large- and
mid-cap companies in developed countries outside the U.S. The Subadviser may endeavor to track the Index by
purchasing every stock included in the Index, in the same proportions; or, in the alternative, the Subadviser
may invest in a sampling of Index stocks by utilizing a statistical technique known as “optimization.” The goal of optimization is to select stocks which ensure that various industry weightings, market capitalizations, and fundamental characteristics,
(e.g., price-to-book,
price-to-earnings, debt-to-asset ratios and dividend yields) closely approximate those of the Index.
The Fund invests,
under normal circumstances, at least 80% of net assets in stocks that are in the Index. Although the Fund seeks
to track the performance of the Index, the performance of the Fund will not match that of the Index exactly
because, among other reasons, the Fund incurs operating expenses and other investment overhead as part of its
normal operations.
In order to generate additional income, the Fund may lend portfolio securities to broker-dealers and other
financial institutions provided that the value of the loaned securities does not exceed 30% of the Fund’s
total assets. These loans earn income for the Fund and are collateralized by cash and securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities. Investors will be given at least 60
days’ written notice in advance of any change to the Fund’s 80% investment policy set forth
above.
Principal Risks of Investing in the Fund
As with any mutual fund, there can be no assurance that the Fund’s investment objective will be met or
that the net return on an investment in the Fund will exceed what could have been obtained through other
investment or savings vehicles. Shares of the Fund are not bank deposits and are not guaranteed or insured by any bank, government entity or the Federal Deposit Insurance Corporation. If the value of the assets of the Fund goes down, you could lose money.
The following is a summary of
the principal risks of investing in the Fund.
Equity Securities Risk. The Fund invests principally in equity securities and is therefore subject to the risk that stock prices will fall and may underperform other asset classes. Individual stock prices fluctuate from day-to-day and may decline significantly. The prices of individual stocks may be negatively affected by poor company results or other factors affecting individual prices, as well as industry and/or economic trends and developments affecting industries or the securities market as a whole.
Index Risk. In
attempting to track the performance of the index, the Fund may be more susceptible to adverse developments
concerning a particular security, company or industry because the Fund generally will not use any defensive
strategies to mitigate its risk exposure.
Failure to Match Index
Performance Risk. The ability of the Fund to match the performance of the Underlying Index may be affected by, among other things, changes in securities markets, the manner in which performance of the Underlying Index is calculated, changes in the composition of the Underlying Index, the amount and timing of cash flows into and out of the Fund, commissions, portfolio expenses, and any differences in the pricing of securities by the Fund and the Underlying Index. When the Fund employs an “optimization”
strategy, the Fund is subject to an increased risk of tracking error, in that the securities selected in the
aggregate for the Fund may perform differently than the Index.
Foreign Investment Risk. Investment in foreign securities involves risks due to several factors, such as illiquidity, the lack of public information, changes in the
exchange rates between foreign currencies and the U.S. dollar, unfavorable political, social and legal developments, or economic and financial instability. Foreign companies are not subject to the U.S. accounting and financial reporting standards and may have riskier settlement procedures. U.S. investments that are denominated in foreign currencies or that are traded in foreign markets, or securities of U.S. companies that have significant foreign operations may be subject to foreign investment risk.
Currency Risk.
Because the Fund’s foreign investments are generally held in foreign currencies, the Fund could
experience gains or losses based solely on changes in the exchange rate between foreign currencies and the U.S.
dollar. Such gains or losses may be substantial.
Geographic Risk. If the Fund invests a significant portion of its assets in issuers located in a single country, a limited number of countries, or a particular geographic region, it
assumes the risk that economic, political and social conditions in those countries or that region may have a
significant impact on its investment performance.
Large- and Mid-Cap Company Risk. Investing in large- and mid-cap companies carries the risk that due to current market conditions these companies may be out of favor with investors. Large-cap companies may be unable to respond quickly to new competitive challenges or attain the high growth rate of successful smaller companies. Stocks of mid-cap companies may be more volatile than