Because the values of the Fund's investments will fluctuate with market conditions, so will the value of your investment in the Fund. You could lose money on your investment in the Fund, or the Fund could underperform other investments. The values of the Fund’s investments fluctuate in response to the activities of individual companies and general stock market and economic conditions. In addition, the performance of foreign securities depends on the political and economic environments and other overall economic conditions in the countries where the Fund invests. Emerging country markets involve greater risk and volatility than more developed markets. Some emerging markets countries may have fixed or managed currencies that are not free-floating against the U.S. dollar. Certain of these currencies have experienced, and may experience in the future, substantial fluctuations or a steady devaluation relative to the U.S. dollar. Growth stocks typically are more volatile than value stocks; however, value stocks have a lower expected growth rate in earnings and sales.
1 Sources: Worldscope via FactSet, The Brandes Institute, as of 6/30/2016. Using data from 1980 to 2016, the study showed that over the long term, based on price/book deciles, a value premium was evident across both large and small cap stocks in our Global Sample. The Global sample consisted of publicly traded companies domiciled in the United States and non-U.S. developed markets (excluding the smallest 50% of companies). We grouped the largest 30% of the companies in our sample in a large-cap segment and assigned the remaining 70% to a small-cap segment. Stocks were first divided into 10 deciles based on price-to-book. Aggregate performance of each decile was tracked over the next five years. This process was then repeated each year. Within the small-cap segment, decile 10 value stocks outperformed decile 1 glamour stocks by an average annualized rolling five-year return of 6.11%. Within the large-cap segment, decile 10 value stocks outperformed decile 1 glamour stocks by an average annualized rolling five-year return of 4.47%. Past performance is not a guarantee of future results.
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The Morningstar RatingTM 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 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. Ratings for other share classes may differ. For current performance, please view the Performance page of the web site or call 800.395.3807.