Global Impact Annual Report APRIL 2018

It is our pleasure to share this year’s Global Impact Annual Report. We review 2017 milestones for our strategy, share exciting developments in the broader field of impact investing, and highlight encouraging prospects for 2018.

Thanks to your faith in our team, the Global Impact strategy has expanded the scale of social and environmental impact. We are grateful to have been entrusted with substantially more assets in 2017, which we have invested in impact companies around the world. Over the course of the year, each of these businesses achieved measurable impact, and collec-tively they generated financial results that exceeded the broader markets.

Through Global Impact, you are financing market-based solutions for some of the world’s greatest challenges. In 2017, your investment supported three portfolio companies that are providing quality education to more than two million students in dozens of countries. You own shares in companies in Europe and the developing world that finance or develop affordable housing. And you are invested in pioneering health care companies, some that are working on treatments for cancer, Alzheimer’s disease, and schizophrenia, and others that are expanding the lifesaving uses of genetic sequencing for medical diagnosis.

We continue to uncover new investment ideas across our impact themes. This year, for example, 13 companies that met our criteria had initial public

offerings, enabling us to add them to our opportunity set. You are now invested in two of them: a Japanese company that recycles abandoned and dilapidated homes into quality affordable housing, and a US business that provides affordable postsecondary education in 25 countries.

As many of our impact companies are less well-known to investors, we believe they provide us with excellent opportunities to potentially create long-term value for you. To ensure that Global Impact’s portfolio companies can achieve their impact and financial objectives, we conduct extensive due diligence in both of those areas, assuming that we will own their shares for several years. Fortunately, many of our colleagues are specialists in the indus-tries in which we invest, and they continually provide thoughtful support and creative insights. We believe this collaborative research effort is one of the keys to our effective management of Global Impact over the long term.

In 2017, we also expanded our engagement in the broader impact-investor community. We pre- sented our ideas at investor conferences globally. We sponsored students’ impact efforts, taught workshops, judged university competitions, and collaborated on an academic case study. We also advised other impact investors to help them launch their own portfolios. We believe that everyone benefits if the impact “ecosystem” thrives.

MESSAGE OF COMMITMENT

We see possibilities in what others see as problems.

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Finally, 2017 was a strong year for the portfolio’s relative and absolute financial returns.1 Broad markets worldwide were buoyed by deregulation, tax cuts, and strong global economic growth. Many of your portfolio companies, with their disrup-tive offerings and long-term mind-set, performed well on a relative basis. We now face the challenge of high valuations that are evident in many of your holdings. So far, we have been able to pivot to other impact opportunities with the potential to deliver attractive shareholder returns while providing innovative solutions. If markets continue to soar, bringing valuations up with them, it could become increasingly difficult to find prudently valued investment opportunities.

Sincerely,

Eric Rice, PhDPortfolio Manager

R. Patrick Kent, CMT, CFAPortfolio Manager

All investing involves risk. Investors should consider the risk that may impact their capital before investing. The value of your investment may become worth more or less than at the time of original investment. Please refer to the risk section at the end of this document for more information.

2017 outreach and collaboration Below is a partial list of the events at which we shared our insights and collaborated with our colleagues across the impact ecosystem.

March Harvard Social Enterprise Conference

Cambridge

March Phenix Capital 3rd Annual Impact Summit

The Hague

March Impact Investing World Forum

London

May Milken Institute Global Conference

Los Angeles

May Social Stock Exchange London

June Responsible Investor London

July GSG Impact Summit 2017 Chicago

September SPS Investment Insights Amsterdam

September Principles for Responsible Investment

Berlin

October Toniic Annual Impact Seminar

Monterey

December High Water Women’s Investing for Impact Symposium

New York

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1 Past results are not necessarily indicative of future results and an investment can lose value.

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2017 Impact highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Measuring impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Alignment with the UN’s Sustainable Development Goals . . . . . . . . . . . . . . . . . . . . . . . . . 8

ESG integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Affordable housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Clean water and sanitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Sustainable agriculture and nutrition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Digital divide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

Education and job training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Financial inclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Alternative energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Resource efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Resource stewardship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Investment outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Important disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

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ENVIRONMENT

LIFE ESSENTIALS

HUMAN EMPOWERMENT

TABLE OF CONTENTS

The views expressed herein are those of the author(s), are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may make different investment decisions for different clients. The material and/or its contents are current as of 31 December 2017. Forward-looking statements or estimates may be made. Actual results and occurrences may vary significantly. Certain data provided is that of a third party. While data is believed to be reliable, no assurance is being provided as to its accuracy or completeness. Material is for the intended recipient and is not to be redistributed. | PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS AND AN INVESTMENT CAN LOSE VALUE.

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20

4

Last year, your portfolio companies...

PROVIDED education and job training to more than two million people

SUPPLIED more than 50,000 affordable housing units and 930,000 loans to low- and middle-income families

GENERATED 315 terawatt hours of renewable energy, enough to power 35 million homes and avoid 235 million metric tons of CO2 emissions

CONNECTED 166 million people to mobile financial services

ADVANCED the development of disease treatments that may help more than 18 million people

PROVIDED digital access to nearly 150 million people in developing countries

CLEANED more than 5.9 billion cubic meters of polluted water

2017 IMPACT HIGHLIGHTS

5

WhY We MeaSure iMPact• Bring awareness of the core impact case of

an investment

• Increase accountability and encourage improvement over time

• Provide a differentiated perspective from traditional fundamental analysis

• Deepen our engagement with the companies in our portfolio

• Affirm and strengthen values alignment for our clients

hoW We MeaSure iMPact: KPisIn the context of impact investing, we believe the most informative KPIs measure as much of a company’s overall impact as possible. Good KPIs are easy to understand, are adaptive, and can be calculated logically with reliable, verifiable information.

KPI metrics vary by company, industry, and theme, and are created based on the specific nature of the impact at hand. Quality metrics should also reflect a company’s additionality and value proposition for filling unmet needs. For us, revenue alone is not sufficient for a qualitative impact assessment. If it were, many companies that do not yet generate positive revenue — clinical-stage biopharmaceutical companies developing innovative treatments for diseases afflicting large populations, for example — would be unjustifiably excluded. We consider the degree to which a company is advancing social or environmental goals, and focus on the KPI that we believe is most relevant and informative for that situation.

Finding data for a particular KPI often requires in-depth research. While some companies measure their social or environmental improvement as part of their operations, others do not. To accurately assess impact, we may combine inputs from multiple sources, including company reports and presentations, management meetings, industry research, and case studies.

deVeloPinG a KPiWe use a logic model, or chain, from the impact investing industry to 1) form a structured view of how a company achieves its impact goals, and 2) systematically measure impact for each company. Our goal is to capture KPIs as far to the right on the chain as possible, as in our view those indicators tend to provide the most compelling evidence that a company is making a genuine difference.

Through proprietary research and our access to com-pany management teams, we have been able to develop KPIs across most of the logic chain, from points 1 through 4. However, definitive data for the fifth and final “impact” portion remains difficult to quantify. How does one quantify, for instance, the impact that access to education in the developing world has on improving income potential and quality of life? Data needed to answer questions like that is often hard to track, so in these cases, we believe it is important to give companies credit for the aspirational measure of their impact, in order to raise awareness of their impact goals.

Measuring impact is central to our impact investing process. Through extensive research and the development of custom key performance indicators (KPIs), we seek to determine each company’s progress toward effecting positive social and environmental change. By adopting a structured, repeatable methodology, we aim to hold ourselves — and the companies we invest in — to high standards of accountability for measuring and achieving impact.

6

MEASURING IMPACT

7

KPI logic chain and examples

Capital applied toward achieving the impact goal

Product development toward achieving the impact goal

Units sold or revenue from impact product

Impact achievements expressed in terms of product use

Products’ contributions to achieving the impact goals

SuStainable food and aGriculture health

financial incluSion

education and Job traininG

reSource SteWardShiP

Spend US$44 million on research and development toward a zero-calorie natural sweetener

Operate nearly 500 affordable fitness clubs across Europe

Provide last-mile retail services via 35,000 outlets for rural and disadvantaged populations in India

Provide 920,000 students in the developing world with access to higher education

Produce energy from waste that avoids conventional emissions equal to two million metric tons of CO2

The KPI examples are for illustrative purposes only. The data sources for the information provided as a part of the KPI examples have been sourced from multiple repositories, including: annual and quarterly reports, industry research pieces, company websites, press releases, case studies, and company engagements. Certain data provided is that of a third party. While this data is believed to be reliable, no assurance is being provided as to its accuracy or completeness. Additional information regarding the source of specific data points is available upon request.

eXaMPleS of iMPact enGaGeMent Direct engagement with companies on impact is also essential to our approach. During engagement meetings, we primarily provide companies with feedback on how we think they can be more effective in achieving positive social or environmental change.

As an example, in 2017 we met with the management team of a renewable energy company to discuss plans for a small, legacy coal-fired asset they own. We recommended they either convert the plant to a new, sustainable source of fuel or dispose of it. The team agreed to bring this proposal to their board, and we plan to continue engaging with them on this topic.

We also use engagement opportunities to hear from companies on what data they can provide us for building out a KPI. We recently met with the CEO of one of our clean water and sanitation holdings to discuss which of their impact achievements we should measure over time. The officer provided us with helpful guidance that brought us a step closer to assessing the company's contributions in water and energy conservation.

Input Activity Output Outcome Impact

1 2 3 4 5

MEASURING IMPACT

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ALIGNMENT WITH THE UN’S SUSTAINABLE DEVELOPMENT GOALS

During the conception and development of the Global Impact strategy in 2012, we began to research companies that sought to address large-scale social and environmental challenges in differentiated and innovative ways. We consulted with other impact investors, industry analysts, social entrepreneurs, and external advisors. We read reams of published research and literature reviews, and we traveled the world listening and learning. Over the next few years, we narrowed our focus to the 10 impact themes that make up the strategy and our proprietary impact opportunity set today.

When the SDGs were published in 2015, we were delighted to see how well our themes aligned. (The check marks in the table below denote where the Global Impact approach intersects with the SDGs.) This overlap validated the extensive research we had been doing, while underscoring the breadth and complexity of the challenges at hand.

In September 2015, more than 190 countries adopted the United Nations’ (UN’s) 2030 Agenda for Sustainable Development, including the 17 Sustainable Development Goals (SDGs). These objectives aim to increase global economic growth and decrease inequality while protecting the environment for future generations. It is a massive task requiring an estimated US$5 trillion to $US7 trillion per year.1 We believe that impact investors can play a central role in achieving the SDGs by leveraging widespread opportunities to match purpose with profit.

Wellington Management supports the SDGs | Sources: UN.org, Wellington Management

UN SDGs and Global Impact alignment

1 United Nations Conference on Trade and Development (2017 estimates).

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Global iMPact theMeS

LIFE ESSENTIALS

• Affordable housing• Clean water and sanitation• Health • Sustainable agriculture and nutrition

HUMAN EMPOWERMENT

• Digital divide• Education and job training• Financial inclusion

ENVIRONMENT

• Alternative energy• Resource efficiency• Resource stewardship

hoW iMPact inVeStinG can helP achieVe the SdGsWe believe the private sector can deliver many of the market-based solutions needed to address the SDGs. While each SDG has specific targets, the goals are interconnected; success with one may entail tackling issues more commonly associated with another. For our part, we have sought to focus on the impact challenges for which we believe social enterprises can have the greatest impact. In fact, we often find that a company’s impact case aligns with more than one SDG, enabling us to aim to address some goals as secondary objectives.

• Health services and health-science companies in our opportunity set address Goal 3.

• Sustainable energy companies we invest in help meet Goals 7 and 13.

• A private education company that helps meet Goal 4 has a student body made up mostly of women and girls, thereby helping to address Goal 5.

• Water treatment and wastewater management businesses we own provide solutions for Goals 6, 11, and 12.

In accordance with our impact philosophy, we also assess the additionality of each company; simply being aligned with one of our themes is not enough to be considered an impact company.

Some of our impact themes are not directly captured by the SDGs, but in our view they still indirectly address several goals. We believe that bridging the digital divide and expanding financial inclusion, for instance, are critical pathways for reducing poverty, enhancing gender equality, and reducing inequalities (Goals 1, 5, and 10, respectively). As an example, a Bangladeshi telecommunications company we own provides poor rural women with jobs selling products to communities that would likely otherwise lack Internet access or mobile phones. Through initiatives like these, this company is helping to expand the digital universe and simultaneously promote the advancement of women and the poor.

looKinG toWard the futureMany of our clients have inquired about Global Impact’s alignment with the SDGs, so we will remain flexible and transparent, always willing to learn and adapt. Today, the SDGs have become a common framework for many investors focused on sustainable investing, and we welcome the increased visibility and sense of urgency for impact they have catalyzed, even if we do not use them explicitly in our investment approach. For a few of the goals, the investable universe in publicly listed equities is small or nonexistent as the solutions needed do not fit with a marketable product or service. Our objective remains to seek the delivery of attractive financial returns by investing in companies working to solve big global problems, many of which are addressed by the laudable UN Sustainable Development Goals.

Members of Wellington’s Global Impact team.

ALIGNMENT WITH THE UN’S SUSTAINABLE DEVELOPMENT GOALS

10

Environmental, social, and corporate governance (ESG) research is another key component of our investment process. Because we intentionally invest in businesses that we believe are helping to solve some of the world’s most intractable problems, we hold our impact companies to high standards of sustainability as well. To qualify as an impact company per our investment strategy, the majority of the enterprise’s core products and services need to address a problem of global importance, and its offerings must be differentiated from competitors or other providers. In addition, each business should have a sound approach to addressing ESG issues, with operations that reinforce the positive contributions of its offerings.

Since launching the Global Impact strategy in 2015, ESG data and metrics have become more widely available, enhancing our ability to assess ESG profiles. ESG profile assessment (also known as ESG

integration) is distinct from impact assessment. As fundamental investors, we use ESG data as a signal to further investigate. We do not rely on this data alone; instead, we seek to understand the factors that influence the ESG profile, and then determine what steps a company can take to improve.

We believe that our nuanced approach, which is based on Wellington’s proprietary ESG research and ratings, as well as on our direct engagements with individual companies, provides additional insight that helps us better serve our clients. For example, our proprietary research has uncovered many false alarms, where a temporary issue or bad “optics” resulted in poor third-party ESG ratings, unduly punishing a company. On the other hand, our in-house ratings system has revealed enterprises with high ESG scores that do not necessarily meet our impact standards.

eSG enGaGeMent in actionAlthough many of our portfolio companies have strong ESG profiles, we believe it is still important to engage with management teams to discuss where and how they can improve. During our meetings in 2017, we discussed a number of ESG issues ranging from cybersecurity to consumer protection to board structures. We want companies to understand the issues that concern us and be able to articulate how they are addressing or solving them.

For example, with a low-cost consumer-lending business, we dug into its responsible lending practices. During our meeting, we asked how the company ensures that customers understand the loan products they are purchasing. We also inquired about how the company seeks to prevent credit defaults and works with customers struggling to repay loans. For many of this company’s customers, this may be the first formal financial product they’ve ever had. We wanted to be sure the company had some consumer protections in place.

Assessing material ESG risks

ESG INTEGRATION

TYPICAL OUTCOMES

In-depth quarterly ESG portfolio reviews

Periodic ESG engage-ment with portfolio

companies

Proprietary ESG ratings integrated

into proprietary team dashboard

Deep fundamental analysis to assess the

materiality of ESG issues raised

Adjust target price and/or weight to

reflect riskAffirm conviction Further engage

company

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1“World Hunger Falls to Under 800 Million, Eradication is Next Goal,” World Food Programme,

May 2015.2“Global Nutrition Report 2017,” Development Initiatives Poverty Research Ltd.3“What’s Food Loss and Waste Got to do with Sustainable Development? A Lot, Actually,”

World Resources Institute, 2015.4“The Power of Ideas: A Collection of Insights to Transform the Future,” FasterCures,

November 2016. 5 World Health Organization, Global Health Observatory data, 1998 – 2016.

LIFE ESSENTIALS

10,000diseases are known today

Treatments exist for just

5004

CLEAN WATER AND SANITATION

AFFORDABLE HOUSING

HEALTH

billion people 1.6

lack affordable basic shelter11

of the world’s population will live under scarce water conditions by

20257

2/3 million hours

OUT-OF-POCKET HEALTH CARE SPENDING6

Higher-income individuals spend

Lower-income individuals spend

44% of World Health Organization

member countries have fewer than

1 1,000physician per

people5

of food is wastedbecause of inadequate processing,

storage, and distribution3

In the developing world

ARE STUNTED DUE TO MALNUTRITION2

155 million children

under age five

SUSTAINABLE AGRICULTURE AND NUTRITION

1million DEATHS each year

are the result of poor water, sanitation, and hygiene9

million people

— one in nine —suffer from chronic hunger;

the vast majority are women and children1

of all homeless are families OF THESE ARE

HEADED BY WOMEN10

34% 84%

Women and children spend

EACH DAY COLLECTING WATER8

200

6 World Health Organization, 2017 World Health Statistics Report.7 International Water Management Institute.8“Collecting water is often a colossal waste of time for women and girls,”

UNICEF, August 2016.9“The Water Crisis,” Water.org, 201710“Tackling the world’s affordable housing challenge,” McKinsey Global Institute, 2014.11 ibid.

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12

Affordable housing

LIFE ESSENTIALS

THE UNITED NATIONS REFERS TO HOMELESSNESS AS “A HUMAN RIGHTS CRISIS.” 1 An estimated 1.6 billion people worldwide live without basic shelter and millions more struggle with substandard housing.2 While some governments have made progress, we believe the private sector, led by lenders and homebuilders, can ultimately have the most positive impact by supplying adequate, affordable shelter for lower-income households.

1“Governments must commit to eliminating homelessness by 2030, UN rights expert urges,” UN News, March 2016.

2“The Case for Habitat,” Habitat for Humanity, 2017.

3“Tackling the World’s Affordable Housing Challenge,” McKinsey Global Institute, 2014. 4 Ibid.

the riPPle effect of hoMeleSSneSSThe lack of safe, appropriate housing has lasting, often devastating effects. Poor health outcomes, subpar school performance, higher unemployment, and lower financial inclusion have all been linked to a lack of proper shelter.3 Compounding the issue, many studies show that women are disproportionately affected, as the majority of homeless families are headed by women.4

buildinG SolutionS froM the bottoM uPFrom mortgage lenders to companies constructing, refurbishing, or rehabilitating homes, we have identified businesses that underpin our confidence that affordable housing solutions can be profitable, scalable business models that also have a significant positive social impact.

This past year, we invested in a newly public Japanese home-refurbishment company that “recycles” rundown, often abandoned, single-family homes. The

company buys and upgrades homes cost effectively, then sells them to first-time and lower-income home buyers for about half the price of new construction (and less than the cost of renting). The Japanese government further incents these purchases by waiving most or all of the country’s 8% value-added tax. We see a powerful growth story here that we think companies in other countries can replicate.

We continued to hold a real estate company in Thailand that develops low-cost properties, specifically in the country’s rural areas. The company recognizes the many challenges facing underserved populations, including a dearth of affordable housing. With its commitment to improving home accessibility and sustainable business operations related to ESG, this company is, in our view, an example of an attractive business model that can have a positive impact on society and the environment.

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Clean water and sanitation

LIFE ESSENTIALS

APPROXIMATELY 700 MILLION PEOPLE LACK ACCESS TO SAFE WATER, and over two billion live without improved sanitation.1 Although lack of this essential resource puts lives at risk, water security remains difficult to address. Population growth and climate change will likely exacerbate the lack of clean water, threatening food security, disease management, and economic development.

1 “Progress on Drinking Water, Sanitation and Hygiene,” UNICEF and WHO, July 2017.2“Environmental Outlook to 2050: The Consequences of Inaction,” Organisation for

Economic Co-operation and Development, 2012.

3“Water for a Sustainable World,” UNESCO, 2015.4 UNICEF WASH (Water, Sanitation and Hygiene project): unicef.org/wash.

deMandS are riSinGGlobal water demand is expected to increase 55% by 2050, meaning the need for water security is both immediate and, most likely, enduring.2 Almost one-sixth of the world’s population — nearly 1.2 billion people — lives in areas where water is already scarce, and this number is expected to increase significantly by 2025. Extreme weather events, including droughts and flooding caused by climate change, will almost certainly strain water resources further.3

To ensure uninterrupted water availability, access, and quality, we believe that water infrastructure must be expanded or improved. In our view, emerging markets face the most urgent need for water investment, but the challenge is global. Over 800 children die each day from preventable diseases caused by unsafe water and poor sanitation.4 The demand for sustainable approaches to allocating

water resources is growing, but many governments face a growing gap between the capital required to improve or develop water infrastructure and the investments required to meet that goal.

deVeloPinG innoVatiVe Water SolutionS We have found that innovative companies are often more effective than traditional regulated or quasi-regulated water utilities in developing efficient water infrastructure, treating wastewater, and providing sewerage services. We focus on companies with solutions for allocating water equitably and sustainably in an effort to meet current and future demand. Our opportunity set includes companies that address water access, collection, transportation, and treatment. We also invest in enterprises that produce smart-meter technologies aimed at improving water-use efficiency and reducing water loss.

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GIVEN THE GROWING DEMAND FOR HEALTH CARE AROUND THE WORLD, RISING COSTS, and persistent shortcomings in public health outcomes, we are focused on companies that we believe are moving in new directions to provide innovative solutions. The challenges are multifaceted. In the US, Japan, and many developing countries, aging demographics are already straining health care systems. In India, the Middle East, and sub-Saharan Africa, expanding middle classes and larger working-age populations are demanding more and better care. Epidemics like cancer, obesity, and heart disease are becoming significant global problems.

Health

LIFE ESSENTIALS

1“Research Shows Shortage of More than 100,000 Doctors by 2030,” AAMCNews, March 2017.

2“The workforce for health in a globalized context — global shortages and international migration,” Global Health Action, February 2014.

3“New global surgical and anaesthesia indicators in the World Development Indicators dataset,” BMJ Global Health, May 2017.

lacK of MeanS to deliVer health SerViceSExacerbating global demand trends is a looming shortage of health care providers. The US is expected to face a shortfall of between 40,800 and 104,900 physicians by 2030, according to a new study commissioned by the Association of American Medical Colleges.1 The World Health Organization says that the world faces a “global shortage of almost 4.3 million doctors, midwives, nurses, and other health care professionals.”2 And a 2017 study by BMJ Global Health found that five billion people lack access to safe, affordable surgical and anesthesia care.3

neW buSineSS ModelS needed We believe that new models of health care delivery, along with targeted software and enhanced data analysis, can help alleviate many of the challenges facing the industry. In our view, telemedicine, machine learning, and new technologies all have great potential to boost efficiencies by improving delivery and access to health care services. In our research, we primarily focus on three areas: business models that improve the health care experience for underserved populations; products and services that lower health care costs; and innovations that seek to provide cures, better outcomes, or palliative solutions for major diseases.

THE WORLD SEEMS TO BE LOSING THE FIGHT AGAINST HUNGER AND MALNUTRITION. In 2016, the number of chronically undernourished people increased to an estimated 800 million.1 In addition to multiple forms of undernutrition, including protein-energy malnutrition and dietary deficiencies, many countries are simultaneously experiencing high rates of child and adult obesity. In addition, studies show that the nutrient density of our food has declined over time.2 In some cases, one has to eat more food just to get the same nutrient content.

Compounding these problems are limited agriculture acreage and massive food waste. The amount of arable land on earth has declined by about a third over the past 40 years as a result of erosion and pollution.3 And despite increased food-production demands, society still wastes nearly a third of all food produced.4 According to the UN, global losses of “roughly 30% for cereals; 40% – 50% for root crops, fruits, and vegetables; 20% for oilseeds, meat, and dairy; plus 35% for fish” still occur.5

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Sustainable agriculture and nutrition

LIFE ESSENTIALS

1World Hunger Falls to Under 800 Million, Eradication is Next Goal,” World Food Programme, May 2015.

2 Researchers from Washington State University who analyzed 63 spring wheat cultivars grown between 1842 and 2003 found an 11% decline in iron content, a 16% decline in copper, a 25% decline in zinc, and a 50% decline in selenium. This research has not been updated by Washington State University in recent years. We believe the trend presented still persists.

3“Soil loss: an unfolding global disaster,” Grantham Centre for Sustainable Futures, The University of Sheffield, December 2015.

4“Save food: Global Initiative on Food Loss and Waste Reduction,” Food and Agriculture Organization of the United Nations, 2018.

5 Ibid. 6“Resource Efficiency: Potential and Economic Implications,” UN Environment Programme’s

(UNEP)International Resource Panel (IRP); citation from UN Food and Agriculture Organization, 2014.

liMitationS on Modern aGriculture It is clear to us that the world’s agricultural system must be revolutionized to sustainably feed a growing population. Unfortunately, constrained groundwater supplies, soil degradation from pollution, and intensive pesticide use have undermined the soil microbiome, the natural ecosystem of organisms living in soil. Marine ecosystems are under enormous pressure as well. Marine fisheries now supply 17% of the world’s protein, but commercial fishing stocks have continued to decline, and 90% of all fisheries are either fully fished or overfished.6

inVeStable SolutionSWe believe that businesses, working alongside governments and philanthropies, can play a vital role in tackling hunger and malnutrition. We have identified scalable business models that, in our view, are focused on efficient, sustainable food production. These include advanced irrigation systems, smallholder agricultural equipment, crop insurance, improved dietary nutrients, enhanced livestock husbandry initiatives, and better infrastructure and technology.

DIGITAL DIVIDE

1“Statistics on Literacy,” UNESCO.org.2“Global Education Monitoring Report,” UNESCO, 2016.3“2017 Equity Indicators Report,” Pell Institute.4“Financial Inclusion Overview,” The World Bank, April 2017.5 Abhijit Banerjee and Esther Duflo. “The (not so simple) economics of lending to the poor,”

Lecture at Massachusetts Institute of Technology, 2011.

HUMAN EMPOWERMENT

EDUCATION AND JOB TRAINING

FINANCIAL INCLUSION

Families without access to formal credit face informal-sector

lending rates of up to

200%5

1/3 of the world’s adult population4

PEOPLE ARE UNBANKED2 BILLION

emerging market companies lack adequate growth capital6

200 million

750 million

adults are illiterate

2/3 of these are women1

of the world lacks Internet access

ABOUT

1/2

25 MILLION KIDS

are never expected to attend school at all2

MORE THAN 250 MILLION CHILDREN

are not enrolled in school

From bottom-income quartile families

12%

From top-income quartile families

77%

INDIVIDUALS WHO COMPLETE COLLEGE BY AGE 243

50%EACH YEAR, OVER

of US consumers suffer a digital-security BREACH like

a hacked account or compromised personal information 83/4 of the population in some

countries is still off-line7

ANNUALLY 9US$400 billion

$Globally, CYBER ATTACKS cost businesses

6 ibid.7“The Inclusive Internet Index: Bridging digital divides,” The Economist, March 2017.8“Consumer Account Security Report,” TeleSign, 2016.9 Gandel, Stephen. “Lloyd’s CEO: Cyber attacks cost companies $400 billion every year,”

Fortune.com, January 2015.

1616

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Digital divide

HUMAN EMPOWERMENT

INTERNET ACCESS OPENS THE DOOR TO EDUCATION, EMPLOYMENT, AND BUSINESS-FORMATION POSSIBILITIES. It enables people to more easily tap into financial and government services, participate in e-commerce and social networks, and reach diverse sources of information. Without digital access, we believe individuals and communities face diminished economic opportunity and social participation. In developed countries, digital exclusion manifests primarily as lower access rates among certain demographics, such as rural populations, seniors, the poor, and certain ethnic minorities. In emerging markets, however, a majority of citizens often live without the ability to access the Internet.

eXPandinG diGital footPrintSBridging the digital divide will likely require concerted actions from government agencies, telecommunications companies, hardware providers, and software developers. Notably, Internet access alone is not sufficient to bridge the digital divide; users often need instruction in order to develop digital literacy and safely navigate the online world. We find that many of the most successful joint programs between the public and private sector provide Internet access to marginalized communities and train them on digital literacy.

We are invested in telecommunications companies aimed at serving these marginalized populations. Several have instituted programs employing local individuals, helping to empower people and communities. We also own shares in a company

whose low-cost networking equipment extends Internet access to rural and emerging market communities at a fraction of the cost of traditional competitors.

cYberSecuritY, Great and SMallCyber crime is more than just a business risk. Identity theft, privacy breaches, data compromises, and fraud have become widespread, legitimate threats to the safe, effective functioning and use of the Internet. Cyber attacks have been used to damage social cohesion and destabilize communities in many places around the world. Our opportunity set includes leading cybersecurity service providers, several of which are focused on serving the digital needs and providing cyber protection for small- and medium-sized enterprises.

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Education and job training

HUMAN EMPOWERMENT

EDUCATION AND SKILLS DEVELOPMENT ARE AN INDISPENSABLE MEANS FOR FULL PARTICIPATION IN ECONOMIES AND COMMUNITIES GLOBALLY, but affordable quality education remains inaccessible for hundreds of millions of children and adults around the world. Lack of education and basic job training often results in cross-generational poverty, income inequality, and low economic productivity. We believe even marginal improvements in educational access can empower millions of people to reach their full potential.

1 UNESCO.org/themes/literacy.2“Literacy among youth is rising, but young women lag behind,” UNICEF, January 2018.

child and adult illiteracY Literacy is a prerequisite for learning, yet 750 million adults — the majority of whom are women — and 250 million children lack this vital skill.1 In emerging and developed markets, enduring gender, ethnic, health, and income inequalities exclude many from an educa-tion system that is essential for their intellectual and social development.

Despite progress made over the past few decades, literacy rates are still less than 50% in West and Central Africa and South Asia, where the gender gap is also pronounced.2 Apart from these stark examples, improvements in the provision of equitable quality education at all levels — early childhood, primary, secondary, and postsecondary — are needed in many places around the world. Each additional year of learning has the potential to increase a child’s earnings as an adult by 10%, and in aggregate, each additional year may lift annual global GDP by 0.4%.3

addreSSinG the education and traininG GaPWe believe that every child and adult should be equipped with the basic knowledge and skills they need to thrive. This includes learning how to bridge the gap from the classroom to a first, or better, job. We aim to invest in companies that are expanding access to affordable quality education and closing the education gender gap. Businesses in our opportunity set support literacy programs in Africa, provide private education services at all levels, and work to address education-funding concerns. We have found that companies engaged in technology-enabled distance learning and education financing are making particularly impressive strides. While investment opportunities in skills development and job training are fewer, we are optimistic that these business models will proliferate.

3“Opportunities lost: The impact of grade repetition and early school leaving,” UNESCO, 2012.

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Financial inclusion

HUMAN EMPOWERMENT

ACCESS TO BASIC FINANCIAL PRODUCTS AND SERVICES IS UNAVAILABLE OR UNAFFORDABLE FOR BILLIONS OF PEOPLE. The unbanked can find themselves at a perennial disadvantage — at risk for abuse by usurious lenders and stuck in never-ending cycles of high-interest debt. This is often a “catch-22”: It can be difficult to acquire a new service without proper identification, a history of banking activity, or proof of one's ability to repay a loan.

1“The Global Findex Database 2014: Measuring Financial Inclusion around the World,” The World Bank.

2“2015 FDIC National Survey of Unbanked and Underbanked Households,” Federal Deposit Insurance Corporation.

3“2016 Independent Business Survey,” Advocates for Independent Business and the Institute for Local Self-Reliance, February 2016.

affectinG indiVidualS and SMall buSineSSeSDespite some progress, notably with mobile finance, nearly two billion people still lack an account with a financial institution.1 This massive problem is not confined to emerging markets; in the US, approximately 33 million households remained unbanked or underbanked in 2015.2

Financial exclusion can harm businesses as well as households. Small enterprises serve as critical engines for innovation and job creation, yet a recent US-based survey found that one in three independent businesses that applied for a bank loan in recent years didn’t get one.3 The structural decline in small business loans has accelerated since the 2008 global financial crisis, meaning many enterprises have struggled to secure capital for nearly a decade.

SerVinG the SPectruM of needSWe focus on businesses that level the playing field. Companies in India are connecting millions of citizens to the modern economy by providing access to

banking, remittances, insurance, and government benefits payments. These services improve digital democratization and financial inclusion by providing customers with reliable, convenient modes of communication and transaction.

We are invested in a company that facilitates capital formation for small businesses in new ways, and delivers services such as payroll, cash management, and credit to smaller enterprises. From crowdfunding to microfinance to mobile money to financial technology (or “fintech”), we have identified a variety of business models that enable small businesses and individuals to access credit and capital, steps toward financial inclusion that we believe are also steps toward a better life.

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ENVIRONMENT

RESOURCE EFFICIENCY

ALTERNATIVE ENERGY

RESOURCE STEWARDSHIP

PER YEAR BY 20509

MATERIAL EXTRACTION MAY DOUBLE TO

Sources of GHG emissions1

TACKLING CLIMATE CHANGE WILL BE A GLOBAL EFFORT

29%

71%

Developed countries

Developing countries

are emitted annually40 gigatons

of CO2

2/3 is from our use of coal and petroleum2

6 BILLION KILOGRAMS of garbage are dumped

into the ocean every year

MOST IS PLASTIC4

IN THE NIGER DELTA5

Oil spills may lead to a 60% reduction in food security

Converted to energy, that waste could power 84.5 million homes for one year6

EACH YEAR, LANDFILLS RELEASE

800 MILLION METRIC TONS OF

CO2

LED BULBS USE

1/5 of the electricity of incandescents8

Are fully fished

Declining commercial fishing stocks7

61%

Are overfished29%

WARMING OCEANS ANDMELTING LAND ICE WILL ADD

1 to 4 FEET to global sea levels by 21003

1 Research from Tom Boden and Bob Andres. US Department of Energy, Carbon Dioxide Information Analysis Center, Oak Ridge National Laboratory, 2014.

2“Global Carbon Budget 2017,” Global Carbon Project, November 2017; “BP Statistical Review of World Energy,” BP, June 2017.

3“Global Climate Change: Vital Signs of the Planet,” National Aeronautics and Space Administration (NASA).

4 Orme, Helen. “Earth in Danger: Pollution.” New York: Bearport Publishing, 2008.5 Ordinioha, Best and Brisibe, Seiyefa. “The human health implications of crude oil spills in

the Niger delta, Nigeria: An interpretation of published studies,” Nigerian Medical Journal, v. 54(1), January – February 2013.

6“Landfill Methane: Reducing Emissions, Advancing Recovery and Use Opportunities,” Global Methane Initiative, citing US Environmental Protection Agency research, 2011.

7“Resource Efficiency: Potential and Economic Implications,” UN Environment Programme’s (UNEP) International Resource Panel (IRP); citation from UN Food and Agriculture Organization, 2014.

8“How Energy-Efficient Light Bulbs Compare with Traditional Incandescents,” US Department of Energy.

9“Resource Efficiency: Potential and Economic Implications,” UN Environment Programme’s (UNEP) International Resource Panel (IRP), 2016.

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Alternative energy

ENVIRONMENT

EVIDENCE OF CLIMATE CHANGE CONTINUES TO MOUNT: 2017 was the third-hottest year on record, and 16 of the last 17 warmest years have occurred since 2000.1 In response, 195 countries signed the 2015 Paris Agreement, which set voluntary targets for carbon-emission reductions. These targets aim to prevent the earth’s temperature from rising by more than the two-degree-Celsius threshold that climatologists believe could have catastrophic effects.

1 “Earth’s Relentless Warming Sets a Brutal New Record in 2017,” Bloomberg, 2018. Reporting based on data from the National Oceanic and Atmospheric Administration (NOAA).

2“Renewable Energy and Energy Efficiency in Developing Countries: Contributions to Reducing Global Emissions,” United Nations Environment Programme, 2017.

3 Renewable Power Generation Costs in 2017,” International Renewable Energy Agency.4 1Q 2018 Global PV Market Outlook, “Let a hundred markets bloom,” Bloomberg New Energy

Finance, February 2018.

forWard MoVeMentAlthough the US has pledged to withdraw from the Agreement, we believe such action is unlikely to derail the global transition to renewable energy sources, given falling costs of production and ongoing installations. In 2017, the levelized cost of onshore wind electricity dropped to an average of US$0.06 per kilowatt-hour, competitive with the US$0.05 per kilowatt-hour cost for all energy.2 The average cost of utility-scale solar is now US$0.10 per kilowatt-hour and falling.3 We estimate that clean-energy investment was between 45% and 50% of new power-generation capacity globally in 2017. India and China contributed more than 62% of new wind-power installations in 2017, with China accounting for almost half of total solar installations.4

inVeStable innoVationOngoing technology improvements have created an exciting investment opportunity set. We have uncovered companies working on wind-power generation, photo-voltaics, solar thermal, biomass, and hydroelectricity. We have identified businesses developing electric vehicles and large-scale batteries, which we believe have enormous impact potential and large addressable markets. And we are seeing advances in solar-module efficiency, solar panels that resemble roof tiling, large wind turbine construction, and low-cost energy storage solutions. In our view, all of these innovations contribute to the progression toward a cleaner, healthier planet.

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Resource efficiency

ENVIRONMENT

WE BELIEVE THAT TECHNOLOGIES THAT ENABLE MORE EFFICIENT USE OF NATURAL RESOURCES are imperative for reducing carbon emissions, preserving our planet’s valuable resources, and supporting sustainable economic growth.

1“Global automakers call on China to ease ‘impossible’ electric car rules,” Reuters, 13 January 2017.

2 Press release from the office of Governor Edmund Brown, 26 January 2018.

3“The Dutch government confirms plan to ban new petrol and diesel cars by 2030,” electrek, 10 October 2017.

4 Lithium-Ion Battery Price Survey, Bloomberg New Energy Finance, 2017.

a Global autoMotiVe reVolutionMany local and national governments are trying to reduce dependence on gasoline for transportation. China aims to have electric and plug-in hybrid cars comprise over 10% of auto production by 2020, and 20% by 2025.1 California wants to have five million electric vehicles (EVs) on the road by 2030.2 And many European countries are setting aggressive targets as well: The Dutch government plans for all new-car sales to be emission-free after 2030.3 In response, many automakers have revised their product plans, deploying more capacity to build electric and hybrid vehicles.

We believe that this trend will increase resource efficiency across the global economy. EVs require less energy to drive the same mileage, haul the same amount of freight, and move the same number of people. In our view, continued improvements

in energy storage help facilitate EV adoption. The weighted average price for lithium-ion batteries dropped 24% year over year in 2017 to US$209 per kilowatt-hour.4 At this pace, these batteries could cost as little as US$100 per kilowatt-hour by 2020, a level that could make internal combustion engines uneconomical and, therefore, obsolete.

efficiencY GainS are haPPeninG elSeWhereWe have begun to see more efficient solutions in building materials, additive manufacturing (also known as 3D printing), advanced automation and robotics, residential and industrial lighting, and the Internet of things — the digital interconnection among everyday objects and appliances. Decarbonizing the economy and preserving natural resources require significant resource efficiency gains. We see structural growth opportunities for innovative companies addressing these complex issues.

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Resource stewardship

ENVIRONMENT

IN THE CONTEXT OF EARTH’S NATURAL RESOURCES AND THE BIOSPHERE, STEWARDSHIP REFERS TO preserving factors of production related to land use, such as water and soil conservation. Keeping climate change and ocean acidification under control, for example, are potential means of ensuring that the earth can maintain its ability to absorb and process waste such as carbon emissions, chemical spills, or other byproducts of industry.

The taking, making, and discarding of resources and materials has been integral to global growth and production since the dawn of the Industrial Revolution. That intense usage, along with continued economic and population growth, has resulted in a tenfold increase in waste production over the past 100 years.1 With an expanding and urbanizing global middle class, and attendant rising consumption, it is estimated that waste production could nearly double from 2010 levels by 2025.2

1 Daniel Hoornweg, et al. “Waste production must peak this century,” Nature, 31 October 2013.

2“What a waste: A global review of solid waste management,” World Bank Urban Development Series, March 2012.

PhYSical and econoMic SolutionS are needed noWWe believe that the global economy must become more regenerative, akin to a self-sustaining natural ecosystem, where little to nothing is wasted. Waste conversion technologies enable more materials to be recaptured and put to new use. We own shares of a company that turns refuse into less-carbon-intensive power while recovering metals and other materials. Another company is creating a “closed-loop” — meaning zero waste — solution for motor oil, such that it can be reprocessed into other forms of automotive lubricants.

Many companies and individuals are starting to ask how they can reduce waste, lower their carbon footprint, reuse more material inputs, and better manage product life cycles. Reusing materials can save energy and reduce emissions as well as consumption.

We believe that the “Three Rs” framework — reduce, reuse, and recycle — will be an organizing principle as the world works toward managing waste, limiting the strains on natural resources, and mitigating climate change. Businesses that aim to create “closed loop” life cycles may play a critical role in advancing these efforts.

We continue to see many new investment opportunities, and we are encouraged by the alignment of our impact themes with supportive secular trends. Despite evidence of richer valuations in many regions today, we are optimistic that our Global Impact strategy can continue to aim to deliver attractive total returns for clients.

As of 31 December 2017, we have identified 508 companies for potential investment, up from 447 a year ago. This expanded impact opportunity set encompasses nearly US$9.2 trillion in market capitalization.1 Our fundamental research continues to uncover companies that we view as innovative with growth rates that have historically exceeded that of the global equity market.

Our thematic research has also led us to new ideas that we’ve added to our growing list of potential investments. As we look out over 2018, three areas stand out to us today as particularly exciting: com-panies making health care more affordable, Indian financials, and mobile finance and transactions.

One possible headwind stems from valuations. As of this writing, equity valuations are richer almost everywhere in the world than they were in early 2017. We therefore begin the year with a more cautious investment stance, particularly in regions where equity prices have appreciated most or where valuations are richest. We will aim to identify stocks with below-average volatility and we plan to increase our positions in durable franchises, which we think may exhibit relatively stable return profiles.

MaKinG health care More affordable In our view, the creative application of technology can significantly reduce health care costs and improve access to care. A recent study concluded that telemedicine could potentially deliver more than US$6 billion annually in savings.2 And another, more recent, report estimated that the global telemedicine market could grow by over 14% per year through 2020, potentially reaching a market value of over US$36 billion.3

One company we invest in is an emerging tele- health-solutions provider that delivers on-demand health care by phone or via the Internet, including from mobile devices. Another of our holdings provides genetic testing and results reporting for prenatal and cancer screening. The company is developing automated, standardized protocols that are expected to significantly lower the cost of some genetic testing. As its sample-data library grows, the company envisions itself as a central hub of genetic information, able to potentially deliver ongoing genetic screening throughout a patient’s life.

Another company in this theme provides Internet-based business services for physicians’ practices and small hospitals, including cloud-based revenue-cycle management, electronic health records, and other population-health and patient-engagement applications. A 2017 Berenberg report estimated that among OECD4 countries, at least US$260 billion of cost savings could be achieved through the mass adoption of remote care and paperless patient recordkeeping.5

Finally, you are invested in a leader in voice recognition and natural-language processing, which are gaining traction among some health care industries. These systems can help increase doctor productivity by freeing up time for patient interactions and reducing some of the administrative burdens associated with billing and recordkeeping.

indian financialS The Indian government continues to implement economic reforms. The Reserve Bank of India recently renewed its commitment to the expansion of financial inclusion and affordable housing, and we hold several companies that we believe are helping to advance these initiatives. We are particularly encouraged by the prospects for two financial services companies.

One firm is a large, organized financier serving drivers of pre-owned commercial vehicles. The company has built a pan-India presence with a broad branch network and hundreds of private financiers servicing more than a million clients. Today, increased rural demand is driving significant loan growth.

INVESTMENT OUTLOOK

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1 Sources: Wellington Management, based on Bloomberg market-cap data. 2 “Current Telemedicine Technology Could Mean Big Savings,” Willis Towers Watson,

August 2014. 3 “Five Telemedicine Trends Transforming Health Care in 2016,” Foley and Lardner LLP,

November 2015.

4 Organisation of Economic Co-operation and Development.5 “Digital health: shifting care from hospital to home,” Berenberg, February 2017. Actual data

may vary, perhaps significantly, from the estimated data presented.

25

Another Indian holding is a large microfinance player with growing market share. The company’s current base includes millions of rural customers, and new technology investments are creating economies of scale and higher margins. The company is planning to pilot a series of retail distribution outlets, and we think this network could grow to be well over 100,000 stores.

Mobile finance and diGital tranSactionS Financial technology, or “fintech,” promises to upend traditional financial models and extend financial services to unbanked populations around the world. We believe that mobile payment systems, cloud-based applications, and other digital technologies could revolutionize access to capital. KPMG reports that over the last seven years, nearly US$190 billion has flowed to fintech enterprises via venture capital, private equity, and mergers and acquisitions.6

One company in the portfolio is, in our view, an innovator in mobile money and financial inclusion in Africa. Its extensive mobile network has enabled the delivery of financial services to millions of individual and commercial customers. The company continues to expand and plans to open its platform to third-party developers in order to offer an expanded menu of services.

Another holding provides off-line smart-card payment systems. The system, which uses fingerprint-activated cards, requires only periodic data

connections to a central host. The company’s patented technology enables off-line financial settlement, which has been a boon to rural populations that lack telecommunications infrastructure.

Finally, you are invested in a company that enables digital payment acceptance and helps provide investment capital for an active merchant base of more than two million small retailers. The company’s low hardware costs and ability to cross-sell services to its base are helping some small businesses scale and become more competitive.

looKinG ahead We will continue to invest your assets in what we believe are dynamic impact businesses creating positive change. In our view, these companies have the potential to deliver strong financial returns that outpace the broader market. In December 2017, we hosted our inaugural impact conference in Boston. Presenters included impact investing practitioners and consultants as well as academic thought leaders from a number of nonprofit organizations and colleges and universities, including Harvard Business School. It was clear to us that interest in fixed income impact investing continues to grow right alongside equities. In our view, the investment community’s growing focus on positive social and environmental impact is a tailwind that will likely continue.

We look forward to 2018 and the many ongoing opportunities to research and invest in innovative impact business models on your behalf.

INVESTMENT OUTLOOK

The views expressed within the Investment outlook are those of the portfolio managers, are as of the date indicated, and are subject to change without notice. The material is not to be construed as investment advice or a recommendation to buy or sell any security. Statements may be made that are forward-looking in nature. Actual results and occurrences may vary, perhaps significantly, from such statements.

The examples discussed are presented for illustrative purposes only and are not to be viewed as representative of actual holdings. It should not be assumed that any client is invested in the (or similar) examples, nor should it be assumed that an investment in the examples has been or will be profitable. Actual holdings will vary for each client and there is no guarantee that a particular client’s account will hold the examples presented.

6 “The Pulse of Fintech Q3 2017,” KPMG, November 2017.

26

riSKS

ALL INVESTING INVOLVES RISK. IF AN INVESTOR IS IN ANY DOUBT AS TO THE SUITABILITY OF AN INVESTMENT, THEY SHOULD CONSULT AN INDEPENDENT FINANCIAL ADVISER.

PrinciPal riSKS The Portfolio's principal risks include:

Concentration risk — Concentration of investments in a relatively small number of securities, sectors or industries, or geographical regions may significantly affect performance.

Currency risk — Investments in currencies, currency futures contracts, forward currency exchange contracts or similar instruments, as well as in securities that are denominated in foreign currency, are subject to the risk that the value of a particular currency will change in relation to one or more other currencies.

Equity market risks — Equity markets are subject to many factors, including economic conditions, government regulations, market sentiment, local and international political events, and environmental and technological issues.

Foreign markets risk (includes emerging markets) — Investments in foreign markets may present risks not typically associated with domestic markets. These risks may include changes in currency exchange rates; less-liquid markets and less available information; less government supervision of exchanges, brokers, and issuers; increased social, economic, and political uncertainty; and greater price volatility. These risks may be greater in emerging markets, which may also entail different risks from developed markets.

Smaller-capitalization stock risk — The share prices of small- and mid-cap companies may exhibit greater volatility than the share prices of larger capitalization companies. In addition, shares of small- and mid-cap companies are often less liquid than larger capitalization companies.

additional riSKSThe Portfolio is also subject to the following additional risks:

Fixed income securities-market risk — Fixed income securities markets are subject to many factors, including economic conditions, government regulations, market sentiment, and local and international political events. In addition, the market value of fixed income securities will fluctuate in response to changes in interest rates, currency values, and the creditworthiness of the issuer.

Real estate securities risk — Risks associated with investing in the securities of companies principally engaged in the real estate industry such as real estate investment trust (REIT) securities include: the cyclical nature of real estate values; risk related to general and local economic conditions; overbuilding and increased competition; demographic trends; and increases in interest rates and other real estate capital market influences.

additional PerforMance inforMationPast results are not necessarily indicative of future results. There can be no assurance nor should it be assumed that future investment performance of any strategy will conform to any performance examples set forth in this material or that the portfolio’s underlying investments will be able to avoid losses. The investment results and any portfolio compositions set forth in this material are provided for illustrative purposes only and may not be indicative of the future investment results or future portfolio composition. The composition, size of, and risks associated with an investment in the strategy may differ substantially from the examples set forth in this material. An investment can lose value.

IMPORTANT DISCLOSURES

27

IMPORTANT DISCLOSURES

2017 Impact highlights and Measuring impactAs of 31 December 2017 | The key performance indicators shown for each company have been developed by Wellington through extensive research and development. These metrics are proprietary to Wellington and are used to assess a company’s progress toward its particular business objectives. These are not to be construed as a recommendation of any of the specific securities presented or indicative of their future performance. Additional information is available upon request.

Wellington Management Company LLP (WMC) is an independently owned investment adviser registered with the US Securities and Exchange Commission (SEC). WMC is also a commodity trading advisor (CTA) registered with the US Commodity Futures Trading Commission. In certain circumstances, WMC provides commodity trading advice to clients in reliance on exemptions from CTA registration. In the US for ERISA clients, WMC is providing this material solely for sales and marketing purposes and not as an investment advice fiduciary under ERISA or the Internal Revenue Code. WMC has a financial interest in offering its products and services and is not committing to provide impartial investment advice or give advice in a fiduciary capacity in connection with those sales and marketing activities. WMC, along with its affiliates (collectively, Wellington Management), provides investment management and investment advisory services to institutions around the world. Located in Boston, Massachusetts, Wellington Management also has offices in Chicago, Illinois; Radnor, Pennsylvania; San Francisco, California; Beijing; Frankfurt; Hong Kong; London; Luxembourg; Singapore; Sydney; Tokyo; Toronto; and Zurich.

This material is prepared for, and authorized for internal use by, designated institutional and professional investors and their consultants or for such other use as may be authorized by Wellington Management. This material and/or its contents are current at the time of writing and may not be reproduced or distributed in whole or in part, for any purpose, without the express written consent of Wellington Management. This material is not intended to constitute investment advice or an offer to sell, or the solicitation of an offer to purchase shares or other securities. Investors should always obtain and read an up-to-date investment services description or prospectus before deciding whether to appoint an investment manager or to invest in a fund. Any views expressed herein are those of the author(s), are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may make different investment decisions for different clients.

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Patrick Kent researches next-generation 3D printers.

Eric Rice visits a waste-to-energy incinerator.