TECHNOLOGY ADOPTION HAS ACCELERATED...
Several factors serve to quicken the pace of innovation and fuel future acceleration.
Today’s disruptors operate in an increasingly connected world, building out new capabilities while benefiting from previous investments in processes and digital infrastructure. At the same time, consumers are increasingly comfortable with technologies and processes that allow companies to interact with customers instantaneously and adapt rapidly to changing market demands. Investing in technology stocks entails specific risks, including the potential for wide variations in performance and unusually wide price swings, both up and down. Technology companies can be affected by, among other things, intense competition, government regulation, earnings disappointments, dependency on patent protection, and rapid obsolescence of products and services due to technological innovations or changing consumer preferences.

…RESULTING IN UNPRECEDENTED MARKET CHANGE.
Investors must separate winners from losers as technology transforms the global economy.
Innovative companies are leveraging technological advantages to disrupt industries and take market share from more traditional players. Facebook, Microsoft, Alphabet, Amazon, and Apple, for example, experienced extraordinary revenue growth in the current economic cycle, helping them capture enormous market value that supplanted a number of “old economy” stalwarts.


AN ACTIVE, SELECTIVE APPROACH IS KEY.
Active management and in-depth research can help put investors on the right side of change.
Because it invests broadly across an industry, sector, or index, a passive investment approach may fail to isolate a small number of companies leveraging disruptive innovation to win market share and build revenues. Market sectors that experience the greatest disruption offer the greatest potential benefit from careful research and effective stock selection.

KEY TRENDS ARE DEEPENING AND EMERGING.
Innovation will continue to drive rapid change—and change creates opportunity.
Many disruptive companies are leveraging their access to superior client data analytics, artificial intelligence, and other technologies to expand their easily scalable business models and to strengthen their long-term competitive advantages. New technologies and processes are emerging with the potential to upend or render obsolete even the most entrenched business models.


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Revenue Growth Chart: Companies represented based on largest market capitalization as of 6/30/18.
Market Capitalization Chart: Companies highlighted in blue represent technology companies.
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