Small Cap Focused Growth Portfolio Manager Commentary

1st Quarter 2015 During the first quarter, the Granahan Focused Growth strategy rose slightly, +0.3%, but meaningfully underperformed the Russell 2000 Growth index, which rose +6.6%. Below I discuss performance for the first quarter and share our view of the portfolio's positioning going forward.

Composite Performance Chart ---Annualized--- 1Q2015 1-Year 3-Year 5-Year Since Inception

Small Cap Focused Growth – Net of Fees 0.3% 5.5% 21.5% 22.4% 14.6%

Russell 2000 Growth 6.6% 12.1% 17.7% 16.6% 9.3% *Small Cap Focused Growth strategy inception August 1, 2007. Performance prior to 12/31/2011 is from PM’s prior firm. Composite Performance reported Net of Fees. Past performance is not indicative of future returns. Full performance disclosure is attached in the Product Snapshot and also available upon request.

First Quarter -- Tough Relative Performance The portfolio's performance relative to the Russell 2000 Growth benchmark suffered from a combination of sector headwinds and poor stock selection. As has been the case since inception, the Focused Growth Portfolio has little to no exposure to Healthcare stocks. The reasons are worth reiterating: 1) The specialized and highly technical nature of most healthcare companies; 2) The binary risks inherent in much of health technology (which exacerbates the risk of the first point); and 3) We generally are successful at finding a suitable number of companies capable of sustaining 15%+ growth in other sectors of the economy. That said, there will be periods when a lack of exposure to Healthcare presents a headwind for the portfolio's performance relative to the benchmark, and such has been the case for the past five years. Nonetheless, over this period, the Focused Growth portfolio has performed well for clients, generating good absolute and relative returns. However, this was not the case in the first quarter of 2015. The sector headwind was fierce (Healthcare was the only Russell sector that outperformed the overall Russell 2000 Growth benchmark, and the Healthcare return was almost double the overall Index). Unfortunately this sector headwind was combined with some weak stock selection, which resulted in performance that materially trailed the benchmark. Stock selection within Technology was the largest negative contributor to the portfolio's relative performance in Q1, much of which relates to two stocks: LivePerson (LPSN) and Actua (ACTA). LivePerson is a provider of SAAS-based chat software, and it was the portfolio's largest holding entering the year; the stock's 27% decline in the quarter cost 280 basis points of relative performance. Entering 2015, signs indicated there was a good chance that this would be LivePerson's year. After a lengthy and at times bumpy development path, the company's new LiveEngage platform appeared poised to gain significant traction in the marketplace, which we expected to work its way into a meaningfully higher stock price over the course of 2015. However,

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in mid-January, the company's Head of Sales resigned citing personal reasons, and the Head of North American Sales left having been earlier passed over for the top job. There were also rumors that the company had lost AT&T as a client (unconfirmed, but we believe to be true). LivePerson's issues are without a doubt troubling, and we have less confidence that the company will be able to execute the transition to LiveEngage smoothly and effectively. At the same time, we believe the stock price reflects a good deal of investor skepticism, and the company has many underlying strengths. It is the #1 chat vendor, is at the front-end of a new product cycle (LiveEngage), has been posting growth in the range of 15% per year (20%+ in the mid-market and enterprise segment), is generating substantial free cash flow, and retains a strong balance sheet with $49 million of cash. On balance we continue to believe the stock's risk/reward is attractive, and it remains a significant position within the portfolio. Actua was the other major negative contributor in the Technology sector. Actua owns four SAAS-based companies, each of which is rapidly expanding within a distinct vertical market. ACTA shares dropped 16% in the midst of no major fundamental news. We've followed the company for well over a decade, and given its holding company structure, it is not unusual for investor favor – and the stock's valuation – to ebb and flow. In Q1, it ebbed, costing 110 basis points of relative performance. We believe risk/reward is quite favorable, and it remains a large holding in the portfolio. Outside of Technology, overall stock selection was positive. Consumer Discretionary was led by gains from 2U and IMAX. 2U (TWOU) offers a comprehensive platform that enables traditional colleges and universities to offer online programs. The company was selected as the partner for a Masters of Medical Science for Physicians Assistants with Yale University, providing a marquee new client for the company, and giving investors greater conviction in 2U's longer-term opportunity. IMAX (IMAX - network of approximately 750 IMAX screens across the world) saw its shares climb on increased investor optimism that the 2015 film box office will be favorable for IMAX, and that the company's Chinese subsidiary could see an IPO in the next 18 months. In Producer Durables, stock selection was also good overall due to several stocks experiencing nice appreciation (including PSIX, PCTY, and ABCO). But within Producer Durables, one stock declined in Q1 that I believe is most representative of the Focused Growth philosophy and process. That stock is Taser (TASR - Taser-brand smart weapons, on-officer video cameras, and Evidence.com software). Following a sharp rise in Q4, TASR shares traded down sharply in March on below consensus 2015 earnings guidance due to investments the company is making in its on-officer video and Evidence.com software areas. Several years ago, with its core smart weapons (Tasers) business growing at roughly 10% and generating very strong free cash flow, management made the decision to invest in the burgeoning business of on-officer cameras and related software. In the past year, Taser has distanced itself meaningfully from the competition in on-officer video and has won the vast majority of contracts awarded to date. While as noted above, investments in this area led the company to reduce near-term earnings guidance, we believe the company is absolutely making the right moves and has a good chance at becoming the dominant technology platform for law enforcement agencies across North America and beyond. Based on our assessment of risk/reward, we had sold some shares of TASR early in Q1 as the stock approached $30 (though not enough in hindsight), and we bought additional shares in the low-to-mid-$20's following investor disappointment regarding the company's initial 2015 guidance.

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Perspective and Outlook Looking ahead, despite the length of the current bull market (closing in on seven years), on balance we believe the environment is reasonably constructive for the portfolio. While valuations are not cheap, interest rates are at historical lows, the U.S. economy remains healthy, employment levels are in good shape and improving, enterprise and household balance sheets are healthy, and attractive alternatives to equities unclear. The companies we own are in the Focused Growth portfolio not because of cyclical reasons, but based on large opportunities to sustain growth for many years to come. While most companies in the small cap universe do not exhibit the characteristics of strong, sustainable growth that we require for a place on the Desert Island Monitor List of companies, there is no shortage of innovative, well-managed companies with compelling customer value propositions. For example, Cognex’s (CGNX) machine vision systems which are increasingly finding their way beyond manufacturing to a broad range of factory automation and distribution applications, 2U’s (TWOU) platform for enabling traditional colleges and universities to offer their high quality degrees online, and GrubHub’s (GRUB) leading marketplace for connecting hungry diners with local restaurants across the U.S. Such companies, while not immune to macro-economic factors, largely have it within their own control to sustain high growth for a long time. These are the type of companies that we will vet, monitor, and invest in when risk/reward is attractive. Finally, for those of you are not yet on the "Podcast Bandwagon", a couple of recent podcast series I think you might enjoy are Serial and StartUp. You can download them by clicking on their respective embedded links. Thank you for your interest and, as always, please don't hesitate to reach out if you have questions or comments. Sincerely, Andrew L. Beja, CFA dbeja@granahan.com (781) 902-1409

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Life Cycle Diversification: Adds stability

Annualized Performance: Net of Fees

Graphs and Statistics are Supplemental Information.

Please reference fully compliant GIPS Presentation on reverse side.

Small Cap Focused Growth Product March 31, 2015

GIM Small Cap Focused Growth Russell 2000 GrowthAs of March 31, 2015

Selected Portfolio Statistics

At a GlanceProduct Assets: $247 MillionMinimum Investment : $3 MillionStatus: OpenInception Date: August 1, 2007Benchmark: Russell 2000 GrowthCapitalization: Typically, $200 Mil - $2 Bil at purchasePortfolio Manager: Andrew L. Beja, CFATypical Number of Holdings: ± 40

Distinguishing Factors• Experienced portfolio manager with a demonstrated

record of success.• Seeks capital appreciation through investment in a

limited number of sustainable growth companies using a strict risk/reward discipline.

• Research centered on the manager’s areas of expertise.

Investment Philosophy Granahan Investment Management (GIM) believes that small dynamic companies provide excellent potential for superior long-term performance. GIM’s Focused Growth strategy is grounded in the belief that superior long term returns are best achieved through a select portfolio of smaller companies poised to grow at 15% or more with clean balance sheets.

Within this philosophy we seek to own companies with large open ended opportunities, a favorable competitive landscape and products or services providing a significant value proposition to the customer.

This company analysis is combined with a rigorousvaluation discipline centered on a stock's expectedreturn and risk/reward. The net result is a portfolio of 40-50 attractively priced stocks of some of the most excitingand innovative companies in the economy, and aportfolio that has generated consistent, strong risk-adjusted returns over time.

Firm HistoryFounded in 1985, Granahan Investment Management,Inc. is a 100% employee-owned firm specializing insmaller cap equity investments for large institutions andwealthy individuals. The firm utilizes fundamental,bottom-up research to uncover and invest in fastgrowing companies under $6 billion in market cap. Thefirm manages over $3.5 billion in institutional assets andthe three founding principals are part of an investmentteam which now totals ten professionals.

Trailing 5-years through March 31, 2015Quarterly Returns - Gross of Fees

Annualized Alpha 6.99%Upside Capture 107.29%Downside Capture 59.38%Tracking Error 8.09Information Ratio 0.84Beta 0.95

Source: Informais

Characteristic Portfolio Russell 2000 Growth

Median Market Cap $1,226.5 mil $890.7 mil

Weighted Avg. Market Cap $2,617.0 mil $2,255.9 mil

Active Share 96.02% -

Est 3-5 Yr EPS Growth 20.8% 15.0%

Forward P/E Ratio 35.2x 22.4x

Dividend Yield 0.06% 0.60%

Price to Book 5.35x 4.49x

Granahan Investment Management, Inc.Small Cap Equity Specialist Since 1985

404 Wyman St., Suite 460, Waltham MA 02451 781-890-4412 www.granahan.com info@granahan.com

Holdings and Characteristics are Supplemental Information.Please reference fully compliant GIPS Presentation above.

March 31, 2015Small Cap Focused Growth Product

Source: FactSet

Top Ten Holdings

Security Life Cycle Category Percent of Portfolio

ADVISORY BOARD Core Growth 7.4%

AFFILIATED MANAGERS GROUP Core Growth 6.5%

LIVEPERSON Pioneer 5.6%

COSTAR CORP Core Growth 5.5%

TASER INTL INC Core Growth 5.3%

SPS COMMERCE Pioneer 4.9%

IMAX CORP Pioneer 4.7%

CONSTANT CONTACT Pioneer 4.5%

COGNEX CORPORATION Core Growth 4.2%

ACTUA CORP Special Situation 3.9%

Composite FootnotesGranahan Investment Management claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report incompliance with the GIPS standards. Granahan Investment Management has been independently verified for the periods January 1, 1993 through December 31,2013. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2)the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. GIM is an independent, SEC-registered investment firm that oversees small and mid-cap equity portfolios for large institutions and wealthy individuals. The Small Cap Focused Growth productutilizes fundamental, bottom-up research and analysis to invest in companies in the small cap sector of the market that exhibit sustainable high earnings growth, witha focus on the technology services, internet, consumer, and business services sectors. The benchmark for the Small Cap Focused Growth product is the Russell2000 Growth. The composite, created in December 2011, is calculated by asset-weighting the performance of each account on a monthly basis. The compositeincludes returns from the portfolio manager’s prior firm, from inception of August 1, 2007 through December 31, 2011. Accounts are included beginning with the firstfull month under management and terminated accounts are included in the composite. Performance calculations, expressed in U.S. dollars, produce a total returnincluding cash and the reinvestment of dividends and interest. The dispersion is a standard deviation using equal-weighted total returns for accounts in the compositethe entire year. The three-year annualized standard deviation measures the variability of the composite and the benchmark returns over the preceding 36-monthperiod. Leverage is not utilized. Policies for valuing portfolios, calculating performance, and preparing compliant presentations are available upon request. Returnsare gross of investment management fees, which when included, reduce investment returns. Beginning 10/31/2012, net returns are total returns reduced by actualinvestment management fees. Prior to 10/31/12 and for accounts which pay no management fee, the standard management fee applicable is applied to calculate thenet return. The standard fee for accounts managed in the Small Cap Focused Growth style is payable quarterly in arrears and is calculated by applying the ANNUALrate of 1.00% times the average value of the assets in the account on the last day of each month in the quarter. Fees are collected quarterly, which produces acompounding effect on the total rate of return net of management fees. Market value is based on trade date and security pricing is supplied by Telemet. A completelist and description of all of the firm's composites is available upon request. Past performance is no guarantee of future results.

Date Small Cap Focused Growth Composite

CompositeGross Return

Russell 2000 GrowthReturn

Composite Assets$ Mil

Composite# Accts

Composite3-Yr.

Std. Dev.

Russell 2000Growth

3-Yr. Std. Dev.

CompositeDispersion

CompositeNet Return

Non-Fee Assets

FirmAssets$ Mil

YTD 2015 0.42% 6.63% $247.0 7 16.76 13.92 NA 0.29% 0.8% $3,570.1

2014 2.17% 5.60% $211.8 6 15.87 13.82 NA 1.61% 0.4% $3,516.6

2013 65.19% 43.30% $93.0 <5 16.73 17.27 NA 64.49% 1% $4,056.7

2012 24.55% 14.59% $26.5 <5 21.23 20.72 NA 23.36% 2% $3,049.4

2011 13.19% -2.91% $0.4 <5 23.12 24.31 NA 12.07% 100% $2,741.5

2010 30.06% 29.08% $5.4 8 29.56 27.70 0.15 28.81% 7%

2009 53.80% 34.47% $4.2 8 NA 24.85 0.06 52.33% 10%

2008 -46.34% -38.54% $1.9 6 NA 21.26 NA -46.91% 10%

2007* 18.24% 3.27% $.4 <5 NA 14.23 NA 17.76% 100%

NA – Dispersion information is not statistically meaningful due to an insufficient number of portfolios in the composite for the entire year; Standard deviation information has fewer than three years’ data. *Partial year performance: August 1, 2007 through December 31, 2007

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