“country of risk” is a country in the Asia Pacific region as determined by a third party service provider
such as Bloomberg.
The Fund invests primarily in equity securities, including common and
preferred stock, and depositary receipts. The Fund’s common stock investments also include China-A
shares (shares of companies based in mainland China that trade on the Shanghai Stock Exchange and the
Shenzhen Stock Exchange).
The Fund invests primarily in securities that are considered by the Fund’s
portfolio managers to have potential for earnings or revenue growth.
The Fund may invest in the securities of issuers of all capitalization sizes and may invest a significant amount of its net assets in the securities of small- and mid-capitalization
issuers.
The Fund may invest up to 100% of its net assets in foreign
securities, including securities of issuers located in emerging markets countries, i.e., those that are
generally in the early stages of their industrial cycles.
The Fund can
invest in derivative instruments including futures contracts and forward foreign currency contracts. The Fund can use forward foreign currency contracts to hedge against adverse movements in the foreign currencies in which portfolio securities
are denominated; although the Fund has not historically used these instruments. The Fund can use futures
contracts to gain exposure to the broad market in connection with managing cash balances or to hedge against downside risk.
The portfolio managers’ strategy primarily focuses on identifying issuers
that they believe have a strong “EQV” profile. The portfolio managers’ EQV investment
approach focuses on Earnings, demonstrated by sustainable earnings growth; Quality, demonstrated by efficient capital allocation; and Valuation, demonstrated by attractive prices.
The portfolio managers employ a disciplined investment strategy that emphasizes
fundamental research. The fundamental research primarily focuses on identifying quality growth companies and is supported by quantitative analysis, portfolio construction and risk management. Investments for the portfolio are selected bottom-up
on a security-by-security basis. The focus is on the strengths of individual issuers, rather than sector or
country trends.
The Fund’s portfolio managers may consider
selling a security for several reasons, including when (1) its price changes such that they believe it has
become too expensive, (2) the original investment thesis for the company is no longer valid, or (3) a more compelling investment opportunity is identified.
Principal Risks
of Investing in the Fund
As with any mutual fund investment, loss of money is a risk of investing. An investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other governmental agency. The risks associated with an investment in the Fund can increase during times of significant market volatility. The principal risks of investing in the Fund
are:
Market Risk. The market values of the Fund’s investments, and therefore the value of the Fund’s shares, will go up and down, sometimes rapidly or unpredictably. Market risk may
affect a single issuer, industry or section of the economy, or it may affect the market as a whole. The value of the Fund’s investments may go up or down due to general market conditions that are not specifically related to the
particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook
for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, military conflict, acts of terrorism, economic crisis or adverse
investor sentiment generally. During a general downturn in the financial markets, multiple asset classes may
decline in value. When markets perform well, there can be no assurance that specific investments held by
the Fund will rise in value.
Investing in Stocks
Risk. The value of the Fund’s portfolio may be affected by changes in the stock markets. Stock markets may experience significant short-term volatility and may fall or
rise sharply at times. Adverse
events in any part of the equity or fixed-income markets may have unexpected negative effects on other market segments.
Different stock markets may behave differently from each other and U.S. stock markets may move in the
opposite direction from one or more foreign stock markets.
The prices of individual
stocks generally do not all move in the same direction at the same time. However, individual stock prices tend to go up and down more dramatically than those of certain other types of investments, such as bonds. A variety of factors can
negatively affect the price of a particular company’s stock. These factors may include, but are not
limited to: poor earnings reports, a loss of customers, litigation against the company, general unfavorable
performance of the company’s sector or industry, or changes in government regulations affecting the company or its industry. To the extent that securities of a particular type are emphasized (for example foreign stocks, stocks of
small- or mid-cap companies, growth or value stocks, or stocks of companies in a particular industry), fund share values may fluctuate more in response to events affecting the market for those types of securities.
Asia Pacific Region Risk (ex-Japan). The level of development of
the economies of countries in the Asia Pacific region varies greatly. Furthermore, since the economies of
the countries in the region are largely intertwined, if an economic recession is experienced by any of these
countries, it will likely adversely impact the economic performance of other countries in the region.
Certain economies in the region may be adversely affected by increased competition, high inflation rates, undeveloped financial services sectors, currency fluctuations or restrictions, political and social instability and increased
economic volatility.
Investments in companies located or operating in Greater China
(normally considered to be the geographical area that includes mainland China, Hong Kong, Macau and Taiwan)
involve risks and considerations not typically associated with investments in the U.S. and other Western nations, such as greater government control over the economy; political, legal and regulatory uncertainty; nationalization,
expropriation, or confiscation of property; difficulty in obtaining information necessary for investigations into and/or litigation against Chinese companies, as well as in obtaining and/or enforcing judgments; limited legal remedies
for shareholders; alteration or discontinuation of economic reforms; military conflicts, either internal or
with other countries; inflation, currency fluctuations and fluctuations in inflation and interest rates
that may have negative effects on the economy and securities markets of Greater China; and Greater China’s dependency on the economies of other Asian countries, many of which are developing countries. Events in any one country within
Greater China may impact the other countries in the region or Greater China as a whole. Export growth
continues to be a major driver of China’s rapid economic growth. As a result, a reduction in spending
on Chinese products and services, the institution of additional tariffs or other trade barriers (or the threat thereof), including as a result of trade tensions between China and the United States, or a downturn in any of the economies of
China’s key trading partners may have an adverse impact on the Chinese economy. In addition, actions by the U.S. government, such as delisting of certain Chinese companies from U.S. securities exchanges or otherwise restricting
their operations in the U.S., may negatively impact the value of such securities held by the Fund. Further,
health events, such as the recent coronavirus outbreak, may cause uncertainty and volatility in the Chinese economy, especially in the consumer discretionary (leisure, retail, gaming, tourism), industrials, and commodities sectors. Additionally, any
difficulties of the Public Company Accounting Oversight Board (“PCAOB”) to inspect audit work papers and practices of PCAOB-registered accounting firms in China with respect to their audit work of U.S. reporting companies may
impose significant additional risks associated with investments in China.
Investments in Chinese companies may be made through a special structure known as a
variable interest entity (“VIE”) that is designed to provide foreign investors, such as the Fund, with exposure to Chinese companies that operate in certain sectors in which China restricts or prohibits foreign investments. Investments in VIEs
may pose additional risks