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Negative Investor Sentiment Caused NCEAX to Fall

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Investment objective and strategy

The objective of the Neuberger Berman Greater China Equity Fund – Class A (NCEAX) is to seek long-term capital growth by investing in equity investments that are tied economically to the Greater China region. The Greater China region consists of mainland China, Hong Kong, Macau, and Taiwan.

The fund uses a private-equity-like approach to develop a concentrated portfolio of Greater China equity securities.

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Fund facts

NCEAX had net assets of $112.8 million as of November 30, 2015. The fund has a net expense ratio of 1.9%. The fund was incepted on July 17, 2013.

Performance evaluation

For the month ending on November 30, 2015, NCEAX fell by 1.3%. Weak PMI (purchasing managers’ index) data, lower commodity prices, and uncertainty regarding the Fed’s interest rate hike contributed to negative investor sentiment. The global slowdown impacted China’s online retailers like Baidu (BIDU), Alibaba Group Holdings (BABA), NetEase (NTES), and 58.com (WUBA).

For the three months ending on November 30, 2015, FHKAX rose by 9.2%. Meanwhile, the fund fell by 0.1% YTD (year-to-date).

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Benchmarks

NCEAX benchmarks its performance to the MSCI China Index. In the one-month period ending in November 2015, the MSCI China Index fell by 3.4%. NCEAX outperformed the benchmark.

Portfolio composition

NCEAX’s latest available portfolio composition was as of September 2015. We’re evaluating the portfolio composition as of September 2015. To maintain parity, we used September 2015 for the portfolio composition of the MSCI China Index.

The financial sector dominated the portfolio with 21.4% weight as of September 2015. The IT sector was second. It accounted for 19.5% of the portfolio. The utilities and consumer discretionary sectors formed 14.3% and 13.8% of the assets, respectively. NCEAX doesn’t have exposure to the materials sector. It holds ~2% in cash.

Top holdings

As of September 2015, the top ten holdings of NCEAX accounted for 47.7% of the total portfolio weight. The top ten portfolio holdings included NetEase, Tencent Holdings, and China Mobile (CHL). NCEAX also invests in companies’ stocks like CNOOC (CEO), Qihoo 360 Technology (QIHU), and JD.com (JD). NCEAX has 33 holdings as of September 30, 2015.

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