Avantis - Mutual Fund Field Guide

Monthly Mutual Fund Field GuideTalking Points for Client ConversationsFebruary 2022

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Academic Perspective

The Psychology of Financial WindfallsBy Prof. Hal HershfieldPsychologically speaking, windfalls may seem easier to spend than earned income, but it may be wise to consider spending them pragmatically instead of on purchases you may well regret later.

Market Review

§ Global stocks declined amid mounting uncertainties and heightened volatility.

§ The Russia/Ukraine crisis took center stage and contributed to market unrest.

§ U.S. Treasury yields topped 2% before easing on a geopolitical-fueled flight to quality.

Portfolio Updates

§ Portfolio characteristics and composition

Did You Know?

Timing Is Everything (if It Works)If we react to shocking news by temporarily changing our asset allocation and moving to the sidelines for fear of volatility or the prospect of diminished returns, we must choose when to get out of the markets andwhen to get back in.

Appendix

§ Standardized performance

§ Glossary

§ Disclosures

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Did You Know?

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Timing Is Everything (if It Works)

As news of Russia’s invasion into Ukraine broke and the scope and scale of the developing conflict became clearer, investors sought to understand its full implications beyond the tragic loss of life and immediate devastation on the people of Ukraine.

Volatility spiked and stocks retreated (although U.S. stocks would recover and end the February 24 trading session in positive territory) as political leaders from the West condemned Russia’s actions and vowed significant sanctions in response.

While Russia makes up a small percentage of the overall global stock market (less than ¼ of 1% as of February 23), Russia and Ukraine both play considerable roles in the production and supply of commodities such as liquid natural gas, wheat, etc. Fears surrounding disruptions in these supply chains were also seemingly exacerbated given the inflationary pressures already present in many developed markets, especially among European countries.

When you add geopolitical conflict of this size into a market backdrop where the S&P 500® Index was already in correction territory (down at least 10% from its previous high) and the NASDAQ was in bear market territory (down at least 20% from its previous high), it would be perfectly normal for investors’ concerns to become elevated.

If we consider a simple valuation framework of Price = Future Earnings/ Demanded Return, we can observe that the two primary reasons why stock prices decrease can be summarized as (1) lower price with no change in expected returns because the company is expected to produce lower profits in the future or (2) lower price with no change in expected profits to accommodate the market demanding a higher expected return in the future.

While the reason can be a combination of varying degrees of these two cases, most of us will agree that in times of market anxiety the market is expected to demand higher returns. Investors would be wise, however, to remember that making rash portfolio decisions in a vacuum can have adverse consequences.

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If your asset allocation from a week ago made sense then, what has changed to make it less appropriate today? Avoiding knee-jerk reactions in these scenarios is usually the prudent course. To help quell the fears of those still tempted to temporarily take risk “off the table,” we ran a few experiments to help demonstrate why staying the course has historically been shown to be a good option.

In or Out?

Benchmarking any timing decisions requires evaluating the path not taken. By choosing not to be invested in stocks, we are choosing to be invested in something else (cash, bonds, etc.). We set up some simple experiments using U.S. stocks and U.S. Treasury bill returns going back almost 100 years.

It is good to remember that for any market move there are two different timing moves. If the market goes down, some may think it is a buying opportunity (i.e., due to the higher expected returns going forward), while others may want to sell since it may be an early indication of lower future cash flows.

Figure 1 includes a comparison of three hypothetical portfolios. Portfolio 1, the “buy-and-hold” portfolio, maintains an allocation of 50% stocks and 50% T-bills throughout the entire period. The second portfolio, Equity Timing 1, employs a timing strategy. Four times per year, it looks at the return of stocks over the last quarter. If stocks did well (their return was greater than the median quarterly stock return in the sample), it invests 100% in stocks. If stocks didn’t do well (last quarter’s return was less than the median), it invests 100% in T-bills. This is a very simple example of a momentum-based timing strategy.

Equity Timing 2 also has a timing strategy, but it is the opposite of Equity Timing 1. While it also looks at quarterly stock returns, it invests 100% in stocks if last quarter’s return was below median and invests 100% in T-bills if last quarter’s stock return was above median. Equity Timing 2 is a simple example of a contrarian-based timing strategy.

Figure 1 | Buy-and-Hold vs. Equity-Based Timing Strategies

6.896.41 6.23

8.47

11.17

13.08

0

2

4

6

8

10

12

14

Buy and Hold Equity Timing 1 Equity Timing 2

% R

etur

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d St

anda

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evia

tion

Annualized Return Standard Deviation

1 U.S. stocks are represented by the CRSP U.S. Total Market Index, which consists of nearly 4,000 constituents across mega, large, small and micro capitalizations, representing nearly 100% of the U.S. investable equity market.Data from 1/1/1928 – 12/31/2021. Sources: Ken French’s data library and Avantis Investors. Hypothetical illustration only.Past performance is no guarantee of future results.

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Timing Is Everything (if It Works)How do the timing strategies perform? It is important to note that on average, they all have the same allocation (50% stocks and 50% T-bills), but while Buy and Hold always has a 50/50 split, the timing strategies are either 100% in stocks or 100% in T-bills. The performance across all three portfolios is similar, although both timing strategies lag the buy-and-hold portfolio by a statistically insignificant difference.

Both timing strategies also have significantly higher volatility, which is driven by the periods where they have 100% allocated to stocks (in a chain of events, the riskiest link in the chain drives the overall risk of losses). In this experiment, it doesn’t appear that either timing strategy adds value either from superior returns or reduced volatility.

$0.25

$2.50

$25.00

$250.00

1927 1937 1947 1957 1967 1977 1987 1997 2007 2017

Figure 2 | Growth of $1 - Buy and Hold vs. Equity-Based Timing Strategies

Buy and Hold

Equity Timing 1

Equity Timing 2

Figure 2 offers another illustration of how the Buy-and-Hold strategy would have fared versus the timing strategies over the last 90+ years. You can observe the periods where each timing strategy would have allocated to T-Bills as they tend to be flat or slightly upwardly sloped lines. The Buy-and-Hold strategy chugs along with fewer wild swings than either of the timing strategies.

U.S. stocks are represented by the CRSP U.S. Total Market Index, which consists of nearly 4,000 constituents across mega, large, small and micro capitalizations, representing nearly 100% of the U.S. investable equity market.Data from 1/1/1928 – 12/31/2021. Sources: Ken French’s data library and Avantis Investors. Hypothetical illustration only.Past performance is no guarantee of future results.

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What About Volatility-Based Signals?

What happens if we look at volatility-based versus return-based signals? In Figure 3, we do just that. The buy-and-hold portfolio maintains an allocation of 50% stocks and 50% T-bills throughout the entire period. Volatility Timing 1 employs a timing strategy. Four times per year, it looks at the volatility of stocks over the last 90 days. If stock volatility was high (greater than the median 90-day volatility in the sample), it invests 100% in stocks. If volatility was low (less than the median), it invests 100% in T-bills. Volatility Timing 2 also has a timing strategy, but it is the opposite of Volatility Timing 1. While it also looks at volatility, it invests 100% in stocks if that last 90 days’ volatility was below the median and invests 100% in T-bills if the previous 90 days’ volatility was above median.

How do the volatility-based timing strategies stack up? The timing strategy that chooses stocks when volatility has been high has a return similar to the buy-and-hold strategy (6.83% vs. 6.89%) but significantly higher volatility (standard deviation of 14.79% vs. just 8.47% for the buy and hold portfolio).

Volatility Timing 2, the timing strategy that chooses stocks when volatility has been low, has a standard deviation similar to the buy-and-hold strategy, but returns are significantly lower (5.81% vs. 6.89%). Like the equity-based timing strategies, the volatility-based timing strategies do not appear to add value over the buy-and-hold portfolio.

Figure 3 | Buy-and-Hold vs. Volatility-Based Timing Strategies

6.89 6.835.81

8.47

14.79

8.79

0

2

4

6

8

10

12

14

16

Buy and Hold Volatility Timing 1 Volatility Timing 2

% R

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Annualized Return Standard Deviation


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In Figure 4, we show the same comparison as Figure 2 but with the volatility-based timing strategies. Once again, it is easy to observe when each of the timing strategies would have held stocks vs. T-Bills based on the relative choppiness or smoothness of each line, versus the Buy and Hold strategy that generally slopes upward with some drawdowns along the way.

Time in the Market vs. Timing the Market

While these are just a few examples of timing strategies, they help illustrate the challenges that can arise from making large shifts to try to time markets. When we face shocking news, it is perfectly natural for us to want to react, but we need to remember that the market already reacted so the known news about the future has already impacted markets and future expected returns.

If we decide to temporarily change our asset allocation and move to the sidelines due to concerns about volatility or the prospects of stock returns, that change involves more than just one decision—we have to choose when to get out and when to get back in.

The hypothetical experiments we have shown here demonstrate that we would have been better off just staying the course than trying to jump in and out—and this is before we consider any taxes or transactions costs (which would likely further tilt the odds in the favor of the buy-and-hold strategy). As the saying goes, time in the market is more important than timing the market.

0.25

2.50

25.00

250.00

1927 1932 1937 1942 1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 2022

Figure 4 | Growth of $1 - Buy and Hold vs. Volatility-Based Timing Strategies

Buy and Hold

Volatility Timing 1

Volatility Timing 2


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Academic Perspective

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Maybe it was a $20 bill you found on the subway platform or sidewalk. Maybe it was a surprise bonus at work. Or maybe it was money inherited from a relative. Whichever the case, maybe you were one of the lucky ones who’s come into a windfall of money, small or large.

If you’re reading this and thinking, “Fat chance, that’s not me!” wait just a minute. Because odds are that even if you haven’t yet experienced such a windfall of money, you most likely will at some point—even if it’s as mundane as a tax refund that’s higher than you expected, or a stimulus check from the government.

But we shouldn’t be asking, “How can we predict when we’ll get a windfall of money?” (Though I’d love to be able to answer that!) Instead, we should be asking, “How should we treat such windfalls? Should they be spent in a ‘treat yo’ self’ splurge? Socked away in an investment account to be used for the future? Or a little of column A and a little of column B?”

Before attempting to answer, let’s talk about what people actually do with windfalls. Almost 30 years ago, Hal Arkes, a psychology professor at the Ohio State University, and his colleagues decided to find out. Academic articles are rarely known for their compelling narratives, but Arkes’s paper is an exception, and he opens with a good tale.

As the story goes, a publishing house planned its annual meeting at a hotel in the Bahamas. Shortly before the convention started, a university decided to buy up one of the publisher’s texts. It was a big sale, but no single salesperson could take credit for it and thus lay claim to the bonus associated with such a catch. So, the publisher decided to get creative and divide the bonus across the entire marketing department: Each salesperson received $50 upon arriving at the hotel.

Hal Hershfield, Ph.D.Consultant to Avantis Investors

Hal is a Professor of Marketing and Behavioral Decision Making in the Anderson School of Management at the University of California, Los Angeles and a consultant to Avantis Investors.

His research asks, “How can we help move people from who they are now to who they’ll be in the future in a way that maximizes well-being?”

The Psychology of Financial Windfalls

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Nearby was a casino. One of the salespeople, Nancy, spent the whole of her $50 gambling, as did many of her coworkers. But she later expressed regret about her decision: “If I hadn’t been given the $50, there’s no way I would have spent a dime at the casino. There are a million things I could have used that money for. Why did I waste it?”1

That, of course, is just one anecdote. But across several experiments, Arkes and his collaborators found when blessed with a financial windfall, many folks tend to spend rather than save.

In one study, for instance, a group of research participants learned in advance that they’d receive $5 for participating in a study. Another group, however, only learned about the $5 payment by surprise, upon arriving at the lab.

Both groups received their 5 bucks and were then sent to see a college basketball game. When asked afterward how much of their $5 they had spent at the game, the folks who had received the money by surprise—those for whom the money was a windfall—spent about twice as much of it compared to those who had tagged the money as planned earnings.

This finding extends beyond carefully controlled laboratory contexts and into the real world as well. When grocery store shoppers used $10 coupons, for example, they spent about $1.59 more than when shopping without such coupons. Sure, that’s small potatoes. But it’s not as if they stocked up on essentials they could use in the future. On the contrary, shoppers were considerably more likely to spend their small windfalls on items they typically didn’t purchase.2

So why would the marketing staff of a publishing house, research subjects at a basketball game and grocery shoppers armed with coupons all spend their small windfalls (and sometimes on otherwise regrettable purchases), rather than use them in more prudent ways?

Windfalls vs. Earned Income

To some extent, such patterns may be due to the simple fact that windfalls feel like unearned money. Consider how we treat the income received through our paychecks. That money is valuable—after all, we’ve worked hard to earn it—and it could feel, psychologically speaking, like a loss if we mindlessly spent it.

A windfall, by contrast, is unearned and unexpected. In that way, even though $10 earned has the same spending power as $10 unearned, we may see the money from a windfall as less valuable. It’s easier not to “count” that money as part of our earnings, and thus, easier to spend it.

In a series of research studies, Nick Epley, a professor of behavioral science at the University of Chicago’s Booth School of Business, tackled this explanation head-on. He and his colleagues sent undergraduate research participants $50 checks that presumably came from a faculty member’s research budget.

The researchers described the money as a “tuition rebate” for half of the participants and “bonus income” for the other half. When later asked how much of their $50 they had spent, students who had received a “bonus” spent significantly more of their money than those who had received a “rebate.” In fact, almost three-quarters of those with rebates spent none of their money; only 36% of those with bonuses could say the same.3


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Think about what’s happening here: A rebate, just like earned income, feels like money that is owed to us, and we normally put it right into our metaphorical pockets. A bonus, on the other hand—well, that’s just like a windfall. Rather than feeling like it’s money that’s owed to us, it takes on more of the flavor of house money—money that isn’t ours and that we can spend freely. As Epley wrote in an op-ed, rebates “send us on trips to the bank. Bonuses send us on trips to the Bahamas.”4

What’s the takeaway? Money is money. If you’re short on your budget for an upcoming vacation and happen to come into a small windfall, then use it for the trip! But if you find yourself coming up short for necessary expenses, it may be wise to consider using a new windfall in more pragmatic ways—whether it’s a tax refund, small inheritance or $20 bill found on the sidewalk.

Endnotes1Hal R. Arkes, Cynthia A. Joyner, and Mark V. Pezzo, et al., “The Psychology of Windfall Gains,” Organizational Behavior and Human Decision Processes 59, no. 3 (September 1994): 331-347. 2Katherine L. Milkman, John Beshears, “Mental Accounting and Small Windfalls: Evidence From an Online Grocer,” Journal of Economic Behavior & Organization 71, no. 2 (August 2009): 384-394.3Nicholas Epley, Dennis Mak and Lorraine Chen Idson, “Bonus or Rebate?: The Impact of Income Framing on Spending and Saving,” Journal of Behavioral Decision Making 19, no. 3 (July 2006): 213-227.4Nicholas Epley, “Rebate Psychology,” New York Times, January 31, 2008.


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Market Review

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Snapshot

Geopolitics captured center stage in February, contributing to significant volatility across global financial markets. Meanwhile, elevated inflation, rising interest rates and expectations for much tighter Fed policy continued to cloud the backdrop. Global stocks and bonds broadly declined for the month.

§ The S&P 500 Index dropped nearly 3% in February. All sectors posted negative returns except energy, which was up nearly 4%, and financials, which was flat.

§ U.S. economic and corporate earnings data were generally upbeat. More than 75% of companies reporting through month-end beat their earnings estimates, according to FactSet.

§ However, inflation hit a 40-year-high, which, combined with a hawkish Fed and Russia’s invasion of Ukraine, generally overshadowed the positive economic and earnings data.

§ Amid the crisis in Ukraine, oil prices topped $100 a barrel for the first time since 2014.

§ Non-U.S. developed markets stocks declined but not as much as U.S. stocks. Emerging markets stocks declined at a similar pace as U.S. stocks.

§ Despite a late-February flight to quality, U.S. Treasury yields increased for the month. Higher yields and wider credit spreads led to losses for most U.S. fixed-income sectors.

As of 2/28/2022

Returns (%)

INDEX 1 MO 3 MO YTD 1 YR 3 YR 5 YR 10 YR

U.S. Large-Cap Equity

S&P 500 -2.99 -3.89 -8.01 16.39 18.23 15.16 14.58

U.S. Small-Cap Equity

Russell 2000 1.07 -6.62 -8.66 -6.01 10.49 9.50 11.18

Intl. Developed Markets Equity

MSCI World ex USA -1.56 -1.12 -5.90 4.46 8.31 7.42 6.05

Emerging Markets Equity

MSCI Emerging Markets -2.99 -3.04 -4.83 -10.69 6.03 6.99 3.24

Global Real Estate Equity

S&P Global REIT -2.33 -2.05 -8.81 16.63 6.54 5.60 7.24

U.S. Fixed Income

Barclays U.S. Aggregate Bond

-1.12 -3.49 -3.25 -2.64 3.30 2.71 2.47

Global Fixed Income

Barclays Global Aggregate Bond

-1.19 -3.35 -3.21 -5.32 2.15 2.36 1.28

U.S. Cash

Barclays U.S. 1-3 Month Treasury Bill

0.01 0.02 0.01 0.04 0.80 1.07 0.58

Data as of 2/28/2022. Performance in USD. Periods greater than one year have been annualized. Past performance is no guarantee of future results. Source: FactSet.

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Equity Returns | Size and Style

U.S.

QTD YTD

Value Growth Value Growth

Larg

e

-3.46% -12.47% -3.46% -12.47%

Smal

l

-4.27% -13.03% -4.27% -13.03%

Non-U.S. Developed Markets

QTD YTD


Larg

e

1.18% -11.85% 1.18% -11.85%

Smal

l

-3.17% -12.15% -3.17% -12.15%

Emerging Markets

QTD YTD


Larg

e

-2.30% -7.26% -2.30% -7.26%

Smal

l

-4.31% -9.21% -4.31% -9.21%

§ U.S. stocks generally declined for the first two months of 2022.

§ Small-cap stocks rebounded in February to advance and outperform large-cap stocks, which declined. Nevertheless, year to date, the broad large- and small-cap indices were down more than 8%.

§ From a style perspective, value stocks generally outperformed growth stocks across the size spectrum. In February, though, small-cap value stocks were top performers, advancing 1.7%.

§ International developed markets stocks broadly declined so far in 2022 but not as much as U.S. stocks.

§ Returns were negative across the capitalization categories. Although small-cap stocks outperformed their large cap peers in February, they underperformed for the two-month period.

§ The value style outperformed across the board. Year to date, large-cap value stocks delivered a gain, while all other style categories declined.

§ Emerging markets stocks broadly declined for the two-month period.

§ Similar to the performance trends in developed markets, small-cap stocks fared better than their large-cap peers in February. Year to date, though, declines were greater among small caps than they were among large caps.

§ From a style perspective, losses among value stocks were generally less severe than they were for growth stocks.

Data as of 2/28/2022. Performance in USD. Past performance is no guarantee of future results. Source: FactSet.U.S. Equity, International Developed Markets and Emerging Markets Equity style boxes are represented by Russell, MSCI World ex USA and MSCI Emerging Markets indices, respectively.

As of 2/28/2022

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Equity Returns | Country

Data as of 2/28/2022. Performance in USD. Past performance is no guarantee of future results. Source: FactSet. Countries are represented by MSCI country indices.

CanadaMOYTD

0.17%-0.69%

U.S.MOYTD

-2.97%-8.49%

MexicoMOYTD

4.92%-0.59%

ChileMOYTD

3.58%16.58%

ArgentinaMOYTD

-2.20%2.87%

BrazilMOYTD

4.70%18.33%

SpainMOYTD

-1.56%-3.11%

U.K.MOYTD

0.79%1.69%

NorwayMOYTD

4.16%4.11%

FranceMOYTD

-4.46%-8.10%

South AfricaMOYTD

4.66%11.79%

ItalyMOYTD

-4.84%-7.30%

GermanyMOYTD

-6.90%-10.34%

SwedenMOYTD

-8.09%-17.41% Finland

MOYTD

-6.84%-12.73%

RussiaMOYTD

-52.75%-56.87%

ChinaMOYTD

-3.90%-6.73% Japan

MOYTD

-1.12%-6.13%

KoreaMOYTD

0.74%-9.50%

IndiaMOYTD

-4.00%-5.32%

AustraliaMOYTD

5.85%-3.42%

As of 2/28/2022

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Soaring inflation and persistent rate-hike expectations helped push U.S. Treasury yields higher in February. All major U.S. bond market sectors declined. U.S. bonds modestly outperformed global bonds.

§ The Bloomberg U.S. Aggregate Bond Index declined more than 1% in February, as Treasuries, corporate bonds and mortgage-backed securities (MBS) retreated.

§ The yield on the 10-year U.S. Treasury note topped 2% mid-month, followed by a flight to quality alongside Russia’s late-month invasion of Ukraine. The 10-year yield dropped to 1.83% by February 28, 5 bps higher than at the end of January. The two-year Treasury yield rose 25 bps to 1.43%, and the yield curve flattened.

§ Annual headline inflation climbed to 7.5% in January, a 40-year high. Rising energy and used car prices largely accounted for the gain.

§ Investment-grade corporate bonds underperformed Treasuries, MBS and the broad bond market, largely due to higher yields and wider credit spreads.

§ Municipal bond (muni) yields rose at slower pace than Treasury yields, and munis outperformed Treasuries.

§ The crisis in Ukraine contributed to rising oil prices and higher inflation expectations. Against this backdrop, TIPS advanced and outperformed nominal Treasuries.

Returns (%)

INDEX 1 MO 3 MO YTD 1 YR 3 YR 5 YR 10 YRGlobal Fixed IncomeBarclays Global Aggregate Bond

-1.19 -3.35 -3.21 -5.32 2.15 2.36 1.28

U.S. Fixed IncomeBarclays U.S. Aggregate Bond

-1.12 -3.49 -3.25 -2.64 3.30 2.71 2.47

U.S. High Yield CorporateBarclays U.S. Corporate High-Yield Bond

-1.03 -1.93 -3.73 0.64 5.31 4.88 5.85

U.S. Investment GradeBarclays U.S. Corporate Bond

-2.00 -5.37 -5.30 -3.40 4.76 3.82 3.81

MunicipalsBarclays Municipal Bond

-0.36 -2.93 -3.09 -0.66 3.19 3.24 3.15

U.S. TIPSBarclays U.S. Treasury - U.S. TIPS

0.85 -0.87 -1.19 6.06 7.53 4.81 2.77

U.S. TreasuriesBarclays U.S. Treasury Bond

-0.66 -3.04 -2.54 -2.11 3.11 2.39 1.90

U.S. CashBarclays U.S. 1-3 Month Treasury Bill

0.01 0.02 0.01 0.04 0.80 1.07 0.58

Data as of 2/28/2022. Performance in USD. Periods greater than one year have been annualized. Past performance is no guarantee of future results. Source: FactSet.

As of 2/28/2022

Fixed-Income Returns

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Global Yield Curves

Yield is a rate of return for bonds and other fixed-income securities. A yield curve is a line graph that shows yields of fixed-income securities from a single sector (e.g., Treasuries) over various maturities (e.g., five and 10 years) at a single point in time (e.g., 12/31/2020).

As of 2/28/2022

Data as of 2/28/2022 Source: Bloomberg.

2/28/2022

11/30/2021

12/31/2021

-1.0

0.0

1.0

2.0

3.0

U.S. Treasury Yield Curve Over Time

3M 5Y 10Y 20Y 30Y

Japan

U.K.

E.U.

U.S.

-1.0

0.0

1.0

2.0

3.0

Country/Region Yield Curves as of Latest Month

3M 5Y 10Y 20Y 30Y

2/28/2022

11/30/202112/31/2021

0.0

1.0

2.0

3.0

4.0AAA U.S. Municipal Yield Curve Over Time

3M 5Y 10Y 20Y 30Y

2/28/2022

11/30/202112/31/2021

0.0

1.0

2.0

3.0

4.0

3M 5Y 10Y 20Y 30Y

A-Rated U.S. Corporate Credit Yield Curve Over Time

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Portfolio Updates

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For standardized quarterly performance, please see Appendix. Performance data quoted represents past performance and is no guarantee of future results. Extraordinary performance is attributable in part due to unusually favorable market conditions and may not be repeated or consistently achieved in the future. Current performance may be lower or higher than the performance data quoted. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than original cost. Returns less than one year are not annualized. Index performance does not represent the fund's performance. It is not possible to invest directly in an index.

As of 2/28/2022

Performance Overview | Equity Funds

Returns as of Month-End (%)

FUND AND BENCHMARK 1 MO QTD YTD 1 YRSINCE

INCEPTIONINCEPTION

DATE

Avantis U.S. Equity - Inst -1.44 -6.68 -6.68 12.93 18.73 12/4/2019

Russell 3000 Index -2.52 -8.25 -8.25 12.29 17.94

Avantis U.S. Small Cap Value - Inst 2.09 -0.52 -0.52 18.35 24.02 12/4/2019

Russell 2000 Value Index 1.65 -4.27 -4.27 6.63 13.98

Avantis International Equity - Inst -2.40 -5.31 -5.31 4.88 8.59 12/4/2019

MSCI World ex USA IMI Index -1.46 -6.17 -6.17 3.77 7.86

Avantis International Small Cap Value - Inst -0.09 -3.22 -3.22 7.13 10.31 12/4/2019

MSCI World ex U.S. Small Cap Index -0.89 -7.67 -7.67 -0.02 8.79

Avantis Emerging Markets - Inst -3.85 -4.69 -4.69 -4.60 10.31 12/4/2019

MSCI Emerging Markets IMI Index -2.93 -5.08 -5.08 -9.06 8.76Data as of 2/28/2022. Performance in USD, net of fees. Periods greater than one year have been annualized. Source: FactSet.

U.S. Equity Inst. AVUSXExpense Ratio (%) 0.15Total Assets ($M) 335.54U.S. Small Cap Value Inst. AVUVXExpense Ratio (%) 0.25Total Assets ($M) 347.14International Equity Inst. AVDEXExpense Ratio (%) 0.23Total Assets ($M) 102.60International Small Cap Value Inst. AVDVXExpense Ratio (%) 0.36Total Assets ($M) 155.60Emerging Markets Inst. AVEEXExpense Ratio (%) 0.33Total Assets ($M) 194.31Expense ratio as of the most recent prospectus. Assets as of 2/28/2022.

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U.S. Equity | Portfolio Composition

Size and Style Allocation (%)

FUND BOOK-TO-MARKET AND PROFITABILITY

LOW MID HIGH

SIZE

MEGA 4.77 22.90 17.82

LARGE/MID 6.02 22.04 14.90

SMALL/MICRO 1.08 5.70 3.95

BENCHMARK BOOK-TO-MARKET AND PROFITABILITY

LOW MID HIGH

SIZE

MEGA 10.77 31.10 16.39

LARGE/MID 10.38 15.95 5.93

SMALL/MICRO 1.70 2.86 0.94

Data as of 2/28/2022. Charts show weights in various book/market and profitability buckets (highest 25%, middle 50%, and lowest 25%) across market capitalizations. Excludes REITs. Source: FactSet.

Key Characteristics

Benchmark: Russell 3000 Index FUND BENCHMARK

Weighted Average Market Cap $398.4 B $514.1 B

Weighted Average Book/Market 0.22 0.15

Weighted Average Profits/Book 0.55 0.54

Number of Holdings 2,236 3,047Data as of 2/28/2022. Source: FactSet.

Sector Allocation (%)

FUND BENCHMARK

Information Technology 22.07 27.20

Financials 16.44 12.23

Consumer Discretionary 12.93 11.71

Health Care 11.82 13.28

Industrials 10.33 8.93

Energy 7.27 3.66

Communication Services 6.57 8.72

Consumer Staples 4.90 5.75

Materials 4.72 2.51

Utilities 2.71 2.53

Real Estate 0.24 3.47Data as of 2/28/2022. Source: FactSet.

As of 2/28/2022

21

U.S. Small Cap Value | Portfolio Composition



LOW MID HIGH

SIZE

MEGA -- -- 1.28

LARGE/MID 0.04 4.32 10.73

SMALL/MICRO 0.07 13.55 69.34


LOW MID HIGH

SIZE

MEGA -- -- --

LARGE/MID 0.94 5.22 2.71

SMALL/MICRO 9.15 36.42 27.79

Data as of 2/28/2022. Charts show weights in various book/market and profitability buckets (highest 25%, middle 50%, and lowest 25%) across market capitalizations. Excludes REITs.Source: FactSet.

Key Characteristics

Benchmark: Russell 2000 Value Index FUND BENCHMARK




Number of Holdings 654 1,438Data as of 2/28/2022. Source: FactSet.


FUND BENCHMARK



Energy 17.20 8.39


Materials 7.21 4.61





Real Estate 0.35 11.21

Utilities 0.00 5.13Data as of 2/28/2022. Source: FactSet.

As of 2/28/2022

22

International Equity | Portfolio Composition



LOW MID HIGH

SIZE

MEGA 3.78 18.94 10.91

LARGE/MID 7.54 21.51 17.55

SMALL/MICRO 2.12 7.46 8.46


LOW MID HIGH

SIZE

MEGA 9.62 27.36 11.42

LARGE/MID 11.95 18.33 9.51

SMALL/MICRO 2.66 3.80 2.56


Key Characteristics

Benchmark: MSCI World ex USA IMI Index FUND BENCHMARK






FUND BENCHMARK



Materials 11.87 8.84





Energy 6.35 5.12


Utilities 3.84 3.53


Top 5 Country Allocations (%)

FUND BENCHMARK

Japan 20.22 20.96

United Kingdom 14.18 14.00

Canada 10.75 10.91

France 9.10 9.17

Switzerland 8.46 8.47Data as of 2/28/2022. Source: FactSet.

As of 2/28/2022

23

International Small Cap Value | Portfolio Composition



LOW MID HIGH

SIZE

MEGA -- 0.48 0.05

LARGE/MID -- 3.17 8.47

SMALL/MICRO 0.54 22.89 63.36


LOW MID HIGH

SIZE

MEGA 0.43 0.51 --

LARGE/MID 5.34 12.41 5.81

SMALL/MICRO 15.80 33.69 16.81


Key Characteristics

Benchmark: MSCI World ex U.S. Small Cap Index FUND BENCHMARK



Weighte Average Profits/Book 0.35 0.25



FUND BENCHMARK





Energy 8.20 3.68



Real Estate 3.91 12.04



Utilities 1.30 3.49Data as of 2/28/2022. Source: FactSet.


FUND BENCHMARK

Japan 24.96 25.43

United Kingdom 15.35 15.58

Canada 10.21 9.66

Australia 9.38 8.78

Sweden 5.60 5.67Data as of 2/28/2022. Source: FactSet.

As of 2/28/2022

24

Emerging Markets Equity | Portfolio Composition



LOW MID HIGH

SIZE

MEGA 4.15 19.79 12.98

LARGE/MID 5.34 14.63 13.66

SMALL/MICRO 3.38 11.69 12.63


LOW MID HIGH

SIZE

MEGA 10.04 30.32 12.29

LARGE/MID 9.16 13.56 8.02

SMALL/MICRO 4.14 5.89 4.33


Key Characteristics

Benchmark: MSCI Emerging Markets IMI Index FUND BENCHMARK






FUND BENCHMARK








Energy 5.00 4.81


Utilities 3.28 2.58



FUND BENCHMARK

China 28.86 28.87

Taiwan 18.70 16.96

India 14.83 13.43

South Korea 14.28 12.65

Brazil 5.72 5.16Data as of 2/28/2022. Source: FactSet.

As of 2/28/2022

25

Performance Overview | Fixed Income Funds

For standardized quarterly performance, please see Appendix. Performance data quoted represents past performance and is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than original cost. Returns less than one year are not annualized. Index performance does not represent the fund's performance. It is not possible to invest directly in an index.

As of 2/28/2022

Core Fixed Income Inst. AVIGXExpense Ratio (%) 0.15Total Assets ($M) 3.00Short Term Fixed Income Inst. AVSFXExpense Ratio (%) 0.15Total Assets ($M) 11.91Core Municipal Fixed Income Inst. AMUXExpense Ratio (%) 0.15Total Assets ($M) 13.39Expense ratio as of the most recent prospectus. Assets as of 2/28/2022.

Returns as of Month-End (%)

FUND AND BENCHMARK 1 MO QTDSINCE

INCEPTIONINCEPTION

DATE

Avantis Core Fixed Income - Inst -1.33 -3.61 -3.36 2/24/2021

Barclays Aggregate Bond Index -1.12 -3.25 -2.57

Avantis Short Term Fixed Income - Inst -0.65 -1.70 -2.45 2/24/2021

Barclays 1-5 Year US Gov/Credit Index -0.56 -1.57 -2.33

Avantis Core Municipal Fixed Income - Inst -0.41 -3.29 -1.44 2/24/2021

S&P National AMT-Free Municipal Bond Index -0.49 -3.05 -0.75

Data as of 2/28/2022. Performance in USD, net of fees. Periods greater than one year have been annualized. Source: FactSet.

26

Core Fixed Income | Portfolio Composition

Find the prospectus at AvantisInvestors.com

Sector Allocation

FUND BENCHMARK

Government 25.18% 39.58%

Agencies 2.89% 1.34%

Securitized 18.90% 30.03%

Credit 62.07% 27.69%

Emerging Markets 0.00% 1.35%

Cash and Cash Equivalents -9.04% 0.00%Data as of 2/28/2022 Source: American Century Investments, Bloomberg Index Services Ltd. *Data is preliminary and subject to change.

Duration Breakdown

YEARS FUND BENCHMARK0-2 -6.10% 11.30%

2-4 27.05% 21.08%

4-6 35.14% 24.62%

6-8 21.52% 19.55%

8-10 13.89% 5.58%

10-15 4.47% 6.17%

15+ 4.04% 11.70%Data as of 2/28/2022 Source: American Century Investments, Bloomberg Index Services Ltd. *Data is preliminary and subject to change.

Credit Quality

FUND BENCHMARK

U.S. Government 46.97% 69.35%

AAA 2.51% 3.36%

AA 6.27% 2.89%

A 22.85% 10.97%

BBB 30.44% 13.41%

BB 0.00% 0.00%

NR 0.00% 0.02%

Cash and Cash Equivalents -9.04% 0.00%Data as of 2/28/2022 Source: American Century Investments, Bloomberg Index Services Ltd. *Data is preliminary and subject to change.

As of 2/28/2022

Key Characteristics

Benchmark: Barclays U.S. Aggregate Bond Index FUND BENCHMARK

Effective Duration (years) 6.64 6.73

Yield to Maturity (%) 2.77 2.34

SEC Yield (%) ** 2.03 N/A

OAS (bps) 73 40

Holdings 322 12,393

** Institutional Class

Data as of 2/28/2022 Source: American Century Investments, Bloomberg Index Services Ltd., State Street. *Data is preliminary and subject to change.

https://avantisinvestors.prospectus-express.com/summary.asp?doctype=pros&cid=avantisll&fid=025072661

27

Short-Term Fixed Income | Portfolio Composition


Sector Allocation

FUND BENCHMARK

Government 29.62% 64.95%

Agencies 3.99% 3.11%

Securitized 0.00% 0.00%

Credit 65.67% 30.94%

Emerging Markets 0.00% 0.99%

Cash and Cash Equivalents 0.73% 0.00%Data as of 2/28/2022 Source: American Century Investments, Bloomberg Index Services Ltd.*Data is preliminary and subject to change.

Key Characteristics

Benchmark: Barclays 1-5 Year US Gov/Credit Index FUND BENCHMARK



SEC Yield (%)** 1.74 N/A

OAS (bps) 41 19

Holdings 175 3,116Data as of 2/28/2022 Source: American Century Investments, Bloomberg Index Services Ltd., State Street. *Data is preliminary and subject to change.

As of 2/28/2022

Duration BreakdownYEARS FUND BENCHMARK

0-2 24.37% 32.67%

2-4 64.59% 50.45%

4-6 11.04% 16.88%Data as of 2/28/2022 Source: American Century Investments, Bloomberg Index Services Ltd.*Data is preliminary and subject to change.

Credit QualityFUND BENCHMARK

U.S. Government 34.37% 67.98%AAA 6.42% 4.27%AA 8.84% 3.10%A 28.35% 12.51%BBB 21.47% 12.14%NR 0.00% 0.00%Cash and Cash Equivalents 0.55% 0.00%Data as of 2/28/2022 Source: American Century Investments, Bloomberg Index Services Ltd.*Data is preliminary and subject to change.


28

Core Municipal Fixed Income | Portfolio Composition


Duration Breakdown

YEARS FUND BENCHMARK

0-2 3.85% 19.94%

2-4 23.06% 20.56%

4-6 45.92% 21.54%

6-8 19.90% 15.27%

8-10 6.59% 10.56%

10-15 0.68% 9.33%

15+ 0.00% 2.79%Data as of 2/28/2022 Source: American Century Investments, S&P Dow Jones Indices LLC *Data is preliminary and subject to change.

Top 5 States

FUND BENCHMARK

CA 15.12% 20.13%

NY 14.19% 23.72%

FL 6.32% 2.69%

TX 6.11% 8.77%

IL 4.88% 4.78%Data as of 2/28/2022 Source: American Century Investments, S&P Dow Jones Indices LLC*Data is preliminary and subject to change.

Credit Quality

FUND BENCHMARK

AAA 6.10% 14.64%

AA 65.38% 58.96%

A 24.45% 18.33%

BBB 3.32% 7.40%

BB 0.00% 0.08%

B 0.00% 0.00%

NR 0.00% 0.58%

Cash and Cash Equivalents 0.75% 0.00%Data as of 2/28/2022 Source: American Century Investments, S&P Dow Jones Indices LLC *Data is preliminary and subject to change.

Top 5 Sectors

FUND BENCHMARK

Special Tax 22.90% 22.26%

State GO 16.52% 18.37%

Local GO 14.24% 12.91%

Public Power 8.74% 5.44%

Water & Sewer 6.62% 9.31%Data as of 2/28/2022 Source: American Century Investments, S&P Dow Jones Indices LLC *Data is preliminary and subject to change.

Key Characteristics

Benchmark: S&P AMT-Free Municipal Bond Index FUND BENCHMARK



SEC Yield (%)** 1.47 N/A

Holdings 321 12,929Data as of 2/28/2022 Source: American Century Investments, S&P Dow Jones Indices LLC, State Street. *Data is preliminary and subject to change.

As of 2/28/2022


2 9

Appendix

30

Standardized Performance | Equity

Performance data quoted represents past performance and is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than original cost. Returns less than one year are not annualized. Index performance does not represent the fund's performance. It is not possible to invest directly in an index.

Returns as of Quarter-End (%)

FUND AND BENCHMARK 1 MO QTD YTD 1 YRSINCE

INCEPTION

Avantis U.S. Equity - Inst 3.61 8.53 27.46 27.46 24.40

Russell 3000 Index 3.94 9.28 25.66 25.66 24.52

Avantis U.S. Small Cap Value - Inst 4.29 6.21 40.17 40.17 26.43

Russell 2000 Value Index 4.08 4.36 28.27 28.27 17.59

Avantis International Equity - Inst 4.63 2.91 13.28 13.28 12.20

MSCI World ex USA IMI Index 4.95 2.71 12.40 12.40 11.88

Avantis International Small Cap Value - Inst 5.43 1.70 15.34 15.34 12.92

MSCI World ex U.S. Small Cap Index 4.24 0.39 11.14 11.14 13.79

Avantis Emerging Markets - Inst 3.40 -0.06 5.18 5.18 13.76

MSCI Emerging Markets IMI Index 2.17 -0.98 -0.28 -0.28 12.25


As of 12/31/2021

31

Standardized Performance | Fixed Income

Performance data quoted represents past performance and is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than original cost. Returns less than one year are not annualized. Index performance does not represent the fund's performance. It is not possible to invest directly in an index.

Returns as of Quarter-End (%)

FUND AND BENCHMARK 1 MO QTDSINCE

INCEPTION

Avantis Core Fixed Income - Inst -0.26 -0.44 0.23

Barclays Aggregate Bond Index -0.26 0.01 0.67

Avantis Short Term Fixed Income - Inst -0.05 -0.75 -0.79

Barclays 1-5 Year US Gov/Credit Index -0.16 -0.72 -0.80

Avantis Core Municipal Fixed Income - Inst 0.08 0.54 1.90

S&P National AMT-Free Municipal Bond Index 0.15 0.85 2.37


As of 12/31/2021

32

Glossary

Agencies: Agency securities are debt securities issued by U.S. government agencies such as the Federal Home Loan Bank and the Federal Farm Credit Bank. Some agency securities are backed by the full faith and credit of the U.S. government, while others are guaranteed only by the issuing agency.

Basis points (BPS): Basis points are used in financial literature to express values that are carried out to two decimal places (hundredths of a percentage point), particularly ratios, such as yields, fees, and returns. Basis points describe values that are typically on the right side of the decimal point--one basis point equals one one-hundredth of a percentage point (0.01%).

Barclays Global Aggregate Bond Index: A flagship measure of global investment-grade debt from 24 local currency markets. This multicurrency benchmark includes Treasury, government-related, corporate and securitized fixed-rate bonds from both developed and emerging markets issuers.

Barclays Global U.S. Treasury - U.S. TIPS Index: Consists of Treasury inflation-protected securities issued by the U.S. Treasury with a remaining maturity of one year or more.

Barclays Municipal Bond Index: A market value-weighted index designed for the long-term tax-exempt bond market.

Barclays U.S. 1-3 Month Treasury Bill Index: A subindex of the Bloomberg Barclays U.S. Short Treasury Index, the Bloomberg Barclays U.S. 1-3 Month Treasury Bill Index is composed of zero-coupon Treasury bills with a maturity between one and three months.

Barclays 1-5 Year U.S. Government/Credit Index: Tracks the market for investment grade, US dollar-denominated, fixed-rate treasuries, government-related and corporate securities.

Barclays U.S. Aggregate Bond Index: Represents securities that are taxable, registered with the Securities and Exchange Commission, and U.S. dollar-denominated. The index covers the U.S. investment-grade fixed-rate bond market, with index components for government and corporate securities, mortgage pass-through securities and asset-backed securities.

Barclays U.S. Corporate Bond Index: Measures the investment-grade, fixed-rate, taxable corporate bond market. It includes U.S. dollar-denominated securities publicly issued by U.S. and non-U.S. industrial, utility and financial issuers.

Barclays U.S. Corporate High Yield Bond Index: Measures the U.S. dollar-denominated, high-yield (non-investment grade), fixed-rate corporate bond market.

Barclays U.S. Treasury Index: Measures U.S. dollar-denominated, fixed-rate, nominal debt issued by the U.S. Treasury. Treasury bills are excluded by the maturity constraint but are part of a separate Short Treasury Index.

Book-to-Market Ratio: Compares a company’s book value relative to its market capitalization. Book value is generally a firm’s reported assets minus its liabilities on its balance sheet. A firm's market capitalization is calculated by taking its share price and multiplying it by the number of shares it has outstanding.

CRSP U.S. Total Market Index: Consists of nearly 4,000 constituents across mega, large, small and micro capitalizations, representing nearly 100% of the U.S. investable equity market.

Credit Quality: A measure of the financial strength of the issuer of a security, and the ability of that issuer to provide timely payment of interest and principal to investors in the issuer's securities. Common measurements of credit quality include the credit ratings provided by credit rating agencies such as Standard & Poor's and Moody’s.

Dow Jones Industrial Average: An average made up of 30 blue-chip stocks that trade daily on the New York Stock Exchange.

Duration: Measures how long it takes, in years, for an investor to be repaid a bond’s price by the bond’s total cash flows. It is also a measure of a bond’s interest rate sensitivity. The longer the duration, the more sensitive a bond is to interest rate shifts.

Effective Duration: The average duration of all the bonds in a fund. It provides an indication of how a fund’s net asset value (NAV) will change as interest rates change.

Emerging Markets Debt: Debt issued by countries whose economies are considered to be developing or emerging from underdevelopment.

Exchange-Traded Fund (ETF): An ETF represents a basket of securities that trades on an exchange, similar to a stock. An ETF differs from a mutual fund in that its share price fluctuates all day as investors buy and sell the ETF. A mutual fund’s net asset value (NAV) is calculated once per day after the market closes.

33

Glossary

Expected Returns: Valuation theory shows that the expected return of a stock is a function of its current price, its book equity (assets minus liabilities) and expected future profits, and that the expected return of a bond is a function of its current yield and its expected capital appreciation (depreciation). We use information in current market prices and company financials to identify differences in expected returns among securities, seeking to overweight securities with higher expected returns based on this current market information. Actual returns may be different than expected returns, and there is no guarantee that the strategy will be successful.

Market Capitalization: The market value of all the equity of a company's common and preferred shares. It is usually estimated by multiplying the stock price by the number of shares for each share class and summing the results.

MSCI Emerging Markets IMI Index: Captures large-, mid- and small-cap securities across 27 emerging markets countries.

MSCI Emerging Markets IMI Value Index: Captures large- and mid-cap securities exhibiting overall value style characteristics across 27 emerging markets countries. The value investment style characteristics for index construction are defined using three variables: book value to price, 12-month forward earnings to price and dividend yield.

MSCI World ex USA IMI Index: Captures large-, mid- and small-cap representation across 22 of 23 developed markets countries, excluding the U.S.

MSCI World ex USA Small Cap Index: Captures small-cap representation across 22 of 23 developed markets countries, excluding the U.S.

MSCI World ex USA Value Index: Captures large- and mid-cap securities exhibiting overall value style characteristics across 22 of 23 developed markets countries. The value investment style characteristics for index construction are defined using three variables: book value to price, 12-month forward earnings to price and dividend yield.

Option-Adjusted Spread (OAS): Measures the difference between the yield of a bond with an embedded option and the yield on Treasuries. Call options give the issuer the right to redeem the bond prior to maturity at a preset price, and put options allow the holder to sell the bond back to the company on certain dates. The OAS adjusts the spread to account for these potential changing cash flows.

Profitability-to-Book Ratio: Measures a company’s profitability relative to its book value. A company's profitability is generally calculated by subtracting operating expenses from its gross profit. Book value is generally a firm’s reported assets minus its liabilities on its balance sheet.

Quality: Describes the portfolio in terms of the quality ratings of the securities it holds. All U.S. government securities are included in the U.S. Government category. Cash and cash equivalents include payable amounts related to securities purchased but not settled at period end.

Credit quality ratings on underlying securities of a fund are obtained from three Nationally Recognized Statistical Rating Organizations (NRSROs), Standard & Poor's, Moody's and Fitch. Ratings are converted to the equivalent Standard & Poor's rating category for purposes of presentation. The median rating is used for securities rated by all three NRSROs. The common rating is used when two of the three NRSROs agree. The lower rating is used when only two NRSROs rate a security. A nonrated designation is assigned when a public rating is not available for a security. This designation does not necessarily indicate low credit quality. The letter ratings are provided to indicate the creditworthiness of the underlying bonds in the portfolio and generally range from AAA (highest) to D (lowest). Includes payable amounts related to securities purchased but not settled at period end.

Due to rounding, these values may exceed 100%. Negative weights, when quoted, may be due to open security or capital stock trades at period end and/or unrealized loss on derivative positions as a percent of net assets at period end. Fund holdings subject to change without notice.

34

Glossary

Russell 1000® Growth Index: Measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.

Russell 1000® Value Index: Measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.

Russell 2000® Index: Measures the performance of the 2,000 smallest companies among the 3,000 largest publicly traded U.S. companies, based on total market capitalization.

Russell 2000® Growth Index: Measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.

Russell 2000® Value Index: Measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.

Russell 3000® Index: Measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.

S&P 500® Index: A market-capitalization-weighted index of the 500 largest U.S. publicly traded companies. The index is widely regarded as the best gauge of large-cap U.S. equities.

S&P Global REIT Index: A comprehensive benchmark of publicly traded equity REITs listed in both developed and emerging markets.

S&P National AMT-Free Municipal Bond Index: A broad, comprehensive, market value-weighted index designed to measure the performance of the investment-grade tax-exempt U.S. municipal bond market. Bonds issued by U.S. territories, including Puerto Rico, are excluded from this index. It is not possible to invest directly in an index.

SEC Yield: A calculation based on a 30-day period ending on the last day of the previous month. It is computed by dividing the net investment income per share earned during the period by the maximum offering price per share on the last day of the period.

Securitized Debt: Debt resulting from the process of aggregating debt instruments into a pool of similar debts, then issuing new securities backed by the pool (securitizing the debt). Examples include asset-backed and mortgage-backed securities.

Treasury Inflation-Protected Securities (TIPS): A special type of U.S. Treasury security that is indexed to inflation as measured by the Consumer Price Index, or CPI. At maturity, TIPS are guaranteed by the U.S. government to return at least their initial $1,000 principal value, or that principal value adjusted for inflation, whichever amount is greater. In addition, as their principal values are adjusted for inflation, their interest payments also adjust.

Weighted Average Book-to-Market: An average book-to-market ratio resulting from the multiplication of each security’s book-to-market by its weight in the portfolio.

Weighted Average Market Capitalization: An average market capitalization resulting from the multiplication of each security’s market capitalization by its weight in the portfolio.

Weighted Average Profitability-to-Book: An average profitability-to-book ratio resulting from the multiplication of each security’s profitability-to-book by its weight in the portfolio.

Yield to Maturity: The rate of return an investor will receive if an interest-bearing security, such as a bond, is held to its maturity date. It considers total annual interest payments, the purchase price, the redemption value, and the amount of time remaining until maturity.

35

Disclosures

You should consider the fund's investment objectives, risks, and charges and expenses carefully before you invest. The fund'sprospectus or summary prospectus, which can be obtained by visiting Avantisinvestors.com or by calling 833-928-2684, contains this and other information about the fund, and should be read carefully before investing.Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.

International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks.

Historically, small- and/or mid-cap stocks have been more volatile than the stocks of larger, more-established companies. Smaller companies may have limited resources, product lines and markets, and their securities may trade less frequently and in more limited volumes than the securities of larger companies.

This information is for educational purposes only and is not intended as tax advice. Please consult your tax advisor for more detailed information or for advice regarding your individual situation.

Portfolio holdings are as of date indicated and subject to change. It is not possible to invest directly in an index.

The opinions expressed are those of the portfolio team and are no guarantee of the future performance of any Avantis fund. This information is for an educational purpose only and is not intended to serve as investment advice. Opinions and estimates offered constitute our judgment and, along with other portfolio data, are subject to change without notice.References to specific securities are for illustrative purposes only and are not intended as recommendations to purchase or sell securities. Generally, as interest rates rise, the value of the securities held in the fund will decline. The opposite is true when interest rates decline.Derivatives may be more sensitive to changes in market conditions and may amplify risks.Municipal Securities investing is more sensitive to events that affect municipal markets, including legislative or political changes and the financial condition of the issuers of municipal securities. The fund may have a higher level of risk than funds that invest in a larger universe of securities. Additionally, the novel coronavirus (COVID-19) pandemic has significantly stressed the financial resources of many municipal issuers, which may impair a municipal issuer's ability to meet its financial obligations when due and could adversely impact the value of its bonds, which could negatively impact the performance of the fund.

American Century Investment Services, Inc., Distributor.

©2022 American Century Proprietary Holdings, Inc. All rights reserved. The contents of this Avantis Investors presentation are protected by applicable copyright and trademark laws. No permission is granted to copy, redistribute, modify, post or frame any text, graphics, images, trademarks, designs or logos.

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Avantis - Mutual Fund Field Guide