global innovators fund - gafunds.com€¦ · § strong performance from energy in q3 as oil price...

Forregisteredinvestmentprofessionaluseonly

GlobalInnovatorsFundReviewofthe3rdQuarter2017

2Contents

§ Introductiontofund§ Marketperformance§ Summaryfundperformance§ Performancedriversandattribution§ Changestoportfolio§ Sectorallocation§ Geographicallocation§ Portfoliotodayandoutlook§ Portfoliocharacteristics§ Marketcommentary

3Portfoliomanagers

Source: GuinnessAtkinsonAssetManagement

MatthewPage,CFAPortfolioManager

• JoinedGuinnessAtkinsonAssetManagementin2005• PreviouslyworkedforGoldmanSachsasananalystinFixed

IncomeCurrenciesandCommodities(FICC)• GraduatedfromUniversityofOxford,withaMastersdegree

inPhysicsin2004• ManagerofGlobalInnovatorsstrategysince2010

DrIanMortimer,CFAPortfolioManager• JoinedGuinnessAtkinsonAssetManagementin2006• GraduatedfromUniversityofOxford,withaD.Phil.inPhysics

in2006• GraduatedfromUniversityCollegeLondon,Universityof

London,withaMastersdegreeinPhysicsin2003• ManagerofGlobalInnovatorsstrategysince2011

Global Innovators

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

TimGuinness Manager

MatthewPage - - Analyst Manager

IanMortimer - - - - - - Analyst Manager

JoshuaCole - - - - - - - - - - - - - - Analyst

SagarThanki - - - - - - - - - - - - - - Analyst

4Analystteam

JoshuaColeAnalyst• JoinedGuinnessAtkinsonAssetManagementin2017• PreviouslyworkedatCastleTrust,aspecialistfinance

firmintheCityofLondonasaquantitativeanalyst• GraduatedfromUniversityofBristolin2013witha

Master’sdegreeinMechanicalEngineering.In2016,JoshuapassedLevelIIoftheCFAProgram.

SagarThankiAnalyst• JoinedGuinnessAtkinsonAssetManagementin2017• PreviouslyworkedforBloombergasanequityspecialist,

withinFinancialAnalyticsandSales• GraduatedfromUniversityofCambridge,withaMaster’s

degreeinEconomics,andhassincecompletedLevelIoftheCFAProgram.


5Whydowelookforinnovativecompanies?

§ Webelieveitisasuperiorwaytoidentifygoodgrowthcompanies

§ Basedonourexperience,traditionalmethodologiesdonotwork

§ Historicgrowthisapoorpredictoroffuturegrowth

§ Analystforecastsofgrowthratesareunreliableatbest

§ Insteadtrytofindcompaniesdoingsomethinginnovative…whichwebelieve,ifsuccessful,shouldleadtohigherreturnoncapitalandhigherprobabilityoffuturegrowth


6GlobalInnovatorsphilosophy

Conviction

TheFundtypicallyhas30equallyweightedpositions

Wetargetalowturnoverwithaverageof3– 5yearinvestmenthorizon

Innovation

Weuseinnovationasalenstoidentifygoodgrowthcompanies

Webelieveinnovativecompaniesshouldbeabletogenerateahighreturnoncapitalinthefuture

Growth

Welookforcompaniesthatcangrowprofitably-notjustgrowthforgrowth’ssake

Welookforcompanieswithgoodmarginsthatdonotrequiresignificantexternalcapitaltogrow

Quality

Wefocusoncompaniesthatearnareturnoncapitalabovetheircostofcapitalandhavehistoricallygrowntheireconomicprofit

Weavoidhighlyleveragedcompanies

Thefundseeksaconcentratedportfolioofhighquality,innovative,growthcompanies


7Howdoweassessinnovation:Innovationmatrix

Disruptive Accelerating Continuous

Science/Technology

Scientificbreakthroughleadingtonewtechnologywithsignificantpotential

impact

Rapidimprovements inyoungtechnology

Smallcontinuousadvancesinanestablished

technologythatwillprovideincrementalbenefitstoenduser

Product/Service

Anew product/servicethathasthepotentialtoquicklytakemarketshareand

changethedynamicsofanindustry

Rapidadvancesinadoptionof

product/service

Smalladvancesinproduct/serviceorenduserexperience that

maintainsorgrowsmarketshareorcompetitive

positioning

BusinessModel

Anewrevenue/costmodelortheconfluenceoftechnologiesthathassignificantimpacton

incumbents

Rapidadoptionofbusinessmodelleadstorapid

growthinmarketshare

Continuous evolutionofbusinessmodeltomaintain

competitivestrength

LevelofinnovationKe

ydriverso

finno

vatio

n


8Howdoweidentifyinnovativecompanies?

topdownfocusonthethemes

bottomupfocusonthemetrics

GlobalInnovatorsUniversecandidatesforinclusioninthe


Marketperformance- regions

Source: GuinnessAtkinsonAssetManagement,Bloomberg(dataasof09.30.2017)

§ Anotherstrongquarter– MSCIWorldup4.96%(totalreturninUSD)– followingpositiveQ1andQ2§ RegionalquarterlyperformancefollowedYTDtrends;strongmarketsinEurope,Asiaex-Japan,andEM;USlagging

incomparison§ WeakerUSdollarboostedlocalcurrencyreturnsofnon-USmarkets

8.01

%

6.76

%

6.72

%

4.96

%

4.84

%

4.46

%

3.89

%

28.0

8%

26.2

7%

31.1

6%

16.5

3%

15.6

1%

14.4

1%

14.4

0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

MSCI EmergingMarkets

MSCI Europe ex-UK

MSCI AC Asiaex-Japan

MSCI World MSCI UK MSCI US MSCI Japan

Tota

l ret

urn

(USD

)

Regional performance

Quarter YTD

Marketperformance- sectors

§ StrongperformancefromenergyinQ3asoilprice(WTI)recoveredfrom$46/bbl to$52/bbl.SectorstillinnegativeterritoryYTD,however

§ Consumerstaplesweakestsectorinquarter.‘Defensive’sectorsgenerallyunderperformed§ Yeartodate:InformationTechnologystillsignificantoutperformer

9.28

%

9.06

%

8.50

%

5.60

%

5.48

%

4.96

%

4.01

%

3.42

%

3.23

%

2.52

%

2.11

%

-0.3

3%

-0.8

7%

20.0

9%

27.9

7%

19.5

4%

16.6

5%

16.5

3%

4.75

%

15.2

9%

15.1

0%

19.2

8%

10.4

8%

11.3

7%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Tota

l ret

urn

(USD

)

MSCI World sector performance

Quarter YTD


Marketperformance- styles

§ Growthcontinuedtooutperformedvalue,butenergyrecoveryhelpedboostvalueperformanceinthequarter

§ ValuesignificantlyunderperforminggrowthYTD(delta=8.05%)

§ Smallcapbetterinquarter– potentialoftaxbenefitinUS?

§ YTDmarketcapnotasignificantdriverofperformance

5.28

%

4.96

%

4.65

%

20.6

7%

16.5

3%

12.6

2%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

MSCI World Growth MSCI World Index MSCI World Value

Tota

l ret

urn

(USD

)

MSCI World style performance

Quarter YTD

6.34

%

5.01

%

4.96

%

4.76

%

17.2

1%

16.4

3%

16.5

3%

16.9

5%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

MSCI World Small Cap MSCI World Large Cap MSCI World Index MSCI World Index Mid Cap

Tota

l ret

urn

(USD

)

MSCI World market cap performance

Quarter YTD


12Performancevs.benchmark

Performancedataquotedrepresentspastperformanceanddoesnotguaranteefutureresults.Theinvestmentreturnandprincipalvalueofaninvestmentwillfluctuatesothataninvestor'sshares,whenredeemed,maybeworthmoreorlessthantheiroriginalcost.CurrentperformanceoftheFundsmaybelowerorhigherthantheperformancequoted.Totalreturnsreflectafeewaiverineffectandintheabsenceofthiswaiver,thetotal returnswouldbelower.Performancedatadoesnotreflectthe2%redemptionfeeforsharesheldlessthan30daysandifdeductedthefeewouldreducetheperformancequoted.Forperformancecurrenttothemostrecentmonthendpleasevisitwww.gafunds.com/our-funds orcall800-915-6565.

TheAdviserhascontractuallyagreedtoreimburseexpenses(excludingAcquiredFundFeesandExpenses,interest,taxes,dividendsonshortpositionandextraordinaryexpenses)inordertolimittheTotalAnnualOperatingExpensesforInstitutionalSharesandfortheInvestorClassto0.99%and1.24%respectivelythroughJune30,2018

PerformancedatashownforGlobalInnovators,InstitutionalClass(GINNX),priortoitslaunchdateon12.31.2015,usesperformancedatafromtheGlobalInnovators,InvestorClass(IWIRX).

Source: GuinnessAtkinsonAssetManagement,Bloomberg

1Investorclass Ticker:IWIRX Inception12.15.1998 Expenseratioasof5/3/17*1.24%(net);1.35%(gross)

2Institutionalclass Ticker:GINNX Inception12.31.2015 Expenseratioasof5/3/17*0.99%(net);1.38%(gross)

asof09.30.2017(inUSD)

YTD 1year 3yearsannualized

5yearsannualized

10yearsannualized

Sinceinceptionannualized

GlobalInnovators,InvestorClass1 26.82% 29.58% 11.50% 17.88% 8.49% 8.00%

GlobalInnovators,InstitutionalClass2 27.04% 29.88% 11.67% 17.98% 8.54% 8.03%

MSCIWorldIndex 16.53% 18.85% 8.34% 11.65% 4.86% 5.78%

13Fundperformance


Performancedataquotedrepresentspastperformanceanddoesnotguaranteefutureresults.Theinvestmentreturnandprincipalvalueofaninvestmentwillfluctuatesothataninvestor'sshares,whenredeemed,maybeworthmoreorlessthantheiroriginalcost.CurrentperformanceoftheFundsmaybe lowerorhigherthantheperformancequoted.Totalreturnsreflectafeewaiverineffectandintheabsenceofthiswaiver,thetotalreturnswouldbelower.Performancedatadoesnotreflectthe2%redemptionfeeforsharesheldlessthan30daysandifdeductedthefeewouldreducetheperformancequoted.Forperformancecurrenttothemostrecentmonthendpleasevisitwww.gafunds.com/our-funds orcall800-915-6565.

10.8

9%

11.8

2% 18.7

6%

21.1

7%

-45.

42%

45.2

0%

17.0

0%

-6.5

1%

19.9

1%

45.2

9%

12.5

5%

-3.0

4%

9.51

%

26.8

2%

15.2

8%

10.0

8% 20.7

0%

9.66

%

-40.

30%

30.8

7%

12.4

1%

-4.9

9%

16.5

6% 27.4

3%

5.58

%

-0.2

8%

8.19

% 16.5

3%

-50%-40%-30%-20%-10%

0%10%20%30%40%50%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD 2017

Guinness Atkinson Global Innovators MSCI World Index

-50%

0%

50%

100%

150%

200%

250%

300%

350%

Total return (USD)

14Performanceattributioncommentary

§ Overweightinformationtechnologyandunderweightconsumerstapleswerethelargestcontributorstopositiveperformanceintermsofassetallocationrelativetothebenchmarkinthequarter

§ Underweightmaterialandenergysectorswasasmalldragonperformanceoverthequarter

§ Stockselectionwaspositiveacrossallsectorsinthequarter

§ Notablestockselectionperformanceaddedsignificantlytoperformanceinthequarter

§ Informationtechnology AACTech,AppliedMaterials,Nvidia,Paypal,Infineon§ Industrials Boeing,Schneider,Roper§ Consumerdiscretionary NewOrientalEducation,Continental


Fund holdings are subject to change.

15Notableperformancedriversinquarter

§ AACTechnologyupstronglyafterbeatingearnings.Themanufacturerofacousticcomponentsforsmartphones,hasseenaboostinsalesandreportedimproveddiversificationacrossproductlinesalongsideachievingahighgrossprofitmarginofover40%.

§ Boeing reportedstrongsecond-quarterresultsandboosteditscoreearningspershareforecastforthefullyear,withthenewguidanceexceedingthehighestanalystestimate.Eventhoughsaleswerelowerthanexpected,thesharesrosestrongly.Theprofitabilityofits787Dreamlinercontributedtostrongcashflow.

§ NewOrientalEducation,aprivateeducationproviderinChina,madeearlygainsinJulyoffthebackofapositiveresearchnoteandpositivesentiment.Laterinthemonththecompanyreportedfourth-quarterearnings,beatingtheaverageanalystearningsestimateby4%.

§ AppliedMaterials,thesemiconductorequipmentmanufacturer,inSeptemberannouncedanew$3bnsharerepurchaseplanandoutlineditsgrowthplanthrough2020,whichwaspositivelyreceivedbythemarket.

§ Nvidia continuedtorallyduetoitsexposuretoseveralofthefastestgrowthsecularendmarkets,whichreceivedpositivenewsthroughoutthequarter

§ CatcherTechnology,manufacturerofaluminum andmagnesiumcasings,sufferedwithotherApplesuppliersinSeptemberaspreviouslyhighexpectationsturnedtodoubtsoverwhetherdemandwouldmeetmarketexpectationsforthelatestiPhonerelease.Catcherhadrisen84%(totalreturninUSD)inthefirst8monthsof2017.

§ Nikeweakenedafteritreporteditsslowestquarterlysalesgrowthsince2010.But,morepositively,Nikehasbeenattemptingtocut outthemiddlemanandselldirecttocustomers.Itreportedwebstoresalesincreasingby19%,whileitsretailshopsincreasedlikeforlikesalesby5%.

Top5performingstocks Bottom5performingstocksTotalreturn

(inUSD)Totalreturn

(inUSD)

AACTechnologies 34.74% CatcherTechnologies -19.62%Boeing 29.33% Nike -11.82%AppliedMaterials 26.38% Shire -7.56%NewOrientalEducation 25.88% Qualcomm -4.70%Nvidia 23.77% Comcast -1.13%

Source: GuinnessAtkinsonAssetManagement,Bloomberg(dataasof09.30.2017)Fund holdings are subject to change.

Changesmadeinthequarter

§ BuyFacebook§ Purchasedontheprospectofcontinuedstrongearningsgrowthwhichwebelievethemarketisnotappreciating§ Upsidepotentialintheaveragerevenueperuser(ARPU)growthintheUS,asFacebookstillaccountsforarelativelysmallpercentage

ofthetotalrevenuespendperperson§ UsergrowthcouldaccelerateinAsia(especiallyinIndia)andsignificantearningspotentialinFacebook’sunmonetizedappssuchas

WhatsAppandMessenger

§ BuyContinental§ Traditionallyknownasatiremanufacturerbuttodayoverhalfitsrevenuecomesfromautomotivesystems,whichcoverarangeof

innovativetechnologies§ Wellpositionedtotakeadvantageofashifttowardssmarterandconnectedcarsandautonomousdriving§ Stableandhighcashflowreturnoninvestment,lowdebt,marginswhicharehigherthanitspeers,andbelowaveragemultiple

§ SellGilead§ HeldinthefundsinceOctober2010.Oneofourmostsuccessfulholdingsrisingalmost400%overourholdingperiod,inatimethe

market“only”ralliedaround100%(totalreturninUSD).§ HaddonewellfromitsinnovativeHepatitisCandHIVdrugs,butwaslosingmarketshareduetocompetition§ Revenuesandearningsslowedsignificantly,andrecentrallyafter$11bnpurchaseofKitePharmagaveopportunetimetoexit

§ SellQualcomm§ HeldintheGlobalInnovatorsFundsinceOctober2013§ SalesmaybeimpactedbylawsuitsagainstitsroyaltymodelfromApple§ Alsofacesrevenuepressuresassmartphoneshipmentsslowandpricesforitschipsdropamidrisingcompetition.Alsoseeingmorein-

housechipsfromthemajorsmartphonemanufacturerswhichcouldimpactsalessignificantly

Buys SellsFacebook GileadSciencesContinental Qualcomm

Source: GuinnessAtkinsonAssetManagement,Bloomberg(dataasof09.30.2017)Fund holdings are subject to change.

Portfolioallocation:sector

§ SaleofGileadreducedhealthcare;saleofQualcommreducedIT§ PurchaseofFacebookincreasedIT;purchaseofContinentalincreasedconsumerdiscretionary

§ Overallthefundmaintainsahigherweightingrelativetotheindexininformationtechnologyandindustrials§ Thelargestunderweightsinthefundaretofinancialsandconsumerstaples

§ Thefundmaintainsazeroweightingtotelcos,utilities,realestate,materials,andconsumerstaples


-40% -20% 0% 20% 40%

Cash

ConsumerStaples

Materials

TelecommunicationServices

Utilities

RealEstate

Energy

Financials

HealthCare

ConsumerDiscretionary

Industrials

InformationTechnology

Over/underweights0% 10% 20% 30% 40% 50% 60%

Cash

ConsumerStaples

Materials

TelecommunicationServices

Utilities

RealEstate

Energy

Financials

HealthCare

ConsumerDiscretionary

Industrials

InformationTechnology

FundallocationvsMSCIWorldIndex

Fund

Index

Sector holdings are subject to change.

Portfolioallocation:geography(bydomicile)

§ FundequalweightinUS§ FundunderweightEuropebyc.9%§ Benchmark(MSCIWorld)doesnotincludeemergingmarkets.Fundhasc.12%exposuretothisregion§ ThefundcontinuestoholdonlyonecompanyinJapanandisthusunderweightthisregionbyc.5%


0% 10% 20% 30% 40% 50% 60% 70%

Cash

AsiaPacific(exJapan)

Other

MiddleEast

Japan

Emergingmarkets

Europe

NorthAmerica

FundallocationvsMSCIWorldIndex

Fund

Index

-15% -10% -5% 0% 5% 10% 15%

Cash

AsiaPacific(exJapan)

Other

MiddleEast

Japan

Emergingmarkets

Europe

NorthAmerica

Over/underweights


19Geographicexposure

Source: GuinnessAtkinsonAssetManagement(dataasof09.30.2017)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Bydomicile Bysales

Other/undefined

LatinAmerica

Africa/ME

Asia-Pacific

UK

Europeex-UK

NorthAmerica


20

PE PE

17Y 18Y

ContinentalAG Automobiles&Components 50.6 DE 3.6% 13.4 12.1BoeingCo/The CapitalGoods 154.3 US 3.9% 25.3 23.3EatonCorpPLC CapitalGoods 35.1 US 3.3% 16.7 15.1FANUCCorp CapitalGoods 45.6 JP 3.4% 37.0 29.3RoperTechnologiesInc CapitalGoods 25.6 US 3.5% 26.2 24.6SchneiderElectricSE CapitalGoods 51.6 FR 3.2% 18.5 16.8SiemensAG CapitalGoods 119.6 DE 3.3% 15.2 14.9NIKEInc ConsumerDurables&Apparel 83.5 US 3.2% 21.5 22.2NewOrientalEducation&TechnologyGroupInc ConsumerServices 14.8 CN 3.5% 47.7 37.2IntercontinentalExchangeInc DiversifiedFinancials 40.6 US 3.5% 23.4 20.4WisdomTreeInvestmentsInc DiversifiedFinancials 1.5 US 3.1% 39.2 29.7SchlumbergerLtd Energy 93.3 US 3.2% 46.5 30.4DanaherCorp HealthCareEquipment&Servic 60.2 US 3.4% 21.7 20.0ComcastCorp Media 173.3 US 3.0% 18.9 17.2ShirePLC Pharmaceuticals,Biotechnology 47.3 US 3.3% 10.2 9.4AppliedMaterialsInc Semiconductors&Semiconductor 58.3 US 3.6% 16.1 14.2InfineonTechnologiesAG Semiconductors&Semiconductor 29.2 DE 3.5% 24.6 22.0IntelCorp Semiconductors&Semiconductor 185.8 US 3.3% 12.7 12.2NVIDIACorp Semiconductors&Semiconductor 117.3 US 3.5% 60.8 44.3AlphabetInc Software&Services 690.3 US 3.2% 24.9 20.7CheckPointSoftwareTechnologiesLtd Software&Services 19.4 IL 3.4% 22.0 20.2CognizantTechnologySolutionsCorp Software&Services 43.7 US 3.3% 19.6 16.7FacebookInc Software&Services 506.3 US 3.3% 28.8 24.4PayPalHoldingsInc Software&Services 81.5 US 3.8% 34.8 28.9SAPSE Software&Services 137.3 DE 3.2% 22.2 20.3AACTechnologiesHoldingsInc TechnologyHardware&Equipmen 22.3 CN 3.0% 25.1 19.8CatcherTechnologyCoLtd TechnologyHardware&Equipmen 8.0 TW 2.6% 10.0 8.1CiscoSystemsInc TechnologyHardware&Equipmen 165.9 US 3.4% 14.1 13.8SamsungElectronicsCoLtd TechnologyHardware&Equipmen 310.9 KR 3.4% 8.9 7.7VeriFoneSystemsInc TechnologyHardware&Equipmen 2.3 US 3.1% 15.6 12.9

Averagemkt.cap 112.5 Totalportfolio 19.6 17.3Medianmkt.cap 55.0 Y-o-Ygrowth 13%

MSCIWorldIndex 17.9 16.3Fundpremium/(discount) 9.6% 5.8%

NameCountryofdomicile

%NAVMkt.capIndustry

Portfolioprofile

Source: GuinnessAtkinsonAssetManagement,Bloomberg(dataasof9.30.2017)Fundholdingsaresubjecttochange.Forecastsareinherentlylimitedandcannotbereliedupon.

21Portfolioallocationbyestimatedfuturelongtermgrowthrate

Portfoliotoday

Rangelast

10years

10–20%growth

20%+growth

33% 20-50%

60% 30-65%

7% 0-20%

0–10%growth

Source: GuinnessAtkinsonAssetManagementestimates(asof09.30.2017)

EstimatesareusedareusedbyGuinnessAtkinsontohelpallocatetheportfolio,andmaynotbeindicativeoftheFund'sperformance.

Allocation

Thementionofanyindividualsecuritiesshouldneitherconstitutenorbeconstruedasarecommendationtopurchaseorsellsuch securities,andtheinformationprovidedregardingsuchindividualsecuritiesisnotasufficientbasisuponwhichtomakeaninvestmentdecision.

22Portfoliostatistics– arewedoingwhatwesaywewilldo?

Source:GuinnessAtkinsonAssetManagement,Bloomberg,CSHOLT(dataasof9.30.2017)

Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance of the Funds may be lower or higher than the performance quoted. Total returns reflect a fee waiver in effect and in the absence of this waiver, the total returns would be lower. Performance data does not reflect the 2% redemption fee for shares held less than 30 days and if deducted the fee would reduce the performance quoted. For performance current to the most recent month end please visit www.gafunds.com/our-funds or call 800-915-6565.

Fund MSCIWorld

Annual i sed3yrsa les growth

11% 4%

Earnings growth

13% 9%

FCFyield 4.7% 4.8%

PE(2017) 19.6 17.9

ConvictionInnovation Quality Growth

Pos i tions 30

Top10%NAVBottom10%NAV

36%30%

Activeshare 94%

Fund MSCIWorld

R&D/Sa les 7.9% 5.8%

CAPEX/Sa les 6.6% 8.6%

Fund MSCIWorld

CFROI(2016) 18% 11%

Netdebt/equity

-7% 74%

23Marketcommentary– areITstocksexpensive?

§ Not expensive relative to S&P500



§ Cheap relative to historic average



§ But worth noting that larger IT companies are generating the best margins


26

*TheAdvisorhascontractuallyagreedtoreimburseexpenses(excludingAcquiredFundFeesandExpenses,interest,taxes,dividendsonshortpositionandextraordinaryexpenses)inordertolimittheTotalAnnualOperatingExpensesforInstitutionalSharesand forInvestorClassto0.99%and1.24%respectivelythroughJune30,2018.TotheextentthattheAdvisorabsorbsexpensestosatisfythiscap,itmayrecoupaportionorallofsuchamountsabsorbedatanytimewithinthreefiscalyearsafterthefiscalyearinwhichsuchamountswereabsorbed,subjecttotheexpensecapinplaceatthetimerecoupmentissought,whichcannotexceedtheexpensecapatthetimeofwaiver.TheexpenselimitationagreementmaybeterminatedbytheBoardoftheFundatanytimewithoutpenaltyupon60days’ notice.

TheFund’sinvestmentobjectives,risks,chargesandexpensesmustbeconsideredcarefullybeforeinvesting.Thestatutoryandsummaryprospectuscontainsthisandotherimportantinformationabouttheinvestmentcompany,anditmaybeobtainedbycalling800-915-6566orvisitinggafunds.com.Pleasereaditcarefullybeforeinvesting.

Diversificationdoesnotassureaprofitorprotectagainstlossinadecliningmarket

Mutualfundinvestinginvolvesriskandlossofprincipalispossible.Investmentsinforeignsecuritiesinvolvegreatervolatility,political,economicandcurrencyrisksanddifferencesinaccountingmethods.TheFundalsoinvestsinsmallercompanies,whichwillinvolveadditionalriskssuchaslimitedliquidityandgreatervolatility.TheFundisnon-diversifiedmeaningitsassetsmaybeconcentratedinfewerindividualholdingsthandiversifiedfunds.Therefore,theFundismoreexposedtoindividualstockvolatilitythandiversifiedfunds.

Opinionsexpressedaresubjecttochangeandshouldnotbeconsideredinvestmentadvice.

Cashflowisthetotalamountofmoneybeingtransferredintoandoutofabusiness.

Fundholdingsandsectorallocationsaresubjecttochangeandarenotrecommendationstobuyorsellanysecurity.

PricetoEarningsRatio(P/E)isAvaluationratioofacompany'scurrentsharepricecomparedtoitsper-shareearnings.

ReturnonCapitalis areturnfromaninvestmentthatisnotconsideredincome.

Disclosure

27Disclosure

Marketcapitalization(cap)iscalculatedbymultiplyingacompany'ssharesoutstandingbythecurrentmarketpriceofoneshare.Theinvestmentcommunityusesthisfiguretodetermineacompany'ssize,asopposedtosalesortotalassetfigures.

TheMSCIWorldIndexisafreefloat-adjustedmarketcapitalizationweightedindexthatisdesignedtomeasuretheequitymarketperformanceofdevelopedmarkets.

TheMSCIEuropeexUKIndexcaptureslargeandmidcaprepresentationacross14DevelopedMarkets(DM)countriesinEurope.Theindexcoversapproximately85%ofthefreefloat-adjustedmarketcapitalization acrossEuropeanDevelopedMarkets excludingtheUK.

TheMSCIACAsiaex-JapanIndexcaptureslargeandmidcaprepresentationacross2of3DevelopedMarkets(DM)countries*(excludingJapan)and9EmergingMarkets(EM)countriesinAsia.Theindexcoversapproximately85%ofthefreefloatadjustedmarketcapitalizationineachcountry.

TheMSCIEmergingMarketsIndexcaptureslargeandmidcaprepresentationacross24EmergingMarkets(EM)countries.With 845constituents,theindexcoversapproximately85%ofthefreefloat-adjustedmarketcapitalizationineachcountry.

TheMSCI JapanIndexisdesignedtomeasuretheperformanceofthelargeandmidcapsegmentsoftheJapanesemarket.With320constituents,theindexcoversapproximately85%ofthefreefloat-adjustedmarketcapitalizationinJapan.

TheMSCIUKIndexisdesignedtomeasuretheperformanceofthelargeandmidcapsegmentsoftheUKmarket.With109constituents,theindexcoversapproximately85%ofthefreefloat-adjustedmarketcapitalizationintheUK.

TheMSCIUSIndexisdesignedtomeasuretheperformanceofthelargeandmidcapsegmentsoftheUSmarket.With635constituents,theindexcoversapproximately85%ofthefreefloat-adjustedmarketcapitalizationintheUS.Markets excludingtheUK.

Onecannotinvestdirectlyinanindex.

DistributedbyForesideFundServices,LLC

global innovators fund - gafunds.com€¦ · § strong performance from energy in q3 as oil price...

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