of
transaction costs. Performance results will be reduced by the fees incurred. Attribution by is based on estimated returns of all equities held during a measurement
period, including purchases and sales. We calculate attribution using our proprietary attribution system. Our proprietary attribution system runs transactions-
based attribution, taking into account all trading activity. Sectors are based on Global Industry Classification (GICS) Sectors. 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. Specific securities identified and described do not represent all of the securities purchased, sold, or
recommended and you should not assume that investments in the securities identified were or will be profitable.
13 13715114William Blair International Small Cap Growth Fund Positioning September 2021
Regional Exposure Sectoral Exposure
2.6 -0.3 Communication Services 4.3 0.3
Asia Ex-Japan 4.2 3.1
9.2 0.4
Consumer Discretionary 16.1 -0.6
17.3 1.5 12.2 4.9
Japan 3.3 -0.1
19.9 3.5 Consumer Staples
5.6 -1.0
40.0 0.4 Energy -- 0.0
Europe+ME Ex U.K. 2.7 -1.0
28.5 -3.5
Financials 7.1 1.4
13.8 1.8 10.6 3.2
United Kingdom 15.2
11.0 -1.5 Health Care -0.6
7.4 1.0
2.4 -0.9 Industrials 29.0 -1.3
Western Hemisphere 21.2 0.9
6.5 -2.3
Information Technology 18.3 1.2
15.3 -3.2 11.9 -9.5
EM Asia
19.1 0.3 Materials -- 0.0
10.6 -0.7
1.8 -0.1 2.6 0.1
EMEA Real Estate
3.5 0.2 10.3 -0.2
Utilities 1.4 -0.8
4.2 0.2 3.3 -1.6
Latin America
2.3 1.9 Other -- 0.0
-- 0.0
2.6 0.5 2.6 0.5
Cash & Equivalents Cash & Equivalents
-- 1.0 -- 1.0
William Blair International Small Cap Growth Fund
Portfolio Diff Prev QTR
William Blair International Small Cap Growth Fund Portfolio Diff Prev QTR MSCI ACWI ex US Small Cap (net)
Portfolio Diff YTD
MSCI ACWI ex US Small Cap (net) Portfolio Diff YTD
Source: William Blair.
Cash & Equivalents includes: cash and dividend accruals.
14 13715114William Blair International Small Cap Growth Fund Top Holdings by Market Cap September 2021
The table below shows the International Small Cap Growth Fund’s largest holdings as of 9/30/2021 by market cap as well as the sub-
totals by market cap for the portfolio and index. The stocks are listed by country and by the sector that defines each one’s role in the
portfolio.
% of Total % of Total
Net Assets in Net Assets in
Country Sector Portfolio Index*
Mid Cap($5-20b) 10.9% 9.0%
BayCurrent Consulting Inc Japan Industrials 2.0% 0.1%
Lifco AB Sweden Industrials 1.8% 0.1%
Food & Life Cos Ltd Japan Consumer Discretionary 1.6% 0.1%
Info Edge India Ltd India Communication Services 1.0% 0.0%
Belimo Holding AG Switzerland Industrials 1.0% 0.1%
Small Cap(William Blair International Small Cap Growth Fund Top Portfolio Changes September 2021
Top Portfolio Changes During the Period: 07/01/2021 to 09/30/2021
Security Name Country Sector
Bico Group Ab Sweden Health Care
New Purchases Totvs Sa Brazil Information Technology
Plaid Inc Japan Information Technology
Ideagen Plc United Kingdom Information Technology
Indian Energy Exchange Ltd India Financials
Centre Testing Intl Group-A China Industrials
Liquidations
Carl Zeiss Meditec Ag - Br Germany Health Care
Indutrade Ab Sweden Industrials
Toromont Industries Ltd Canada Industrials
Netcompany Group As Denmark Information Technology
Sectors are based on Global Industry Classification (GICS) Sectors. 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. Specific securities identified and described do not represent all of the securities purchased, sold, or recommended and you should not assume that investments
in the securities identified were or will be profitable.
16 13715114William Blair International Small Cap Growth Fund Characteristics September 2021
International Small Cap Growth MSCI ACWI ex US Small Cap
Fund (net) Difference
Quality
Return on Equity (%) 22.3 12.3 81%
Cash Flow ROIC (%) 22.1 13.4 65%
Debt/Equity (%) 53.7 72.8 -26%
Growth
Long-Term Growth (%) 27.3 18.2 49%
5-Year Historic EPS Growth (%) 17.8 11.0 62%
Reinvestment Rate (%) 15.6 9.6 63%
Earnings Trend
EPS Revision Breadth (%) 0.7 3.8 -3.1
Valuation
P/E (next 12 months) 41.8 15.9 162%
Other
Float Adjusted Weighted Average Market Cap ($m) 2,872 2,249 28%
Number of Holdings 100 4,391
Active Share (%) 96 --
Characteristics have been calculated by William Blair.
Please refer to the ‘Important Disclosures’ section of this document for further information on investment risks and returns.
17 13715114William Blair International Small Cap Growth Fund Holdings September 2021
Portfolio Portfolio Portfolio
Weight Weight Weight
Pacific Ex Japan 2.63 Europe+ME Ex UK (continued) Europe+ME Ex UK (continued)
Australia 1.92 Germany 3.62 Sweden (continued)
Pro Medicus Ltd 1.02 Hypoport Se 1.29 Bico Group AB 1.38
Nanosonics Ltd 0.48 Westwing Group AG 0.83 Biotage AB 1.04
Netwealth Group Ltd 0.42 Compugroup Medical Se & Co K 0.76 Sdiptech Ab - B 0.86
New Zealand 0.71 Cts Eventim Ag & Co Kgaa 0.73 Sweco Ab-B Shs 0.79
Ryman Healthcare Ltd 0.71 Israel 2.75 Hemnet Group AB 0.71
Japan 17.29 Inmode Ltd 2.38 Lagercrantz Group Ab-B Shs 0.68
Japan 17.29 Neogames SA 0.37 Paradox Interactive AB 0.12
Benefit One Inc 2.42 Italy 1.87 Switzerland 5.38
Baycurrent Consulting Inc 1.92 Amplifon Spa 0.71 Kardex Holding Ag-Reg 1.47
Rakus Co Ltd 1.85 Carel Industries Spa 0.61 Siegfried Holding Ag-Reg 1.05
Technopro Holdings Inc 1.78 Brunello Cucinelli Spa 0.55 Zur Rose Group AG 1.03
Food & Life Companies Ltd 1.59 Netherlands 0.48 Belimo Holding Ag-Reg 0.98
Sms Co Ltd 1.33 Be Semiconductor Industries 0.48 Softwareone Holding AG 0.85
Jins Holdings Inc 1.28 Norway 1.42 UK 13.79
Japan Elevator Service Holdi 1.17 Tomra Systems Asa 0.98 United Kingdom 13.79
Shift Inc 1.08 Pexip Holding Asa 0.44 Softcat PLC 1.91
Harmonic Drive Systems Inc 0.73 Spain 1.37 Safestore Holdings PLC 1.78
Base Inc 0.58 Edp Renovaveis SA 0.76 Integrafin Holdings PLC 1.24
Plaid Inc 0.56 Solaria Energia Y Medio Ambi 0.61 Cvs Group PLC 0.97
Bengo4.Com Inc 0.54 Sweden 19.90 Rotork PLC 0.96
Hennge Kk 0.47 Mips AB 2.18 Diploma PLC 0.88
Europe+ME Ex UK 39.98 Beijer Ref AB 2.13 Trustpilot As 0.87
Belgium 2.22 Vitrolife AB 1.82 Beazley PLC 0.71
Melexis NV 1.38 Lifco Ab-B Shs 1.76 Dotdigital Group PLC 0.70
Warehouses De Pauw Sca 0.84 Arjo Ab - B Shares 1.70 Trainline PLC 0.67
Finland 0.98 Investment Ab Latour-B Shs 1.65 Boohoo Group PLC 0.66
Musti Group Oy 0.98 Nolato Ab-B Shs 1.57 Renishaw PLC 0.64
Addtech Ab-B Shares 1.52 Burford Capital Ltd 0.55
As of 9/30/2021. 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 in any one particular sector. Holdings are subject to change at any time. Cash includes cash equivalents and accruals.
18 13715114William Blair International Small Cap Growth Fund Holdings September 2021
Portfolio Portfolio
Weight Weight
UK (continued) EM Asia (continued)
United Kingdom (continued) Malaysia 0.52
Ideagen PLC 0.50 Mr Diy Group M Bhd 0.52
Aveva Group PLC 0.45 South Korea 0.89
Moonpig Group PLC 0.15 Koh Young Technology Inc 0.89
Ceres Power Holdings PLC 0.14 Taiwan 3.30
W Hemisphere 2.36 Voltronic Power Technology 1.40
Canada 2.36 Aspeed Technology Inc 1.00
Kinaxis Inc 1.13 Momo.Com Inc 0.90
Enghouse Systems Ltd 0.79 EMEA 1.81
Canada Goose Holdings Inc 0.45 South Africa 0.97
EM Asia 15.30 Clicks Group Ltd 0.97
Cambodia 0.59 United Arab Emirates 0.85
Nagacorp Ltd 0.59 Network International Holdin 0.85
China 1.68 Latin America 4.20
Chacha Food Co Ltd-A 0.66 Brazil 2.79
Proya Cosmetics Co Ltd-A 0.63 Pet Center Comercio E Partic 0.87
Changzhou Xingyu Automotiv-A 0.39 Arezzo Industria E Comercio 0.81
India 7.78 Totvs SA 0.76
Motherson Sumi Systems Ltd 1.76 Locaweb Servicos De Internet 0.35
Au Small Finance Bank Ltd 1.51 Mexico 1.40
Ipca Laboratories Ltd 1.21 Grupo Aeroportuario Del Cent 1.40
Info Edge India Ltd 0.98 Cash 2.64
Aavas Financiers Ltd 0.79 Total 100.00
Indian Energy Exchange Ltd 0.63
Indiamart Intermesh Ltd 0.54
Affle India Ltd 0.36
Indonesia 0.53
Ace Hardware Indonesia 0.53
As of 9/30/2021. 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 in any one particular sector. Holdings are subject to change at any time. Cash includes cash equivalents and accruals.
19 13715114Glossary - Terms
1 Month EPS Revision Breadth: 1-month factor representing the trend in the direction of estimate changes. Range from -100% to +100%, it is calculated
as the number of positive revisions minus the number of negative revisions divided by the total number of estimates.
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.
Cash Flow Return on Invested Capital (ROIC): A measure of how effectively a company generates cash flow based on legacy capital investment.
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.
EPS Growth Rate - 5-Year Historic: The weighted average earnings per share growth for stock within the portfolio over the past 5 years.
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.
20 13715114Glossary - Terms
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.
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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