Quick Facts
Investor Institutional
Ticker: BUFIX BUIIX
Daily Pricing:  
As of 2/7/2023  
NAV: $19.74 $19.75
$ Change: $0.09 $0.09
% Change:
0.46% 0.46%
YTD:
9.73% 9.72%
Inception Date: 9/28/2007 7/1/2019
Expense Ratio: 1.03% 0.88%
Total Net Assets: $528.88 Million  (12/31/22)
Morningstar Category: Foreign Large Cap Growth
Benchmark Index: FTSE All World Ex-US
Related Material:
   Fund Fact Sheet Q4 2022
   PM Commentary Q4 2022
   Summary Prospectus
Fund Objective & Investment Philosophy

The investment objective of the Buffalo International Fund is long-term growth of capital. The International Fund invests primarily in equity securities of established companies that are economically tied to various countries throughout the world (excluding the U.S.).

For purposes of the International Fund’s investments, “foreign securities” means those securities issued by companies:

  • Organized under the laws of, or with a principal office in, a country other than the U.S. and issue securities for which the principal trading market is in a country other than the U.S.; or
  • That derive at least 50% of their revenues or profits from goods produced or sold, investments made, or services provided in a country other than the U.S., or have at least 50% of their assets in a country other than the U.S.
  • Under normal circumstances, the International Fund does not expect its investments in emerging markets to exceed 35% of its net assets.

In selecting securities for the International Fund, the Fund managers use a bottom-up approach in choosing investments, seeking companies expected to experience growth based on the identification of long-term, measurable industry, technological, global or other trends. Companies are screened using in-depth, in-house research to identify those which the Fund managers believe have favorable attributes, including: attractive valuation, strong management, conservative debt, free cash flow, scalable business models, and competitive advantages.

In making portfolio selections the Fund managers will also consider the economic, political and market conditions of the various countries in which the Fund may invest.

Morningstar Ratings

       

Overall Morningstar Rating™ of BUFIX based on risk-adjusted returns among 399 Foreign Large Growth funds as of 12/31/22

Morningstar Sustainability Rating™ of BUFIX out of 7,758 Global Equity Large Cap funds as of 11/30/22, based on 100% of AUM

Carbon Metric Rating of BUFIX as of 9/30/22 in the Foreign Large Growth category, based on 91% of AUM; long positions only

%

Historical Sustainability Score Rank of BUFIX

PM Insights


International Equities
— The New Market Leaders?

Access Report >>


The Case for Investing Internationally

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When it comes to investing internationally, we believe our approach to stock selection is distinct. We are focused on finding good companies and aren’t constrained by benchmark alignment to countries or industries.

Our approach is based on finding companies with sound business models, exposure to long-term secular growth trends, and attractive risk/return growth and valuation characteristics, which we can own for the long-term.

Nicole Kornitzer, Portfolio Manager

Performance (%)

As of 1/31/233 MOYTD1 YR3 YR5 YR10 YRSince Inception
BUFFALO INTERNATIONAL FUND - Investor19.619.51-6.456.945.877.605.35
BUFFALO INTERNATIONAL FUND - Institutional19.649.50-6.297.116.037.765.51
  FTSE All World Ex-US Index19.867.89-5.094.452.044.872.65
  Morningstar Global Markets ex-US Index19.357.69-5.803.821.51--
  Lipper International Fund Index19.918.75-5.805.142.395.342.69
  Morningstar Foreign Large Growth Category18.759.09-10.663.502.755.792.68
As of 12/31/223 MOYTD1 YR3 YR5 YR10 YRSince Inception
BUFFALO INTERNATIONAL FUND - Investor15.64-21.79-21.793.265.147.154.75
BUFFALO INTERNATIONAL FUND - Institutional15.67-21.65-21.653.425.307.314.91
  FTSE All World Ex-US Index14.36-15.22-15.220.911.584.492.16
  Morningstar Global Markets ex-US Index14.15-16.15-16.150.351.07--
  Lipper International Fund Index15.81-17.14-17.141.301.764.882.14
  Morningstar Foreign Large Growth Category13.77-25.29-25.290.042.115.262.12

2013201420152016201720182019202020212022
BUFFALO INTERNATIONAL FUND - Investor19.29-2.04-0.453.1929.33-8.8528.0219.1018.21-21.79
BUFFALO INTERNATIONAL FUND - Institutional19.46-1.89-0.303.3429.53-8.7128.2019.2418.42-21.65
  FTSE All World Ex-US Index15.62-3.04-4.465.1227.47-13.8722.2011.528.66-15.22
  Morningstar Global Markets ex-US Index15.71-3.62-3.655.4527.37-14.1721.5711.178.41-16.15
For performance prior to 7/1/19 (Inception Date of Institutional Class), performance of the Investor Class shares is used and includes expenses not applicable and lower than those of Investor Class shares.Performance data quoted represents past performance; past performance 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 fund may be lower of higher than the performance quoted and can be obtained here. Performance is annualized for periods greater than 1 year. Each Morningstar category average represents a universe of funds with similar objectives.
3 Year Risk Metrics
BUFIX vs FTSE All World Ex-US Index (As of 12/31/22)
Upside Capture125.45
Downside Capture105.17
Alpha2.64
Beta1.03
Sharpe Ratio0.12
Hypothetical Growth of $10,000
This chart illustrates the performance of a hypothetical $10,000 investment made in the Fund on the Inception Date. Assumes reinvestment of dividends and capital gains. This chart does not imply future performance.

Portfolio

Portfolio Characteristics
(As of 12/31/22) 
 
# of Holdings80
Median Market Cap$32.39 B
Weighted Average Market Cap$77.15 B
3-Yr Annualized Turnover Ratio13.91%
Active Share91.08%
Market Capitalization
As of 12/31/22. Market Cap percentages may not equal 100% due to rounding.
Top 10 Holdings
Name of HoldingTickerCountrySector% of Net
Assets
LindeLIN GRIrelandMaterials2.80%
AonAONEnglandFinancials2.37%
MerckMRK GRGermanyHealth Care2.27%
Schneider ElectricSU FPFranceIndustrials2.22%
Ashtead GroupASHTYUnited KingdomIndustrials2.10%
HexagonHEXA B SSSwedenTechnology1.99%
ICICI BankIBNIndiaFinancials1.98%
Taiwan SemiconductorTSMTaiwan, Province of ChinaTechnology1.96%
ThalesTHLEFFranceIndustrials1.95%
AstraZenecaAZNCFUnited KingdomHealth Care1.75%
TOP 10 HOLDINGS TOTAL21.39%
As of 9/30/22. Top 10 Holdings for the quarter are not disclosed until 60 days after quarter end. Fund holdings are subject to change and are not recommendations to buy or sell any securities.
Sector Weighting
As of 12/31/22. Security weightings are subject to change and are not recommendations to buy or sell any securities. Sector Allocation may not equal 100% due to rounding.
Countries
TOP 10 COUNTRIES% of Portfolio
Net Assets
France16.48%
Germany14.58%
United Kingdom9.87%
Ireland9.67%
Japan8.10%
Switzerland6.58%
Netherlands6.20%
Canada3.95%
India2.69%
Sweden2.43%
TOP 10 TOTAL80.55%
As of 9/30/22.
MARKET CLASSIFICATION
Emerging Markets:4.62%
Developed Markets:95.38%
As of 9/30/22.

Management

Nicole Kornitzer, CFA
Portfolio Manager

23 Years of Experience

 View full bio

Pat Srinivas
International Equity Research Analyst

17 Years of Experience

 View full bio

Commentary

CAPITAL MARKET OVERVIEW

(As of 12/31/22) — Global equity markets rallied in the 4th quarter after 3rd quarter earnings reports were generally better than expected. Economic data throughout the quarter began to show moderating inflation in the U.S., along with resilient consumer spending. Most markets abroad outperformed the domestic U.S. market in a large part due to the weakening of the U.S. dollar. While the S&P 5OO Index rose 7.56% during the quarter, the MSCI ACWI ex USA Index advanced 14.37% in USD terms. The STOXX Europe 600 Index was up 9.6% in local currency, and nearly 20% in U.S. dollar terms. European markets rose following a better-than-expected earnings season and less benign economic data. It also became apparent that the energy crisis in Europe would not be as serious as feared, thanks to European stockpiling of gas combined with a relatively mild start to winter. In Asia, China’s about face with respect to its “COVID zero” policy was also a boost to European market sentiment. Exports to China make up a smaller, yet significant, portion of revenue for most large multinational corporations domiciled in Europe.

In Japan, the Nikkei Index was flat in local currency, but advanced 11% in USD terms due to strengthening of the Japanese yen vs. the U.S. dollar. The Bank of Japan surprised investors when it decided to widen the spread on 10-year government bond yields, which was seen as a first step toward policy normalization. The Bank of Japan has been maintaining its yield control policy (keeping yields low) despite other global central banks moving rates higher. The surprise policy change suggests that inflation may finally be taking hold in the country after decades of deflation.

The reversal of the COVID zero policy in China also drove Asian markets higher during the period. The Hong Kong Hang Seng market index rose almost 15% in USD terms, so did the Australian market, while the Korean markets advanced an astonishing 28%. Performance across other emerging markets countries was mixed — India’s stock market index rose 4.2% and the Brazilian market advanced 6% in USD terms.

PERFORMANCE COMMENTARY

(As of 12/3122) — The Buffalo International Fund (BUFIX) produced a return of 15.64% for the quarter, a result that outperformed the prospectus benchmark FTSE All-World ex US return of 14.36%. Fund results also outperformed two widely followed international growth indexes, the MSCI All-Country World ex USA Growth Index and the developed country MSCI EAFE Growth Index, which advanced 12.94% and 15.08%, respectively.

For calendar year 2022, the Buffalo International Fund produced a return of -21.79%, underperforming the broad FTSE All-World ex-US Index return of -15.22%, but outperforming the two growth indexes, the MSCI EAFE Growth Index with a return of -22.69%, and the MSCI ACWI ex-USA Growth index, which posted a return of -22.80%.

TOP CONTRIBUTORS

Top contributors in the period included Siemens AG, Linde plc, and ASML Holding NV. Siemens’ shares rose after the company raised its dividend and reported 4th quarter earnings that beat expectations. Revenue and profits grew across all the industrial businesses, but results in Siemens digital industries and the smart infrastructure division were particularly strong. The former is being boosted by large contracts while the later is being driven by strong demand from data centers and for digital building services.

Linde, the global industrial gas giant, announced 3rd quarter results that beat expectations and raised guidance for the year. The company also announced a potential delisting from Germany’s biggest stock exchange, but will maintain a listing in the U.S., a move the company says should help it attain a higher valuation.

ASML, the sole provider of certain equipment for semiconductor manufacturing, reported good financial results and raised its long-term outlook at an upbeat investor event. The company has seen increased demand for its equipment as semiconductor manufacturers have been building capacity. ASML should also be a key beneficiary of some longer-term trends such as spend on elevated logic and memory equipment for AI.

TOP DETRACTORS

Top detractors in the quarter were Tomra Systems ASA, Adidas AG, and Asahi Group Holdings. Tomra, a manufacturer of machines for sorting and recycling waste, is seeing demand for its products as governments around the world seek ways to tackle the growing waste problem. Third quarter results were a bit disappointing due to a weaker margin in their food sorting segment. We continue to be positive about Tomra’s prospects over the long term. The EU plastic directive bodes well for a much larger opportunity for Tomra in Reverse Vending or Deposit Machines, and the global need for better recycling and management of recyclable waste is a growing demand.

Adidas, a global sporting goods brand, was a position we decided to exit in early October after negative news continually hammered the stock. It looked like more bad news was on the horizon due to a deteriorating relationship with Kanye West and a worsening Chinese market. We believed our investment thesis was no longer in vigor, nor was the brand. A few weeks later Adidas hired Puma’s CEO, a rival of Adidas, in a move that revived the stock and reminded us that a change in management can often be an overlooked potential positive catalyst. In spite of the rally, we believe the brand has a tough and long road ahead of it in order to get back to its glory days, particularly in China.

Meanwhile shares of Asahi, Japan’s largest beer company, lagged due to its exposure to the European consumer, which generates as much as 25% of sales, on an expected potential economic recession in the continent.

OUTLOOK

(As of 12/31/22) — Looking back at our 3rd quarter commentary, we can’t help but think what a difference three months can make. The big surprise closing out the year was when the Chinese government decided to abandon “COVID zero” and instead choose a policy of living with the virus. Markets were expecting a more gradual change of policy with a slower path to reopening in 2023. An about-face from one day to the next was not expected. With the pandemic now raging in China, we are confident that a return to a COVID zero policy is no longer an option, and now their leaders sound keen on prioritizing economic growth.

What effect will this have on the rest of the world? It is too early to know entirely, as the China that is reopening is not the same one that helped drive global economic growth prior to the pandemic. Policies implemented over the last few years have been more focused on “shared prosperity” rather than on unbridled growth. The reopening will most likely mean a return to better growth in the near term and should help a number of our portfolio companies that do business in China.

Will China’s reopening stoke global inflation? For the moment the consensus is that it will not be a problem. China will likely begin to consume more resources just as much of the rest of the world’s economic growth is slowing. The outcome will also depend on the size and manner of stimulus the Chinese government deploys.

It appears that the US, UK, and European economies are slowing, and that inflation has peaked. So far in 2023, markets have rallied on easing inflation data, and the hope that central banks, particularly the U.S. Federal Reserve, will slow rate hikes and perhaps begin lowering them later in the year.

While we are doubtful of predicting such an exact outcome, we acknowledge that there are some signs pointing to the upside. Europe, for one, is faring better than feared in the face of the energy crisis and is now getting a bit of a boost from China’s reopening. As a result, Europe could potentially see better growth later in 2023 than the current economic forecasts. As far as consumer sentiment is concerned, as inflation pressures ease, consumers could feel more confident with higher real income if the labor markets remain strong. Businesses could also feel less margin pressure and supply chain pressures could soon be resolved, assuming the pandemic does not cause too much disruption in China.

We believe the next two earnings seasons will be informative. As earnings expectations reset, there could be room for positive surprises. Investment flows into markets outside the U.S. have been strong so far this year. With the weakening US dollar, and the reopening in China, sentiment has been particularly positive on Asian and emerging markets where a weaker dollar would mean more easily available liquidity.

We have modestly increased our weight in Japan and added ideas from Hong Kong or China into the portfolio, however we continue to overweight Europe. As usual, this is mostly a function of our bottom-up investment process of using fundamental analysis to find companies that fit our buy criteria. We continue to deploy cash in ideas with attractive valuations, and invest in high quality companies that have sound, sustainable business models, competitive advantages, that are benefiting from secular growth drivers that should endure a potential economic downturn. We prefer businesses that have strong balance sheets and generate consistent free cash flow. In this inflationary environment we also favor companies that can pass off cost pressures, such as companies with high recurring revenues or those whose products make up a small cost of a larger product. And faced with a potential recession, we seek out companies that can preserve margins even in a weaker environment. This includes businesses that are asset light, have low fixed costs, or have the means to drive efficiency improvements through a downturn. We pay close attention to the valuation of the companies in our portfolio and seek to buy high quality growth companies during periods of market weakness. As always, we believe that by continuing our disciplined, time-tested investment strategy we should be able to produce superior risk-adjusted returns over the long term.

The opinions expressed are those of the Portfolio Manager(s) and are subject to change, are not guaranteed and should not be considered recommendations to buy or sell any security. Earnings growth is not representative of the fund’s future performance.
International Fund News

Kiplinger: Top-Performing Mutual Funds

Kiplinger recognized the Buffalo Flexible Income and International Funds as “Top-Performing Mutual Funds” in their recent fund analysis.

Kiplinger: Top-Performing Mutual Funds

Kiplinger recognized the Buffalo Flexible Income and International Funds as “Top-Performing Mutual Funds” in their recent fund analysis.

Recent Recognition
  • Investor’s Business Daily “Best Mutual Funds List” – April 21, 2022
  • Kiplinger’s “Top Performing Mutual Funds” – April 18, 2022
  • Kiplinger’s “Top Performing Mutual Funds” – March 10, 2022
  • Kiplinger’s “Top Performing Mutual Funds” – January 24, 2022
  • Kiplinger’s “Top Performing Mutual Funds” – December 21, 2021
  • Kiplinger’s “Top Performing Mutual Funds” – November 18, 2021
  • Kiplinger’s “Top Performing Mutual Funds” – August 18, 2021
  • Investor’s Business Daily “Best Mutual Funds List” – March 22, 2021
  • Investor’s Business Daily “Best Mutual Funds List” – March 23, 2020
  • Citywire “Top 20 Female Portfolio Managers in the U.S.” – December 20, 2019
  • Kiplinger Top-Performing Mutual Fund (5 Years) – November 15, 2019
  • US News & World Reports – Best Mutual Funds – August 15, 2019
  • Zacks “4 Non-U.S. Mutual Funds to Buy Now” – July 3, 2019
  • Zacks “3 Non-U.S. Mutual Funds Worth Taking a Look” – May 3, 2019
  • Morningstar 5-star Overall Rating – March 31, 2019out of 373 Foreign Large Growth funds*
  • Morningstar 5-star Overall Rating – December 31, 2018out of 364 Foreign Large Growth funds*
  • Zacks “Consider These Non-U.S. Mutual Funds for Excellent Returns” – October 25, 2018
  • Morningstar 5-star Overall Rating – September 30, 2018out of 347 Foreign Large Growth funds*
  • Citywire “Winning Women – Top 20 Female Portfolio Managers in the U.S.” – August 31, 2018
  • Citywire “International Stars to Watch” – August 10, 2018
  • Morningstar 5-star Overall Rating – September 30, 2017out of 325 Foreign Large Growth funds*
  • Zacks “Four #1 Non-U.S. Mutual Funds” – September 22, 2017
  • Citywire “Alpha Female 2017 – The Top Female Fund Managers in 7 Major Markets” – August 8, 2017
  • Zacks “3 Strong Buy Non-U.S. Mutual Funds” – June 7, 2017

*Overall Morningstar Rating derived from a weighted average of the fund’s 3-, 5-, and 10-year risk adjusted return.

Literature

General Account
Forms
Investor
Class
Institutional
Class
Both
  New Account Application
  New Account Application - Entity
  Change or Add Account Details
  Cost Basis Method Election
  Power of Attorney
Individual Retirement Account (IRA) Forms
  IRA Account Application
  IRA Beneficiary Addition / Change
  IRA Required Minimum Distribution (RMD)
  IRA / Qualified Plan Distribution Request
  IRA Transfer
Coverdell Education Savings Accounts (ESA) Forms
  Coverdell ESA Application
  Coverdell ESA Distribution Request
  Coverdell ESA Transfer
Retirement Information
  Retirement Savings Options for Individuals

Fundamental Approach

We get to know the companies we invest in and learn how they run their business.

Top-Down & Bottom-Up

We identify Top-Down broad, secular growth trends and search for companies from the Bottom-Up.

Proprietary Philosophy

We construct our portfolios based on our own proprietary investment strategy.

Disciplined Investing

Sticking to our disciplined investment strategy ensures we maintain a consistent, balanced approach.

Morningstar Rating™

The Morningstar Rating™ for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating™ for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating™ metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.

©2022 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

The Buffalo International Fund (BUFIX) received 4 stars among 399 for the 3-year, 5 stars among 346 for the 5-year, and 5 stars among 226 Foreign Large Growth funds for the 10-year period ending 12/31/22. Other share classes may have different performance characteristics based on risk-adjusted returns.
Morningstar Sustainability Rating™

The Morningstar Sustainability Rating™ is intended to measure how well the issuing companies of the securities within a fund’s portfolio holdings are managing their financially material environmental, social and governance, or ESG, risks relative to the fund’s Morningstar Global Category peers. The Morningstar Sustainability Rating calculation is a five -step process. First, each fund with at least 67% of assets covered by a company-level ESG Risk Score from Sustainalytics receives a Morningstar Portfolio Sustainability Score. The Morningstar Portfolio Sustainability Score is an asset weighted average of company-level ESG Risk Scores. The Portfolio Sustainability Score ranges between 0 to 100, with a higher score indicating that a fund has, on average, more of its assets invested in companies with high ESG Risk. Second, the Historical Sustainability Score is an exponential weighted moving average of the Portfolio Sustainability Scores over the past 12 months. The process rescales the current Portfolio Sustainability Score to reflect the consistency of the scores. The Historical Sustainability Score ranges between 0 to 100, with a higher score indicating that a fund has, on average, more of its assets invested in companies with high ESG Risk, on a consistent historical basis. Third, the Morningstar Sustainability Rating is then assigned to all scored funds within Morningstar Global Categories in which at least thirty (30) funds receive a Historical Sustainability Score and is determined by each fund’s Morningstar Sustainability Rating Score rank within the following distribution: High (highest 10%), Above Average (next 22.5%), Average (next 35%), Below Average (next 22.5%), and Low (lowest 10%). Fourth, Morningstar applies a 1% rating buffer from the previous month to increase rating stability. This means a fund must move 1% beyond the rating breakpoint to change ratings. Fifth, they adjust downward positive Sustainability Ratings to funds with high ESG Risk scores. The logic is as follows: If Portfolio Sustainability score is above 40, then the fund receives a Low Sustainability Rating. If Portfolio Sustainability score is above 35 and preliminary rating is Average or better, then the fund is downgraded to Below Average. If the Portfolio Sustainability score is above 30 and preliminary rating is Above Average, then the fund is downgraded to Average. If the Portfolio Sustainability score is below 30, then no adjustment is made. The Morningstar Sustainability Rating is depicted by globe icons where High equals 5 globes and Low equals 1 globe. Since a Sustainability Rating is assigned to all funds that meet the above criteria, the rating it is not limited to funds with explicit sustainable or responsible investment mandates. Morningstar updates its Sustainability Ratings monthly. The Portfolio Sustainability Score is calculated when Morningstar receives a new portfolio. Then, the Historical Sustainability Score and the Sustainability Rating is calculated one month and six business days after the reported as-of date of the most recent portfolio. As part of the evaluation process, Morningstar uses Sustainalytics’ ESG scores from the same month as the portfolio as-of date. Please click on http://corporate1.morningstar.com/SustainableInvesting/ for more detailed information about the Morningstar Sustainability Rating methodology and calculation frequency. Sustainalytics is an independent ESG and corporate governance research, ratings, and analysis firm. Morningstar, Inc. holds a non-controlling ownership interest in Sustainalytics.

Morningstar Low Carbon Designation™

The Morningstar® Low Carbon Designation™ is intended to allow investors to easily identify low-carbon funds across the global universe. The designation is an indicator that the companies held in a portfolio are in general alignment with the transition to a low-carbon economy. The designation is given to portfolios that have low carbon-risk scores and low levels of exposure to fossil fuels. To determine carbon-risk scores and fossil fuel involvement, Morningstar uses Sustainalytics' company-level data. The Morningstar® Portfolio Carbon Risk Score™ measures the risk that companies in a portfolio face from the transition to a low-carbon economy. The Morningstar® Portfolio Fossil Fuel Involvement™ percentage assesses the degree to which a portfolio is exposed to thermal coal extraction and power generation as well as oil and gas production, power generation, and products & services. To receive a Morningstar Portfolio Carbon Risk Score, at least 67% of portfolio assets must have a carbon-risk rating from Sustainalytics. The percentage of assets covered is rescaled to 100% before calculating the score. To receive the designation, a portfolio must meet two criteria: 1) a 12-month trailing average Morningstar Portfolio Carbon Risk Score below 10 and 2) a 12-month trailing average exposure to fossil fuels less than 7% of assets, which is approximately a 33% underweighting to the global equity universe. Funds receive the Low Carbon designation based on the most recent quarterly calculations of their 12- month trailing average Morningstar Portfolio Carbon Risk Scores and Morningstar Portfolio Fossil Fuel Involvement. Funds holding the Low Carbon designation that no longer meet the criteria will not receive the designation for the subsequent quarter. All Morningstar Portfolio Carbon Metrics, including the Morningstar Portfolio Carbon Risk Score, Morningstar Portfolio Fossil Fuel Involvement, and the Morningstar Low Carbon Designation, are calculated quarterly. Please visit http://corporate1.morningstar.com/SustainableInvesting/ for more detail information about the Morningstar Low Carbon Designation and its calculation. Sustainalytics is an independent ESG and corporate governance research, ratings, and analysis firm. Morningstar, Inc. holds a non-controlling ownership interest in Sustainalytics.