Portfolio
Turnover. The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or “turns over”
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable
account. These costs, which are not reflected in annual fund operating expenses
or in the example, affect the Fund’s performance. During the fiscal year ended
October 31, 2022, the Fund’s portfolio turnover rate was 27% of the average value of its
portfolio.
PRINCIPAL
INVESTMENT STRATEGY. The Fund
seeks to achieve its investment objective by investing at least 65% of its net
assets in foreign equity securities. Under normal circumstances, the Fund
invests at least 80% of its assets in equity securities or equity-related
securities, including derivative investments that provide exposure to equity
securities. The Fund seeks to outperform the MSCI ACWI ex USA Index. The Fund
diversifies its investments among a broad range of companies in a number of
different countries throughout the world, with no limit on the amount of assets
that may be invested in each country. Securities in which the Fund invests are
denominated in both U.S. dollars and foreign currencies and may trade in both
U.S. and foreign markets. The Fund may invest in securities of companies that
conduct their principal business activities in emerging markets or whose
securities are traded principally on exchanges in emerging markets. The Fund may
invest in companies of any market capitalization, and may trade securities
actively.
The Fund seeks its investment
objective by employing a multiple sleeve structure, which means the Fund has
several components that are managed
separately using
different investment styles. Each component sleeve has a distinct investment
philosophy and analytical process to identify specific securities for purchase
or sale. Each of these sleeves is managed independently of each other.
Wellington Management Company LLP (“Wellington Management”), the Fund’s
sub-adviser, also may invest a portion of the Fund’s assets in securities that
it believes may complement the risk factor biases of the other sleeves (“Risk
Managed Sleeve”) and selects such securities using systematic screening
methodologies. Wellington Management does not allocate a set percentage to any
specific sleeve but instead seeks a flexible and diversified Fund profile.
Together the strategies represent a wide range of investment philosophies that
are intended to be complementary to each other, companies, industries, and
market capitalizations.
Investments
are deemed to be “foreign” if: (a) an issuer’s domicile or location of
headquarters is in a foreign country; (b) an issuer derives a significant
proportion (at least 50%) of its revenues or profits from goods produced or
sold, investments made, or services performed in a foreign country or has at
least 50% of its assets situated in a foreign country; (c) the principal trading
market for a security is located in a foreign country; or (d) it is a foreign
currency.
PRINCIPAL
RISKS. The principal
risks of investing in the Fund are described below. When you sell
your shares they may be worth more
or less than what you paid for them, which means that you could lose money as a
result of your investment. An
investment in the Fund is not a bank deposit and is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government
agency. As with any
fund, there is no guarantee that the Fund will achieve its investment
objective.
Market
Risk –
Market risk
is the risk that one or more markets in which the Fund invests will go down in
value, including the possibility that the markets will go down sharply and
unpredictably. Securities of a company may decline in value due to its financial
prospects and activities, including certain operational impacts, such as data
breaches and cybersecurity attacks. Securities may also decline in value due to
general market and economic movements and trends, including adverse changes to
credit markets, or as a result of other events such as geopolitical events,
natural disasters, or widespread pandemics (such as COVID-19) or other adverse
public health developments.
Foreign
Investments Risk –
Investments in
foreign securities may be riskier, more volatile, and less liquid than
investments in U.S. securities. Differences between the U.S. and foreign
regulatory regimes and securities markets, including the less stringent investor
protection, less stringent accounting, corporate governance, financial reporting
and disclosure standards of some foreign markets, as well as political and
economic developments in foreign countries and regions and the U.S. (including
the imposition of sanctions, tariffs, or other governmental restrictions), may
affect the value of the Fund’s investments in foreign securities. Changes in
currency exchange rates may also adversely affect the Fund’s foreign
investments.
Emerging
Markets Risk –
The risks
related to investing in foreign securities are generally greater with respect to
investments in companies that conduct their principal business activities in
emerging markets or whose securities are traded principally on exchanges in
emerging markets. The risks of investing in emerging markets include risks of
illiquidity, increased price volatility, smaller market capitalizations, less
government regulation and oversight, less extensive and less frequent
accounting, financial, auditing and other reporting requirements, significant
delays in settlement of trades, risk of loss resulting from problems in share
registration and custody and substantial economic and political disruptions. In
addition, the imposition of exchange controls (including repatriation
restrictions), sanctions,