1. The Focused Growth portfolio had a difficult year in 2015, underperforming its benchmark with a return of -8.9% due primarily to poor performance from a few individual stocks, notably LivePerson and Freshpet. 2. LivePerson struggled with leadership changes, losing a major customer, and slower than expected conversion to its new platform. Freshpet fell short of its fridge installation and margin targets. 3. While some positions like 2U.com performed well for the year, they were a significant detractor in Q4 after their share price dropped sharply. Excluding this and lack of healthcare exposure, Q4 execution was relatively good.

1. 1
Small Cap Focused Growth
Portfolio Manager Commentary
4th Quarter 2015
As I sit down to review the prior year and write the Focused Growth year-end letter, the process is
invariably the same – be it a painfully poor performance year such as 2015 (-8.9%, under-performing the
Russell 2000 Growth benchmark by 7.5%), or an abnormally strong performance year such as 2013
(+65%, outperforming the benchmark by 22%). This review process has four parts, as outlined below:
1. How'd We Do? – We look at this from many different slants, though mainly through the lens of
factors that were within our control; i.e., how well did we execute our process?
2. Lessons Learned - What can be learned from what we did well, and not so well, over the past
12+ months?
3. Review Philosophy and Process - Are there any tweaks that should be made to the process based
on #1 and #2?
4. The Portfolio Today - How do we feel about the portfolio's ability to generate good returns
going forward?
How'd We Do? - 2015 Was Not a Good Year
No matter how it’s sliced, 2015 was a difficult year for the Focused Growth portfolio. This is the case
both in terms of factors within our control, and those outside of it; but, the majority of the poor 2015
performance relates to factors within our control.
The Focused Growth portfolio lost 8.9% of its value, meaningfully underperforming the Russell 2000
Growth Index’s return of -1.4%. The portfolio's lack of exposure to health technology was a headwind
(216 basis points), but the main difficulties were with a few stocks. Below we outline what happened, and
where we currently stand, on these names:
 LivePerson (LPSN - Chat vendor transitioning to a real-time, secure customer messaging and
engagement platform)
What Happened in 2015:
LPSN shares accounted for a breathtaking 386 basis points of negative attribution for the Focused
Growth portfolio in 2015. Entering the year, the stock was one of our largest portfolio positions,
as it appeared things were in place for 2015 to be LivePerson's year. But, early in the year came
the first of a series of harsh blows, which together resulted in essentially cutting the stock in half:
sales leadership changes, followed by the loss of a top-3 customer, and finally a year which saw
much slower than expected customer conversion to the company's Live Engage platform.
Our Position Entering 2016:
We continue to hold an investment in LPSN shares, though it is a materially smaller position, both
due the decline in the share price and selling shares. There has been a year of stability in the
leadership ranks, and the company appears close to landing several important large enterprise
reference customers for Live Engage. That said, the transition to Live Engage is not likely to be
completed in 2016, and its ultimate success remains far from assured. Net, we believe the stock
merits a place in the portfolio given a very attractive expected return – but a smaller position size
than previously.

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 Freshpet (FRPT - Fresh, all-natural pet foods – primarily refrigerated)
What Happened in 2015:
FRPT shares contributed a negative 170 basis points to the portfolio in 2015. The prime problem
was that the company ended the year with roughly 1,500 new fridges delivered to retailers, which
was a disappointment relative to the original expectation of 2,000 fridges. In addition, both due to
the lower new fridge count as well as manufacturing inefficiencies, the company did not achieve its
margin targets, so the stock suffered from a series of earnings disappointments and estimate cuts.
Our Position Entering 2016:
Time will tell whether the issues experienced in 2015 were early signs of bigger problems or
normal growing pains while Freshpet carves out a sustainable and profitable position in the multi-
billion-dollar pet food segment. While we expect 2016 estimates will come down a bit further when
the company reports Q4 in February, all things considered, we believe that FRPT shares have good
risk/reward and we continue to hold the stock.
 Affiliated Managers Group (AMG - Owns a stake in a broad range of boutique investment managers)
What Happened in 2015:
AMG experienced a series of challenges in 2015 that brought the share price down 25% and hurt
portfolio performance by 160 basis points. While AMG has a diverse group of about 40 affiliate
managers, most are equity managers, and overall performance and asset flows in 2015 were
disappointing. In addition, the company suffered from the high profile shuttering of the Third
Avenue High Yield Fund in mid-December, which led to a drop of over 25% in AMG’s share price
during the five-week period preceding that event. While closing the Fund was not a positive, its
assets represent less than 0.1% of AMG's total assets under management, and the market's reaction
appeared overdone.
Our Position Entering 2016:
We believe the set-up for AMG going into 2016 is good. The company made several affiliate
investments in 2015, earnings are set to reaccelerate, and the stock's valuation (10X forward P/E,
and 9X EBITDA) is near the bottom of historical ranges and attractive relative to the company's
growth prospects. We believe the expected return is quite attractive and have used the downdraft to
add to our position. AMG is currently a top-ten position in the fund.
 Actua Corporation (ACTA - Holding company for four vertically-focused, cloud-based software
providers)
What Happened in 2015:
Actua contributed a negative 143 basis points to performance in 2015. The company reported
overall slightly disappointing top and bottom line results for the first three quarters of 2015, with
good results in two of Actua's companies being offset by poor results at Bolt and Folio Dynamics.
Our Position Entering 2016:
Actua has been flirting with positive non-GAAP free cash flow for a number of years, and yet has
been unable to achieve such. This is despite what we view as unacceptably high stock-based
compensation awards (effectively reducing cash flow burn in lieu of stock, which makes the lack of
achieving free cash flow all the more disturbing). We eliminated our position in ACTA shares in
Q3 having reached the conclusion that the company was unlikely to achieve and sustain growth in
true free-cash-flow per share.
The four stocks detailed above together contributed 868 basis points of negative attribution in 2015. In
addition, our lack of exposure to one of the best performing sectors (health technology) presented an
additional headwind of 216 basis points. Clearly of the other things going on in the portfolio, there was

3. 3
more good than bad. This included positive performance in a few sectors, including Consumer
Discretionary (+190 basis points) and Producer Durables (+80 basis points). Some of the notable
contributors were 2U.com (TWOU - A platform enabling traditional "bricks and mortar" universities to
offer online graduate programs), which rose 74% in the portfolio and contributed +155 basis points;
Paylocity Corp. (PCTY - payroll and human capital management software for smaller enterprises) was up
56%, contributing 120 basis points; and CoStar Group (CSGP - commercial real estate information
services and Apartments.com web site), which rose 13% accounting for +83 basis points of positive
attribution. Technology’s overall poor performance, due mainly to the problems with LPSN and ACTA,
was somewhat offset by gains in Ultimate Software (ULTI - payroll and human capital management
software for mid-to-large enterprises), SPS Commerce (SPSC - next generation EDI for connecting
vendors with retailers), and C-Vent (CVT - cloud-based enterprise event management platform).
4th Quarter 2015 Review
While the portfolio lagged the benchmark in Q4, my "grade" of our efforts in Q4 is much better than the
"grade" for the first nine months of 2015. This relates to doing a relatively good job of executing our
process and controlling that which is within our control. Overall, the two prime sources of negative alpha
relate to a lack of exposure to health technology (170 basis points) and a single stock 2U (TWOU - see
above for company description). While TWOU shares were a material positive contributor for 2015
overall, they were a material negative contributor of 140 basis points in Q4. After a sharp rise earlier in
the year, TWOU shares were almost cut in half during the first three weeks of Q3, as investor sentiment
changed markedly in the wake of a secondary offering followed by a short report. There have been no
negative developments with 2U. The short report was on the whole benign, and the company's
fundamentals have in fact improved with additional program signings, key university contract renewals
and extensions, and the company reaffirming 2017 profit targets, despite a plan for a steeper ramp of new
programs (which lose money early on). As the stock found its footing in the $20 range during the first
part of November, we boosted the position, and though we trimmed some in the high $20's, it remains a
top-ten holding.
Given that we do not typically invest in health technology and the specific factors behind TWOU's share
retreat, I view these two sources of negative alpha in Q4 as falling in the category of short-term factors
largely outside of our control. Such things will no doubt occur, sometimes in our favor and sometimes not
in our favor, but in the long-run they are not likely to stand in the way of achieving the kinds of returns
we seek. Looking at the remainder of Q4 attribution, it was relatively balanced and skewed to the positive
in terms of both fundamentals and performance attribution. On the negative side of the ledger beyond
healthcare, the largest negative contributor was Consumer Discretionary – but aside from TWOU, that
sector showed positive attribution on the strength of Constant Contact (CTCT - SMB marketing
platform), which agreed to be acquired, and Instructure (INST – cloud-based Learning Management
System (LMS), principally for higher-ed and K-12). Financial Services and Consumer Staples were also
modest negative contributors due to AMG and FRPT (see above). On the positive side, Producer Durables
benefitted from gains in Paylocity, CoStar, and a rebound in the shares of Advisory Board (ABCO - best
practices network and software for hospitals and higher-ed). Lastly, Technology was a net positive
contributor led by appreciation in Ebix (EBIX - services/soft for the insurance industry) and HubSpot
(HUBS - leading SMB platform for "Inbound" marketing and sales).
Lessons Learned

4. 4
2015 served as a reminder of what my mentor, Nick Battelle, used to preach, "beware of transitions"
(LPSN). 2015 was also a reminder that in the short-term the market can be particularly harsh with respect
to near-term dynamics vs. expectations, and that risk/reward and position-sizing all matter a lot (ABCO
falling 33% in Q2 on a 2% reduction in EBITDA, and TWOU's big drop in the face of strengthening
fundamentals in Q4). But the year also served to remind us the importance of having conviction to buy
and own big when the pendulum swings too far on such shortfalls (or perceived shortfalls), shown by our
conviction to buy shares at opportune times/prices in both ABCO and TWOU.
The Philosophy and Process are Sound – Hopefully Improved through Sharpened Execution
To review, the Granahan Focused Growth strategy seeks to identify companies well positioned to sustain
15%+ growth for many years to come. We call these "desert island" companies as we'd expect such
enterprises to increase materially in value if we were to go away to a desert island for many years. We
then seek to own the stocks of such companies when risk/reward is good, and not own them when
risk/reward is bad, using a rigorous process centered on probability-weighted expected return. This
philosophy and process have stood the test of time by performing well in most market environments. That
said, and as noted above, 2015 has re-sharpened our sensitivity to turnarounds, as well as to managing
position sizes of stocks with a wide range of potential outcomes. Bad outcomes in large holdings can
severely impact portfolio returns – even in cases in which initially the probability-weighted expected
return was favorable (i.e., we executed the process).
The Portfolio Today – Portfolio Positioning and Outlook
Having been investing in small caps for over 30 years, I long ago learned that performance inevitably
ebbs and flows. It ebbs and flows because one's investment style goes in and out of favor, it ebbs and
flows due to bad execution with bad outcomes, and good execution with bad outcomes. And it ebbs and
flows due to the vice versa of all of the above. I believe that in recent months we've made meaningful
improvements to the portfolio. We’ve culled companies we no longer believe to be "desert-island
worthy," reduced position sizes of those stocks where we believe there to be a wide range of risk/reward
outcomes, added to existing holdings where risk/reward has improved, and purchased a handful of newer
positions that we believe fit our investment criteria. The net result is a portfolio that I believe can generate
very good returns over the next few years. This optimism starts with the strong business positions and
open-ended prospects for the portfolio companies, as well as consideration of the valuations for the stocks
of those companies today.
Of course much can happen, both within our control (getting the companies and the risk/reward right) and
outside our control (investors' collective view on valuing these companies based on their individual micro
issues as well as the broad range of macro factors such as China, oil prices and currency movements,
which are contributing to severe volatility in early 2016). Legendary investor Benjamin Graham wrote,
"In the short run, the market is a voting machine but in the long run, it is a weighing machine." If we
effectively identify companies capable of sustaining 15+% growth (aka desert island companies), and
carefully assemble and manage the portfolio based on risk/reward and probability-weighted expected
returns, I've no doubt that we will like what the scale says at the end of the day.
Best wishes for a happy, healthy, prosperous, interesting, and enjoyable 2016, and please don't hesitate to
reach out if you wish to chat.
Andrew L. Beja, CFA
dbeja@granahan.com
781 890-4412

5. 5
Disclosure:
The information provided in this commentary should not be considered a recommendation to purchase
or sell any particular security. There is no assurance that any securities discussed herein will remain in an
account's portfolio at the time you receive this report or that securities sold have not been repurchased.
The securities discussed do not represent an account's entire portfolio and in the aggregate may
represent only a small percentage of an account's portfolio holdings.
It should not be assumed that any of the securities transactions or holdings discussed were or will prove
to be profitable, or that the investment recommendations or decisions we make in the future will be
profitable or will equal the investment performance of the securities discussed herein.

6. GIM Small Cap Focused Growth Russell 2000 Growth
Product Assets: $207 Million
Minimum Investment : $3 Million
Status: Open
Inception Date: August 1, 2007
Benchmark: Russell 2000 Growth
Capitalization: Typically, $200 Mil - $2 Bil at purchase
Portfolio Manager: Andrew L. Beja, CFA
Typical Number of Holdings: ± 40
• By investing in businesses with sustainable growth,
we reduce the risk of significant capital loss.
• We invest in exceptional businesses – those with
solid balance sheets, high incremental margins and
strong customer value propositions.
• Our expected return methodology is a mechanism
for mispricing and has proven successful over the
course of several investment cycles.
• We believe conviction leads to outperformance,
60%-80% portfolio held in top 15 holdings.
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.
Within this philosophy we seek to own companies with
large open ended opportunities, a favorable competitive
landscape, products or services providing a significant
value proposition to the customer, and that have clean
balance sheets.
This company analysis is combined with a rigorous
valuation discipline centered on a stock's expected
return and risk/reward. The net result is a portfolio of 40-
50 attractively priced stocks of some of the most exciting
and innovative companies in the economy, and a
portfolio that has generated consistent, strong risk-
adjusted returns over time.
Founded in 1985, Granahan Investment Management,
Inc. is a 100% employee-owned firm specializing in
smaller cap equity investments for large institutions and
wealthy individuals. The firm utilizes fundamental,
bottom-up research to uncover and invest in fast
growing companies under $6 billion in market cap. The
firm manages over $3 billion in institutional assets and
the founding principals are part of an investment team
which now totals eleven professionals.
Trailing 5-years through December 31, 2015
Quarterly Returns - Gross of Fees
Annualized Alpha 5.63%
Upside Capture 111.71%
Downside Capture 71.46%
Tracking Error 7.76
Information Ratio 0.76
Beta 1.02
Source: eVestment

7. Characteristic Portfolio
Russell 2000
Growth
Median Market Cap $1,188.5 mil $758.0 mil
Weighted Avg. Market Cap $2,498.8 mil $2,067.8 mil
Active Share 97.42% -
Est 3-5 Yr EPS Growth 22.5% 16.0%
Forward P/E Ratio 51.9x 21.9x
Dividend Yield 0.08% 0.75%
Price to Book 5.43x 4.16x
Source: FactSet
December 31, 2015Top Ten Holdings
Security Percent of Portfolio
ADVISORY BOARD 7.7%
DEMANDWARE 7.2%
SPS COMMERCE 7.0%
COSTAR CORP 6.7%
2U INC 6.5%
ULTIMATE SOFTWARE GROUP 6.4%
AFFILIATED MANAGERS GROUP 5.4%
IMAX CORP 4.2%
EBIX 4.0%
CONSTANT CONTACT 3.6%
Granahan Investment Management claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance
with the GIPS standards. Granahan Investment Management has been independently verified for the periods January 1, 1993 through December 31, 2014. 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 product utilizes fundamental, bottom-up research and analysis
to invest in companies in the small cap sector of the market that exhibit sustainable high earnings growth, with a focus on the technology services, internet, consumer, and
business services sectors. The benchmark for the Small Cap Focused Growth product is the Russell 2000 Growth. The composite, created in December 2011, is calculated by
asset-weighting the performance of each account on a monthly basis. The composite includes returns from the portfolio manager’s prior firm, from inception of August 1, 2007
through December 31, 2011. Accounts are included beginning with the first full month under management and terminated accounts are included in the composite.
Performance calculations, expressed in U.S. dollars, produce a total return including cash and the reinvestment of dividends and interest. The dispersion is a standard deviation
using equal-weighted total returns for accounts in the composite the entire year. The three-year annualized standard deviation measures the variability of the composite and the
benchmark returns over the preceding 36-month period. Leverage is not utilized. Policies for valuing portfolios, calculating performance, and preparing compliant presentations
are available upon request. Returns are gross of investment management fees, which when included, reduce investment returns. Beginning 10/31/2012, net returns are total
returns reduced by actual investment management fees. Prior to 10/31/12 and for accounts which pay no management fee, the standard management fee applicable is applied
to calculate the net 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
ANNUAL rate 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 a
compounding 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 complete list and
description of all of the firm's composites is available upon request. Past performance is no guarantee of future results.
December 31, 2015
Date Small Cap Focused Growth Composite
As of
12/31/15
Composite
Gross Return
Russell 2000
Growth
Return
Composite
Assets
$ Mil
Composite
# Accts
Composite
3-Yr.
Std. Dev.
Russell 2000
Growth
3-Yr.
Std. Dev.
Composite
Dispersion
Composite
Net Return
Non-Fee
Assets
Firm
Assets
$ Mil
2015 -8.86% -1.38% $206.7 5 17.34 14.95 NA -9.38% 0.4% $3,045.4
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