Portfolio Manager

Brian J. Sokolowski, CFA

Capital Appreciation – All Equity Portfolio
Fact Sheet as of 3/31/2017

INVESTMENT OBJECTIVE
Our objective is to provide long-term capital appreciation by primarily investing in growth companies from around the world,
with a focus on innovative small and medium-sized companies. This portfolio, typically 95% – 100% invested in equity
securities, also holds a small cash balance.

Our Capital Appreciation equity strategy aims for long-term capital growth by investing in equity securities that are trading for
less than intrinsic value. We primarily invest in three types of companies: small or medium emerging growth companies with
opportunities for rapid growth over a long timeframe, medium or large growth companies with sustainable competitive
advantages and large addressable markets, and highly profitable growth companies with defensible market positions which
compound value over time. We believe the most important risk control for a particular security, and for the portfolio as a whole,
is to acquire shares in companies at attractive valuation levels and beneath intrinsic value.

The portfolio focuses on innovative small and mid-cap growth companies, which have historically generated superior returns to
large-cap companies over long time horizons. While the inclusion of a number of larger growth companies can help dampen
the volatility inherent in small and medium companies, our Capital Appreciation portfolio is expected to exhibit more volatility
than the market as a whole, and is therefore suitable for clients with longer timeframes and above average risk tolerance.

SINCE
As of March 31, 2017 QTD 1 YEAR 3 YEARS 5 YEARS
INCEPTION1

Capital Appreciation Composite 6.1% 17.9% 7.3% -- 13.3%

2
Capital Appreciation Benchmark 8.3% 14.6% 8.8% -- 12.7%
1
Inception date is July 31, 2012. Periods greater than one year are annualized. Performance shown is total return and gross of fees.
2
Capital Appreciation Benchmark is composed of 76% Russell 1000 Growth, 19% MSCI All Country World ex-U.S. Index and 5.0% Lipper Money Market Index.

TOP 10 HOLDINGS ASSET ALLOCATION

Adobe Systems Inc. 4.4%

SVB Financial Group 3.9%

Salesforce.com Inc. 3.7%

Hexcel Corp. 3.6%

PNC Financial Services Group 2.9%

Amazon.com Inc. 2.8%

Integra LifeSciences 2.7%

Union Pacific Corp. 2.6%

Callidus Software Inc. 2.5%

Tennant Co. 2.5%

www.cambridgetrust.com/wealthmanagement
 QUARTERLY COMMENTARY
The Capital Appreciation composite returned 6.1% in the
first quarter, versus the benchmark’s 8.3% return.
Equity markets started out strong in 2017 due to the
combination of the market’s expectation of tax reform and
reduced regulation as well as positive global economic
momentum and increased corporate earnings. While
politics has been getting the lion’s share of the focus in
the press, improving GDP growth and increased corporate
earnings have been key ingredients for the global equity
market rally. Corporate earnings are beginning to increase
once again, following five quarters of contraction which
was driven by a recession in the oil industry and the Performance shown is total return and gross of fees
strong U.S. dollar. Earnings growth improves investor
sentiment, makes valuation metrics appear more
attractive, and will give Washington, D.C. a small amount of time to attempt to agree on tax policy changes. If real progress on
policy does not occur as we move through 2017, markets will likely begin to exhibit frustration through increased volatility and
reduced prices.
The Capital Appreciation portfolio participated in the broad market rally, but underperformed its benchmark largely due to
being overweight in both the Energy and Financial sectors. These sectors were the main positive contributors to performance
in 2016 and experienced some reversal in the first quarter of 2017. Top contributors to the composite’s return for the quarter
included Adobe Systems, Callidus Software, Salesforce.com, FEMSA, and FMC Corp. Detractors included Palo Alto
Networks, Anadarko Petroleum, WisdomTree Investments, and O’Reilly Automotive.
Looking into the remainder of 2017, we are in agreement with the consensus view that U.S. and global GDP growth will likely
accelerate compared to 2016. Combined with modestly improving corporate earnings growth, a less than excessive market
valuation and potential tax and regulatory improvements, we remain relatively positive on equities and are finding opportunities
to invest, while carefully monitoring potential political risks, particularly in the area of free trade restriction and geopolitical
volatility. We are currently finding attractive value in the growth portion of the market, as many of these companies have been
left behind as investors focus on cyclical stocks.

EQUITY CHARACTERISTICS MARKET CAPITALIZATION BREAKDOWN

CAPITAL RUSSELL 1000

APPRECIATION GROWTH INDEX

Number of Holdings 57 609

Average Market Cap1 $51.9B $34.3B

1
Beta 1.10 1.00

Dividend Yield1 0.7% 1.5%

1
ROE 15.1% 24.9%

P/E Ratio (2017)1 28.1x 20.3x

1
Price to Sales 4.3x 2.2x

Median Price to Book 4.7x 4.7x

1
Portfolio weighted average Source: Bloomberg
Portfolio characteristics represent a typical account invested according to this investment style; actual account holdings may vary slightly.

CONTACT US
Massachusetts: Erin Cooper, 617-503-5285, erin.cooper@cambridgetrust.com
Edward Fitzgerald, 617-441-1484, edward.fitzgerald@cambridgetrust.com
Kaitlyn Gallagher, 617-441-1412, kaitlyn.gallagher@cambridgetrust.com
Sara Cohn Sarkis, 617-441-1570, sara.sarkis@cambridgetrust.com
William Yates, 617-503-4041, william.yates@cambridgetrust.com
New Hampshire: Susan Martore-Baker, 603-369-5101, susan.martore-baker@cambridgetrust.com

Securities and other investment products are:

www.cambridgetrust.com/wealthmanagement Not FDIC Insured • May Lose Value • Not Bank Guaranteed
Not a Deposit • Not Insured By Any Government Agency