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June 17, 2013

Ray Mills Ray Mills, portfolio manager of the Overseas Stock Fund

Portfolio Manager Ray Mills and his team search for companies in developed markets and, to a lesser extent, emerging markets that are undervalued compared with the strength of their underlying fundamentals.

We work to identify, buy, and hold stocks in established companies with accelerating earnings and cash flow. But they have to balance that with proven financial discipline through capital return, financial stability, and skilled management teams. We set a high bar.

Investing in Stocks, Not Countries

The fund's bottom-up investment strategy relies on in-depth fundamental research, as well as vital on-the-ground intelligence gathered in company visits and meetings with suppliers, competitors, distributors, and clients. Mills and his team also assess macroeconomic and political considerations that could have an impact on the investment. This approach leverages the expertise of the firm's 100 portfolio managers and 200 global research analysts.

Mills, who has managed the Overseas Stock Fund since 2006, believes his team's careful analysis of balance sheets and global markets is based on the best information available. Our collaborative culture promotes a really dynamic exchange of ideas across strategies, styles, and asset classes. Our process leverages all of these insights to help us build an international core equity portfolio, stock by stock.

Performance vs. Competition

*Fund inception date 12/29/2006.

Current performance may be higher or lower than quoted past performance, which cannot guarantee future results. Share price, principal value, and return will vary, and you may have a gain or loss when you sell your shares. The fund's expense ratio as of October 31, 2012, was 0.87%. This fund is subject to general stock market risks.

Earning Solid Returns

Investing overseas carries additional risks compared with domestic investments, including greater political uncertainty and potentially unfavorable currency exchange rates. Yet the fund's core approach—providing broad exposure to multiple market capitalization ranges, geographies, and investment styles—offers the potential to succeed under a variety of market conditions. In fact, as of March 31, 2013, the Overseas Stock Fund outperformed its competitors in the Lipper International Large-Cap Core Funds average category for the 1-, 3-, and 5-year, and since-inception periods. Past performance cannot guarantee future results. On the whole, many of the companies in which we invest have reported strong profits despite generally weak economic conditions. This dynamic is favorable for funds that choose investments based on their bottom-up fundamentals. The muted economic environment is challenging, but corporate balance sheets are healthy. And for companies with excess cash, growing dividends and share repurchases potentially offer an additional source of return.

The fund's share price can fall because of weakness in the broad market, a particular industry, or specific holdings. Funds that invest overseas generally carry more risk than funds that invest strictly in U.S. assets. These risks include currency risk—the effects of negative currency exchange rates. To the extent the fund has investments in emerging market countries, it will be subject to more abrupt and severe price declines. Diversification cannot assure a profit or protect against loss in a declining market. Average annual total return figures include changes in principal value, reinvested dividends, and capital gain distributions. Source for Lipper data: Lipper, a Thomson Reuters company.

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