Fund Goal and Approach
The fund seeks long-term capital appreciation.To pursue its goal, the fund normally invests at least 80% of its net assets, plus any borrowings for investment purposes, in common stocks and other equity securities (or derivative or other strategic instruments with similar economic characteristics) of companies organized or with their principal place of business, or majority of assets or business, in emerging market countries. The fund considers emerging market countries to be all countries represented in the Morgan Stanley Capital International Emerging Markets Index (MSCI® EM Index). The MSCI® EM Index is a free float-adjusted, market capitalization-weighted index designed to measure the equity performance of emerging market countries in Africa, Asia, Europe, Latin America, and the Middle East. The fund may invest in equity securities of companies with any market capitalization.
TOBAM, the fund's subadviser, seeks to maximize the fund's portfolio diversification in terms of various risk metrics by applying a systematic, quantitative investment approach designed to identify securities of emerging market issuers included in the MSCI® EM Index that have the lowest possible correlation to each other for inclusion in the fund's portfolio. The subadviser uses its patented Anti-Benchmark® Maximum Diversification® model to construct a portfolio consisting of securities of emerging market issuers that it believes offers the most diversification potential and avoids the concentration risk that exists in traditional market capitalization-weighted indices. The fund's portfolio managers focus on stock selection as opposed to making proactive decisions as to country, industry or sector exposure. As a result of the subadviser's stock selection and portfolio construction methodologies, the fund may hold both growth-oriented and value-oriented securities.
Securities are bought or sold in relation to their relative diversification benefits within the fund's portfolio. A security will be removed from the portfolio when the portfolio managers believe it no longer provides a benefit in terms of diversification relative to the other securities in the fund's portfolio. Conversely, a new security will be added to the fund's portfolio when the portfolio managers believe it presents a meaningful diversification benefit.
The fund may, but is not required to, use derivative or other strategic instruments, principally options, futures and options on futures, contracts for difference, forward contracts and swap agreements (including total return swaps), as a substitute for investing directly in an underlying asset, to increase returns, to manage foreign currency risk, as part of a hedging strategy or for other purposes related to the management of the fund. There is no limit to the amount of the fund's assets that may be invested in derivative instruments. To the extent such instruments have similar economic characteristics to equity securities as described in the fund's policy with respect to the investment of at least 80% of its net assets, these investments will be considered investments included within such policy.
Equity funds are subject generally to market, market sector, market liquidity, issuer and investment style risks, among other factors, to varying degrees, all of which are more fully described in the fund's prospectus.
Investing internationally involves special risks, including changes in currency exchange rates, political, economic and social instability, a lack of comprehensive company information, differing auditing and legal standards and less market liquidity.
Emerging markets tend to be more volatile than the markets of more mature economies, and generally have less diverse and less mature economic structures and less stable political systems than those of developed countries. Asset allocation and diversification do not ensure a profit or protect against loss. Patent protection on the fund's investment process is not suggestive of potential success of the strategy.
Sharpe ratio measures risk-adjusted performance and indicates reward per unit of risk. The higher the Sharpe ratio, the better the portfolio's risk-adjusted performance has been.
Investors should consider the investment objectives, risks, charges, and expenses of the fund carefully before investing. Download a prospectus, or a summary prospectus, if available, that contains this and other information about the fund, and read it carefully before investing.