Small Cap Value Fund
Portfolio of Investments, July 31, 2021 (all dollar amounts in thousands) (unaudited)
Issuer | Shares | Value | |||||||
Common Stocks | |||||||||
Financials—21.7% | |||||||||
Ameris Bancorp | 413,813 | $ | 20,115 | ||||||
Argo Group International Holdings, Ltd.† | 452,828 | 23,606 | |||||||
Atlantic Union Bankshares Corporation | 418,703 | 14,851 | |||||||
Banc of California, Inc. | 1,134,063 | 19,415 | |||||||
Berkshire Hills Bancorp, Inc. | 733,714 | 19,840 | |||||||
Compass Diversified Holdings | 740,435 | 18,489 | |||||||
ConnectOne Bancorp, Inc. | 914,028 | 24,039 | |||||||
Dime Community Bancshares, Inc. | 200,265 | 6,613 | |||||||
Enterprise Financial Services Corporation | 354,342 | 15,793 | |||||||
First Bancorp | 406,394 | 16,256 | |||||||
First Merchants Corporation | 391,774 | 15,957 | |||||||
MGIC Investment Corporation | 1,437,005 | 19,888 | |||||||
Pacific Premier Bancorp, Inc. | 529,496 | 20,110 | |||||||
Pinnacle Financial Partners, Inc. | 230,013 | 20,612 | |||||||
PJT Partners, Inc. | 304,511 | 23,804 | |||||||
* | PRA Group, Inc. | 612,481 | 23,758 | ||||||
Sandy Spring Bancorp, Inc. | 390,197 | 16,228 | |||||||
Seacoast Banking Corporation of Florida | 593,080 | 18,024 | |||||||
Simmons First National Corporation Class “A” | 756,839 | 20,601 | |||||||
Sterling Bancorp | 621,480 | 13,492 | |||||||
* | Texas Capital Bancshares, Inc. | 392,970 | 24,749 | ||||||
The First Bancshares, Inc. | 461,997 | 17,819 | |||||||
Veritex Holdings, Inc. | 628,514 | 21,087 | |||||||
435,146 | |||||||||
Industrials—20.8% | |||||||||
ABM Industries, Inc. | 365,483 | 16,991 | |||||||
Albany International Corporation | 212,823 | 18,377 | |||||||
Astec Industries, Inc. | 234,644 | 14,386 | |||||||
* | CBIZ, Inc. | 700,070 | 22,640 | ||||||
Deluxe Corporation | 531,989 | 23,354 | |||||||
* | Dycom Industries, Inc. | 222,556 | 15,445 | ||||||
Enerpac Tool Group Corporation | 370,590 | 9,513 | |||||||
GrafTech International, Ltd. | 1,640,509 | 18,653 | |||||||
Granite Construction, Inc. | 478,512 | 18,385 | |||||||
* | Great Lakes Dredge & Dock Corporation | 1,503,964 | 23,161 | ||||||
* | Harsco Corporation | 926,256 | 18,636 | ||||||
Herman Miller, Inc. | 476,955 | 20,581 | |||||||
* | Hub Group, Inc. Class “A” | 307,032 | 20,350 | ||||||
ICF International, Inc. | 225,934 | 20,689 | |||||||
Kaman Corporation | 383,234 | 16,997 | |||||||
* | KAR Auction Services, Inc. | 1,301,721 | 21,452 | ||||||
Marten Transport, Ltd. | 939,973 | 14,870 | |||||||
Matson, Inc. | 298,057 | 20,006 | |||||||
Mueller Water Products, Inc. | 881,004 | 13,057 | |||||||
Regal Beloit Corporation | 151,302 | 22,276 | |||||||
* | SP PLUS Corporation | 482,759 | 15,830 | ||||||
Standex International Corporation | 125,472 | 11,543 | |||||||
Werner Enterprises, Inc. | 427,504 | 19,541 | |||||||
416,733 | |||||||||
Information Technology—14.0% | |||||||||
AudioCodes, Ltd.† | 340,703 | 11,161 | |||||||
Belden, Inc. | 527,567 | 25,851 | |||||||
Benchmark Electronics, Inc. | 507,609 | 13,401 | |||||||
* | Cognyte Software, Ltd.† | 454,810 | 11,811 | ||||||
* | Conduent, Inc. | 3,345,084 | 22,446 | ||||||
CSG Systems International, Inc. | 409,704 | 18,584 | |||||||
* | Knowles Corporation | 949,026 | 19,019 | ||||||
Kulicke & Soffa Industries, Inc. | 520,080 | 28,272 | |||||||
Methode Electronics, Inc. | 528,087 | 25,258 | |||||||
* | NETGEAR, Inc. | 579,548 | 19,850 | ||||||
* | NetScout Systems, Inc. | 696,261 | 20,024 | ||||||
Progress Software Corporation | 503,545 | 22,957 | |||||||
* | Tower Semiconductor, Ltd.† | 828,272 | 23,067 | ||||||
* | Verint Systems, Inc. | 454,720 | 19,403 | ||||||
281,104 | |||||||||
Consumer Discretionary—12.2% | |||||||||
Cracker Barrel Old Country Store, Inc. | 136,022 | 18,523 | |||||||
* | Designer Brands, Inc. Class “A” | 1,751,627 | 25,521 | ||||||
* | El Pollo Loco Holdings, Inc. | 800,117 | 14,890 | ||||||
Group 1 Automotive, Inc. | 115,862 | 20,130 | |||||||
Oxford Industries, Inc. | 319,644 | 27,787 | |||||||
Standard Motor Products, Inc. | 516,925 | 21,587 | |||||||
* | Taylor Morrison Home Corporation | 828,719 | 22,226 | ||||||
* | Tri Pointe Homes, Inc. | 1,408,910 | 33,983 | ||||||
* | Universal Electronics, Inc. | 332,563 | 15,544 | ||||||
* | Urban Outfitters, Inc. | 623,986 | 23,200 | ||||||
Winnebago Industries, Inc. | 307,287 | 22,085 | |||||||
245,476 | |||||||||
Real Estate—7.5% | |||||||||
Brandywine Realty Trust | 1,009,373 | 14,091 | |||||||
CatchMark Timber Trust, Inc. | 1,264,031 | 14,776 | |||||||
Empire State Realty Trust, Inc. | 1,270,259 | 14,519 | |||||||
Four Corners Property Trust, Inc. | 566,626 | 16,268 | |||||||
Kite Realty Group Trust | 1,225,748 | 24,711 | |||||||
Pebblebrook Hotel Trust | 479,852 | 10,792 | |||||||
Physicians Realty Trust | 852,606 | 16,157 | |||||||
Retail Opportunity Investments Corporation | 421,449 | 7,447 | |||||||
* | Sunstone Hotel Investors, Inc. | 811,428 | 9,364 | ||||||
UMH Properties, Inc. | 914,180 | 21,282 | |||||||
149,407 | |||||||||
Health Care—5.9% | |||||||||
* | ANI Pharmaceuticals, Inc. | 179,797 | 6,101 | ||||||
* | Hanger, Inc. | 441,331 | 10,830 | ||||||
* | Integer Holdings Corporation | 102,631 | 10,047 | ||||||
* | Lantheus Holdings, Inc. | 1,297,647 | 33,959 | ||||||
* | ModivCare, Inc. | 130,448 | 22,176 | ||||||
* | NuVasive, Inc. | 254,124 | 16,251 | ||||||
The Ensign Group, Inc. | 214,325 | 18,233 | |||||||
117,597 |
See accompanying Notes to Portfolio of Investments.
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Small Cap Value Fund
Portfolio of Investments, July 31, 2021 (all dollar amounts in thousands) (unaudited)
Issuer | Shares or Principal Amount | Value | |||||||
Common Stocks—(continued) | |||||||||
Materials—5.4% | |||||||||
Greif, Inc. Class “A” | 379,588 | $ | 23,011 | ||||||
Kaiser Aluminum Corporation | 60,780 | 7,396 | |||||||
Materion Corporation | 280,431 | 20,011 | |||||||
Minerals Technologies, Inc. | 283,031 | 22,705 | |||||||
Myers Industries, Inc. | 604,918 | 12,812 | |||||||
* | Orion Engineered Carbons S.A.† | 1,200,141 | 21,698 | ||||||
107,633 | |||||||||
Consumer Staples—4.1% | |||||||||
Cal-Maine Foods, Inc. | 526,325 | 18,364 | |||||||
* | Garden & Pet Co. | 389,571 | 16,872 | ||||||
Edgewell Personal Care Co. | 493,994 | 20,293 | |||||||
* | Landec Corporation | 195,741 | 2,142 | ||||||
Spectrum Brands Holdings, Inc. | 57,265 | 5,002 | |||||||
* | TreeHouse Foods, Inc. | 464,691 | 20,632 | ||||||
83,305 | |||||||||
Energy—3.2% | |||||||||
* | Dril-Quip, Inc. | 491,161 | 14,037 | ||||||
* | Earthstone Energy, Inc. | 836,000 | 8,218 | ||||||
* | Frank’s International N.V.† | 3,257,044 | 8,957 | ||||||
Matador Resources Co. | 1,051,430 | 32,489 | |||||||
63,701 | |||||||||
Communication Services—2.3% | |||||||||
John Wiley & Sons, Inc. | 455,046 | 26,747 | |||||||
Telephone and Data Systems, Inc. | 841,243 | 18,802 | |||||||
45,549 | |||||||||
Utilities—1.8% | |||||||||
NorthWestern Corporation | 303,155 | 18,793 | |||||||
Spire, Inc. | 234,058 | 16,606 | |||||||
35,399 | |||||||||
Total Common Stocks—98.9% (cost $1,546,815) | 1,981,050 | ||||||||
Repurchase Agreement | |||||||||
Fixed Income Clearing Corporation, 0.000% dated 7/30/21, due 8/2/21, repurchase price $21,389, collateralized by U.S. Treasury Bond, 1.875%—2.375%, due 2/15/41—11/15/49, valued at $21,817 | $ | 21,389 | 21,389 | ||||||
Total Repurchase Agreement—1.1% (cost $21,389) | 21,389 | ||||||||
Total Investments—100.0% (cost $1,568,204) | 2,002,439 | ||||||||
Cash and other assets, less liabilities—0.0% | 291 | ||||||||
Net assets—100.0% | $ | 2,002,730 |
* = Non-income producing security
† = U.S. listed foreign security
See accompanying Notes to Portfolio of Investments.
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Notes to Portfolio of Investments
(1) Significant Accounting Policies
(a) Description of the Trust
William Blair Funds (the “Trust”) is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (“the 1940 Act”), as an open-end management investment company. As of July 31, 2021, the Trust had the following twenty funds (the “Funds”) available for sale, each with its own investment objective and policies. For each Fund, the number of shares authorized is unlimited.
U.S. Equity Funds | International Equity Funds | Fixed Income Funds | ||
Growth | International Leaders | Bond | ||
Large Cap Growth | International Growth | Income | ||
Mid Cap Growth | Institutional International Growth | Low Duration | ||
Small-Mid Cap Core | International Small Cap Growth | |||
Small-Mid Cap Growth | Emerging Markets Leaders | Emerging Markets Debt Fund | ||
Small Cap Growth | Emerging Markets Growth | Emerging Markets Debt1 | ||
Small Cap Value | Emerging Markets Small Cap Growth | |||
Multi-Asset and Alternative Fund | ||||
Global Equity Fund | Macro Allocation | |||
Global Leaders |
The investment objectives of the Funds are as follows:
U.S. Equity Funds | Long-term capital appreciation. |
Global Equity Fund | Long-term capital appreciation. |
International Equity Funds | Long-term capital appreciation. |
Bond Fund | Outperform the Bloomberg Barclays U.S. Aggregate Index by maximizing total return through a combination of income and capital appreciation. |
Income Fund | High level of current income with relative stability of principal. |
Low Duration Fund | Maximize total return. Total return includes both income and capital appreciation. |
Emerging Markets Debt Fund | Provide attractive risk-adjusted returns relative to the Fund’s benchmark through investments in hard currency denominated debt issued in emerging market countries. |
Macro Allocation Fund | Maximize long-term risk-adjusted total return. |
1 | Effective May 25, 2021 (Commencement of Operations). |
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Notes to Portfolio of Investments
(b) Repurchase Agreements
In a repurchase agreement, a Fund buys a security at one price and at the time of sale, the seller agrees to repurchase the security at a mutually agreed upon time and price (usually within seven days). The repurchase agreement thereby determines the yield during the purchaser’s holding period, while the seller’s obligation to repurchase is secured by the value of the underlying collateral. William Blair Investment Management, LLC (“the Adviser”) monitors, on an ongoing basis, the value of the underlying collateral to ensure that the value always equals or exceeds the repurchase price plus accrued interest. Repurchase agreements may involve certain risks in the event of a default or insolvency of the other party to the agreement, including possible delays or restrictions upon a Fund’s ability to dispose of the underlying collateral. The risk to a Fund is limited to the ability of the seller to pay the agreed upon sum on the delivery date. In the event of default, a repurchase agreement provides that a Fund is entitled to sell the underlying collateral. The loss, if any, to a Fund will be the difference between the proceeds from the sale and the repurchase price. However, if bankruptcy proceedings are commenced with respect to the seller of the security, disposition of the collateral by the Fund may be delayed or limited. The Funds have master repurchase agreements which allow the Funds to offset amounts owed to a counterparty with amounts owed from the same counterparty, including any collateral, in the event the counterparty defaults. Each Fund’s outstanding repurchase agreements, if any, and related collateral, are shown on the Fund’s Portfolio of Investments. Although no definitive creditworthiness criteria are used, the Adviser reviews the creditworthiness of the banks and non-bank dealers with which a Fund enters into repurchase agreements to evaluate those risks. A Fund may, for tax purposes, deem repurchase agreements collateralized by U.S. Government securities to be investments in U.S. Government securities.
(c) TBA Securities
The Fixed Income Funds may invest in mortgage pass-through securities eligible to be sold in the “to-be announced” market (“TBAs”). TBAs provide for the forward or delayed delivery of the underlying instrument with settlement in up to 180 days. The term TBA comes from the fact that the specific mortgage-backed security that will be delivered to fulfill a TBA trade is not designated at the time the trade is made, but rather is generally announced 48 hours before the settlement date. A Fund generally has the ability to close out a TBA obligation on or before the settlement date, rather than take delivery of the security. When a Fund sells TBAs, it incurs risks similar to those incurred in short sales. For example, when a Fund sells TBAs without owning or having the right to obtain the deliverable securities it incurs a risk of loss because it could have to purchase the securities at a price that is higher than the price at which it sold the securities.
(d) Securities Sold, Not Yet Purchased
A Fund may sell a security it does not own (known as selling a security short) in anticipation of a decline in the fair value of that security. When a fund sells a security short, it must borrow the security sold short and deliver it to the broker through which it made the short sale. A gain, limited to the price at which the fund sold the security short, or a loss, unlimited in size, will be recognized upon the termination of the short sale. A fund is also subject to the risk that it may be unable to reacquire a security to terminate a short position except at a price substantially in excess of the price at which it sold the security short.
(2) Valuation
(a) Investment Valuation
The value of U.S. equity securities, including exchange-traded funds, is determined by valuing securities traded on national securities markets or in the over-the-counter markets at the last sale price or, if applicable, the official closing price or, in the absence of a recent sale on the date of determination, at the mean between the last reported bid and ask prices.
The value of foreign equity securities is generally determined based upon the last sale price on the foreign exchange or market on which it is primarily traded and in the currency of that market as of the close of the appropriate exchange or, if there have been no sales during that day, at the mean between the last reported bid and ask prices. The Board of Trustees has determined that the passage of time between when the foreign exchanges or markets close and when the Funds compute their net asset values could cause the value of foreign equity securities to no longer be representative or accurate and, as a result, may necessitate that such securities be fair valued. Accordingly, for foreign equity securities, the Funds may use an independent pricing service to fair value price the security as of the close of regular trading on the NYSE. As a result, a Fund’s value for a foreign security may be different from the last sale price (or the mean between the last reported bid and ask prices). As of July 31, 2021, fair valuation estimates for foreign equity securities were not obtained.
6
Notes to Portfolio of Investments
Fixed income securities are generally valued using evaluated prices provided by an independent pricing service. The evaluated prices are formed using various market inputs that the pricing service believes accurately represent the market value of a security at a particular point in time. The pricing service determines evaluated prices for fixed income securities using inputs including, but not limited to, recent transaction prices for such securities, dealer quotes, transaction prices for other securities with similar characteristics, collateral characteristics, credit quality, payment history, liquidity and market conditions.
Repurchase agreements are valued at cost, which approximates fair value.
Option contracts on securities, currencies and other financial instruments traded on one or more exchanges are valued at their most recent sale price on the exchange on which they are traded most extensively. Option contracts on foreign indices are valued at the settlement price. If there were no sales that day or if no settlement price is available, such option contracts are valued at the mean between the last reported bid and ask prices. Option contracts traded in the Over-the-Counter (“OTC”) market shall be valued by an independent pricing service. Futures contracts are valued at the most recent settlement price on the exchange on which they are traded most extensively, or if no settlement price is available, at the last sale price as of the close of the exchange. Forward foreign currency contracts are valued on the basis of the value of the underlying currencies at the prevailing currency exchange rate as supplied by an independent pricing service.
Swaps that are centrally cleared through an exchange are valued at the most recent settlement price provided by the exchange on which they are cleared. Total return swaps on equities, equity baskets, indices and other financial instruments are valued by an independent pricing service, or if unavailable, based on the security’s or instrument’s underlying reference asset. All other swap contracts are valued by an independent pricing service. Depending on the product and the terms of the transaction, the independent pricing service may use a series of techniques, including simulation pricing models. The pricing models use inputs that are observed from actively quoted markets such as issuer details, indices, spreads, interest rates, yield curves, dividends and exchange rates.
Securities, and other assets, for which a market price is not available or is deemed unreliable (e.g., securities affected by unusual or extraordinary events, such as natural disasters or securities affected by market or economic events, such as bankruptcy filings), or the value of which is affected by a significant valuation event, are valued at a fair value as determined in good faith by, or under the direction of, the Board of Trustees and in accordance with the Valuation Procedures approved by the Board of Trustees. The value of these fair valued securities may be different from the last sale price (or the mean between the last reported bid and ask prices), and there is no guarantee that a fair valued security will be sold at the price at which a Fund is carrying the security.
(b) Fair Value Measurements
Fair value is defined as the price that a Fund would receive upon selling a security in an orderly transaction to an independent buyer in the principal or most advantageous market for the investment. Various inputs are used in determining the value of a Fund’s investments. A three-tier hierarchy of inputs is used to classify fair value measurements for disclosure purposes. The three-tier hierarchy of inputs is summarized in the three broad levels listed below:
• | Level 1—Quoted prices (unadjusted) in active markets for an identical security. | |
• | Level 2—Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, and others. In addition, other observable inputs such as foreign exchange rates, benchmark securities indices and foreign futures contracts may be utilized in the valuation of certain foreign securities when significant events occur between the last sale on the foreign securities exchange and the time at which the net asset value of the Fund is calculated. | |
• | Level 3—Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in pricing an investment, and are based on the best information available. |
The inputs or methodology used for valuing an investment are not necessarily an indication of the risk associated with investing in those securities.
7
Notes to Portfolio of Investments
A description of the valuation methodologies applied to the Funds’ major categories of assets and liabilities measured at fair value on a recurring basis is as follows:
Exchange-Traded Securities
Securities traded on a national securities exchange (or reported on the NASDAQ national market), including exchange-traded funds, are stated at the last reported sales price on the day of valuation. Other securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are stated at the mean between the last reported bid and ask prices. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized as Level 1 of the fair value hierarchy. Securities traded on inactive markets or valued by reference to similar instruments are generally categorized as Level 2 of the fair value hierarchy.
Fixed Income Securities
Fixed income securities including corporate, convertible and municipal bonds and notes, U.S. government agency obligations, U.S. treasury obligations, sovereign issues, bank loans, convertible preferred securities, asset-backed securities, non-U.S. bonds and commercial paper are generally valued using evaluated prices provided by an independent pricing service. The evaluated prices are formed using various market inputs that the pricing service believes accurately represent the fair value of a security at a particular point in time. The pricing service determines evaluated prices for fixed income securities using inputs including, but not limited to, recent transaction prices for such securities, dealer quotes, transaction prices for other securities with similar characteristics, collateral characteristics, credit quality, payment history, liquidity and market conditions. Securities that use similar valuation techniques and observable inputs as described above are categorized as Level 2 of the fair value hierarchy.
Repurchase Agreements
Repurchase agreements are valued at cost, which approximates fair value. Repurchase agreements are categorized as Level 2 of the fair value hierarchy.
Derivative Instruments
Listed derivatives, such as certain options and futures contracts, that are actively traded are valued based on quoted prices from the exchange on which they are traded most extensively and are categorized as Level 1 of the fair value hierarchy. OTC derivative contracts include forward foreign currency contracts, swap and certain option contracts related to interest rates, foreign currencies, the credit standing of reference entities, equity prices, or commodity prices. Depending on the product and the terms of the transaction, the fair value of OTC derivative products can be modeled by independent pricing services taking into account the counterparties’ creditworthiness and using a series of techniques, including simulation models. Many pricing models do not entail material subjectivity because the methodologies employed do not necessitate significant judgments and the pricing inputs are observed from actively quoted markets, as is the case of forward foreign currency contracts and interest rate swaps. A substantial majority of OTC derivative products valued by a Fund using pricing models fall into this category and are categorized within Level 2 of the fair value hierarchy.
As of July 31, 2021, the value of investments in securities, segregated by their hierarchical input levels used in determining fair value and by security class, are shown below (in thousands).
Investments in securities | Small Cap Value | |||
Level 1—Quoted prices | ||||
Common Stocks | $ | 1,981,050 | ||
Level 2—Other significant observable inputs | ||||
Repurchase Agreements | 21,389 | |||
Level 3—Significant unobservable inputs | ||||
None | — | |||
Total investments in securities | $ | 2,002,439 |
See Portfolio of Investments for Sector Classification.
8