Key Takeaways:

• China’s liquidity-led rally, AI investment surge, and gradual consumer recovery highlight a more pragmatic policy stance.
• Taiwan and South Korea benefit from global AI demand, with semiconductors and memory chips driving equity gains.
• Brazil, India, and GCC markets advance on easing rates, reform momentum, and strategic diversification, while Argentina lags on political risk.

Emerging markets have delivered strong results in 2025, supported by a broad shift in global conditions. A weaker U.S. dollar, moderating inflation, and the end of tightening cycles across key EM central banks have combined with structural growth stories to draw renewed investor flows into the asset class. Equity performance has been underpinned by abundant liquidity in Asia, policy-driven reforms in markets such as India and the Gulf, and cyclical tailwinds in Latin America. While global growth remains uneven, the relative stability and improving fundamentals across many emerging economies have made them stand out in a year when developed markets have faced headwinds.

China: Liquidity-Led Rally Meets Structural Reform

China’s equity market staged a strong, liquidity-driven rally in Q3 2025, moving ahead of underlying economic fundamentals. The Shanghai Composite Index rose approximately 25% from its April lows to a 10-year high, despite the broader economy remaining weighed down by the property sector and deflationary pressures. Abundant liquidity and limited returns in deposits or government bonds encouraged a shift of savings into equities. The rally has so far been led by institutions and sovereign investors rather than retail speculation, which provides some comfort regarding durability.

Investor sentiment has improved on signs that Beijing is adopting a more pragmatic policy stance both externally and domestically. Measures to tackle excess supply and suppress deflationary trends have been introduced, with concepts such as “anti-involution” gaining prominence in policy discussions. We welcome these supply-side reforms, as chronic overcapacity and cutthroat competition have long constrained corporate returns. That said, adjustments in areas like EVs may weigh on near-term growth sentiment. Implementation this time is also more complex than during the 2015–2016 cycle, when excess capacity was concentrated in commoditized, state-dominated industries more amenable to top-down directives. Nevertheless, we view these reforms as directionally healthy and ultimately supportive of more sustainable profitability.

At the same time, China’s leading technology firms have announced substantial commitments to artificial intelligence. Alibaba (2.7% of Fund net assets*) has outlined plans to invest roughly $52 billion in AI and cloud infrastructure, with management signaling potential upward revisions, while Tencent (4.2% of Fund net assets*) also indicated higher AI-related spending. Domestic semiconductor capabilities continue to advance more quickly than anticipated, providing a stronger foundation for the ecosystem. We remain constructive on China’s long-term AI growth potential, underpinned by abundant and relatively low-cost power as well as easing chip constraints. Against this backdrop, we have been steadily adding exposure to companies positioned to benefit from both AI infrastructure and applications. Encouragingly, these holdings have delivered meaningful outperformance while still trading at attractive valuations relative to global peers and their own history. Consumer-facing companies, particularly those centered on experiences, are showing encouraging signs of recovery. Travel demand continues to rebound, with Trip.com (1.2% of Fund net assets) delivering double-digit revenue growth, while leisure spending is fueling both Macau’s gaming industry and online entertainment platforms such as NetEase (1.9% of Fund net assets*) and Tencent—trends that have reflected positively in our holdings. These dynamics point to a gradual normalization of household activity, adding a cyclical layer to China’s growth profile.

Overall, while equities have rallied ahead of underlying fundamentals, we believe accommodative policy, accelerating AI-related investment, and a more constructive external backdrop could sustain near-term momentum, even as the broader economic recovery remains measured.

Taiwan: Semiconductors at the Center of AI Growth

Taiwan benefited from strong demand for advanced semiconductors and its central role in the global AI supply chain. Taiwan Semiconductor Manufacturing Company (TSMC) (9.5% of Fund net assets*) remains the primary beneficiary, with global cloud providers increasing their long-term infrastructure commitments, which implies substantial future chip demand. TSMC’s shares appreciated significantly during the quarter, reflecting both order momentum and its dominance in advanced manufacturing.

The broader Taiwanese technology supply chain also stands to benefit, with contract manufacturers and component suppliers participating in the uplift from global AI investment. While geopolitical risks remain an overhang, cross-strait tensions were relatively subdued in Q3, allowing fundamentals to drive market performance.

South Korea: Memory Cycle Revival and Governance Reforms

South Korea’s equity market delivered strong returns, supported by technology and incremental policy reforms. Semiconductor manufacturers led performance. SK Hynix (3.6% of Fund net assets*) benefited from strong demand for high-bandwidth memory chips used in AI servers, while Samsung Electronics (2.7% of Fund net assets*) gained on expectations it will also qualify as a supplier to leading AI chipmakers. The memory cycle has turned up faster than expected, easing earlier concerns of prolonged oversupply.

Policy initiatives under the government’s “Value-Up” program, designed to improve corporate governance and shareholder returns, have contributed to rising investor interest. Tax incentives linked to dividend payments and measures to stimulate consumption provided further support. We also initiated a position in HD Hyundai Electric (0.9% of Fund net assets*), which is well positioned to benefit from structural demand for power infrastructure upgrades tied to global data center expansion.

Brazil: Easing Rates Fuel Consumer-Led Momentum

Brazil’s market continued to improve as the interest rate cycle turned. The central bank ended its tightening phase, and markets anticipate rate cuts in late 2025 or early 2026. This has created a supportive backdrop for equities, particularly in consumption-oriented sectors.

The quarter included a short-lived disruption from U.S. tariff announcements. While headline tariffs appeared severe, exemptions covering major export categories such as iron ore, oil, and agribusiness significantly limited the impact. As a result, the effect on corporate earnings was less negative than initially feared.

We initiated a position in Multiplan (0.2% of Fund net assets*), a leading shopping mall operator, which we expect to benefit from stronger consumer demand and lower financing costs as rates decline. Overall, Brazil remains a core market in Latin America, supported by improving monetary conditions and more stable fiscal management.

Argentina: Political Risk Forces a Strategic Exit

We exited our Argentina position during the quarter following a deterioration in the political outlook. Earlier optimism around reforms gave way to renewed political risk after a major corruption scandal and poor results for the ruling party in provincial elections. These developments undermined confidence in the reform program and shifted the risk profile to a binary outcome dependent on politics. Given the volatility and uncertainty, we decided to close the position.

Other Latin America: Peru and Mexico

Peru performed well, supported by improving political stability and economic recovery. Our holding in Credicorp (0.7% of Fund net assets*) appreciated significantly, leading us to trim the position on valuation grounds. We continue to view the long-term opportunity favorably.

In Mexico, we are reviewing opportunities but made no major portfolio changes. The market remains supported by nearshoring trends, though valuations are less compelling. We are monitoring developments for more attractive entry points.

India: Reforms and Domestic Demand Anchor Growth

India contributed positively, with our overweight positions performing well. Indian equities lagged some peers but rebounded from earlier pullbacks. A key development was the rollout of a new goods and services tax (GST) reform, which simplified the tax structure and reduced rates on consumer goods. This measure should support consumption over time and has been well received by markets.

While sentiment was impacted by higher-than-expected tariff announcements as well as U.S. visa policy changes and occasional protectionist rhetoric, these issues have limited direct impact on our domestically focused holdings. We remain constructive on India’s long-term outlook, supported by reforms, infrastructure spending, and favorable demographics and focus our exposure to domestic demand growth stories with solid returns and execution to capitalize on such trends.

Middle East (GCC): Reform Momentum and Strategic Diversification

The UAE continued to outperform, driven by reform momentum and investment in technology infrastructure. Abu Dhabi announced major projects in artificial intelligence and data centers, reinforcing the diversification strategy and supporting equity market performance. We initiated a position in one of the UAE’s largest banks, with a particular focus on Abu Dhabi. The bank has been expanding faster than its peers and is well positioned to benefit from the region’s anticipated large-scale investments across infrastructure, artificial intelligence, and other strategic sectors. Its strong balance sheet, solid capital base, and deep strategic relationships provide a competitive advantage that should enable it to capture these growth opportunities while maintaining resilience.

Saudi Arabia underperformed for much of the quarter due to softer oil prices and concerns around capital expenditure. However, late in the quarter the Capital Market Authority announced potential plans to lift foreign ownership limits on listed companies, a change that would significantly increase liquidity and index weightings. The market responded strongly, particularly in financials. We remain focused on Saudi domestic sectors, particularly banks, where reforms, non-oil growth investments and capital market development provide long-term support.

Poland: Policy Risks Challenge Banking Strength

Poland’s economy benefited from EU alignment and expansionary policies, but equity performance was undermined by a potential new tax on banks. The Finance Ministry announced an increase in the corporate tax rate for banks from 19-30% starting in 2026, stepping down gradually in subsequent years. While the legal process has yet to be finalized, this move was unexpected and weighed heavily on bank valuations.

Despite the near-term earnings impact, Polish banks and our holding in PKO (0.7% of Fund net assets*) remain fundamentally sound, with solid balance sheets and ongoing credit growth. We continue to hold core positions but trimmed exposure to manage risk. We remain constructive on the broader Polish economy, supported by EU funds and regional trade and fiscal expansion dynamics.

Portfolio Positioning and Outlook

We took a proactive approach to portfolio positioning in Q3, adding new exposures in Asia—including China, Korea, and ASEAN—alongside the UAE and Brazil, while slightly trimming Peru and fully exiting Argentina. These moves sharpen our tilt toward markets where reform momentum, policy support, and long-term growth prospects are strongest, particularly in Asia and the Middle East.

Emerging markets enter the final quarter of 2025 with a supportive backdrop of moderating inflation, peaking policy rates, and ongoing reforms. While global growth remains subdued and risks persist, valuations across emerging markets remain reasonable, and earnings momentum is building in several key sectors. We will continue to balance tactical adjustments with a long-term focus on quality and structural growth opportunities.

Fund Performance

The VanEck Emerging Markets Fund (the “Fund”) underperformed the MSCI EM IMI Index on the quarter-to-date basis ending September 30, 2025 (+7.95% for the Fund; +9.88% for the Index). Positive relative performance for the quarter was driven by stock selection in South Korea and Greece. Negative relative performance was driven by stock selection in China and Brazil.

China and Taiwan were the Fund’s top contributors for the quarter.

Average Annual Total Returns (%) as of September 30, 2025

The table presents past performance which is no guarantee of future results and which may be lower or higher than current performance. Returns reflect applicable fee waivers and/or expense reimbursements. Had the Fund incurred all expenses and fees, investment returns would have been reduced. Investment returns and Fund shares values will fluctuate so that investor's shares, when redeemed, may be worth more or less than their original cost. Fund returns assume that dividends and capital gains distributions have been reinvested in the Fund at net asset value (NAV). Index returns assume that dividends of the Index constituents in the Index have been reinvested. Performance information current to the most recent month end is available by calling 800.826.2333 or by visiting vaneck.com.

Expenses: Class A: Gross 1.59%; Net 1.59%; Class I: Gross 1.25%; Net 1.02%. Expenses are capped contractually until 5/1/26 at 1.60% for Class A and 1.00% for Class I. Caps exclude acquired fund fees and expenses, interest, trading, dividends, interest payments of securities sold short, taxes and extraordinary expenses.

Fund Review

On a sector level, Consumer Staples, Utilities, and Financials contributed to relative performance, while Real Estate, Materials, and Energy detracted. On a country level, South Korea, Greece and Saudi Arabia contributed to relative performance, while China, Brazil and Poland detracted.

Top Contributors

Top contributors to return on an absolute basis during the quarter:

• Taiwan Semiconductor Manufacturing Co. (“TSMC”) (9.5% of Fund net assets*): TSMC is the world’s leading semiconductor foundry, supplying advanced chips to the biggest names in global technology. It is also the largest position in the Fund’s portfolio. TSMC’s dominance has been built over two decades through customer focus, operational excellence, and technological leadership. We believe its exceptionally wide economic moat—supported by its singular manufacturing expertise and unmatched client base—will continue to reward long-term investors. While quarterly growth may vary, we see TSMC as a core holding with a justified place as the Fund’s largest exposure.
• Alibaba (2.7% of Fund net assets*): Alibaba, China’s largest e-commerce and cloud platform operator, delivered solid results with revenue up ~8% year-over-year and adjusted EPS rising ~13%. Its “AI + Cloud” strategy is gaining traction, with cloud revenue growing ~11% (ex-subsidiaries) and AI-related products sustaining triple-digit growth. Core commerce remained healthy, supported by Taobao/Tmall user and order growth and the continued expansion of the 88VIP membership base. Restructuring efforts and refreshed leadership are driving greater strategic focus and agility. We see Alibaba emerging as a national leader in AI infrastructure, with management planning more than $50 billion in AI cloud CAPEX over the next three years. While competition in e-commerce and food delivery is intensifying, Alibaba’s integrated model should allow it to capture synergies and monetize investments more effectively. Despite strong share price gains, we believe execution strength and rising conviction in strategy can support further rerating over the medium term.
• Tencent Holdings (4.2% of Fund net assets*): Tencent, China’s leading internet and technology platform, delivered a robust quarter with strength across gaming, advertising, and cloud. We are beginning to see meaningful AI-driven enhancements across its ecosystem, particularly in advertising, where improved targeting can continue to drive higher conversion rates and monetization without compromising user experience. Tencent also continues to expand its cloud capabilities and application suite, positioning itself to benefit from the next wave of AI adoption. With unmatched scale, a vast user base, and a highly diversified business model, Tencent is uniquely placed to capture secular growth opportunities while remaining resilient amid a challenging macro environment. We remain constructive on its medium-term outlook, supported by structural growth in AI, cloud, and platform monetization.

Top Detractors

Top detractors to return on an absolute basis during the quarter:

• Reliance Industries (2.9% of Fund net assets*): Reliance Industries, one of India’s largest conglomerates, spans technology, retail, renewables, and petrochemicals. After a strong start to the year, the stock underperformed in Q3, with modest softness tied to U.S.–India tariff discussions. We maintain a large position given Reliance’s embedded value, with the planned spin-off of its mobile and internet services—and the anticipated telecom IPO—serving as a key potential catalyst for further upside.
• Oberoi Realty (1.5% of Fund net assets*): Oberoi Realty has seen several quarters of underperformance, following a remarkable 300–400% rally in prior years. The weakness is consistent with broader softness in Indian real estate equities over the past year. We continue to hold our position, as Oberoi remains well-positioned in its market and benefits from structural drivers such as urbanization, rising homeownership demand, and India’s ongoing economic development—factors that support a constructive long-term outlook.
• MercadoLibre (“MELI”) (2.4% of Fund net assets*): MELI is Latin America’s leading e-commerce and fintech platform, with dominant scale in Brazil and across the region. Shares faced near-term pressure after Amazon waived seller fees through year-end, but sellers continue to favor MELI for its superior logistics, onboarding, and fintech integration. While Q3 margins will reflect higher shipping, marketing, and fulfillment costs, Gross Merchandise Value (GMV) growth, advertising momentum, and resilient credit performance should help offset pressures. We continue to view MELI as the structural winner in LatAm e-commerce, with any weakness creating a potential entry opportunity.

Top Buys & Sells

During the period, we established new positions in the following:

• Abu Dhabi Commercial Bank (“ADCB”) (0.5% of Fund net assets*): ADCB, the UAE’s third-largest bank with over 2.4 million customers, has outpaced peers with more than 15% annual loan growth for two years and doubled net income from 2021–2024, reaching an 18% market share. Management targets ~20% earnings CAGR through 2029, supported by strong loan demand and Abu Dhabi’s strategic spending on AI, technology, and infrastructure. We initiated a position given ADCB’s compelling growth outlook, with mid-teens loan expansion expected over the next five years, driven by government-related entities and international growth, particularly in Saudi Arabia.
• China Resources Mixc Lifestyle Services (0.8% of Fund net assets*): China Resources Mixc Lifestyle is China’s leading premium shopping mall operator and the property management arm of CR Land. Unlike peers reliant on low-margin residential management, Mixc derives ~25% of revenue from high-end malls, which generate over 50% of gross profit with 72% gross margins. Supported by luxury tenants, a 57mn-member loyalty program, ~97% occupancy, and strong same-store sales, Mixc has built one of the most resilient retail platforms in China. We like Mixc for its robust growth pipeline from CR Land and third-party developers, continued expansion into luxury malls, and rising brand partnerships. With sector-leading margins, ~22% ROE, and a 100% payout ratio (~5% yield), Mixc offers both quality and income. We see it as a structural winner in China’s retail property sector, with strong brand equity and a long runway for premium mall growth.
• HY Hyundai Electric (0.9% of Fund net assets*): HDE is the largest manufacturer of large power transformers (LPTs) in the U.S., with more than a decade of experience serving utilities. The company is positioned to be a prime beneficiary of structural U.S. demand growth, underpinned by rising ASPs, strong new orders, and a persistent supply-demand imbalance given disciplined capacity expansion. Internationally, HDE is capturing accelerating transmission capex in the Middle East, now its second-largest market, with orders more than doubling since 2021. We like HDE for its revenue visibility supported by a robust backlog, strong ROE, and diversified global growth drivers.
• Mao Geping Cosmetics (“MGP”) (0.4% of Fund net assets*): Maogeping is China’s leading premium cosmetics brand, differentiated by its focus on high-end makeup (60% of revenue) and strong offline presence, where personalized services drive loyalty and repeat purchases. Leveraging Mao Geping’s brand equity and unique customer engagement model, MGP competes directly with global luxury names like YSL and NARS, but at more accessible price points. With best-in-class gross margins (~84–86%), strong traction across offline and digital channels, and forecast EPS growth of ~26–28% CAGR through 2026, we see MGP as a structural winner in China’s premium beauty market.
• Multiplan Empreendimentos Imobiliarios SA (0.2% of Fund net assets*): Multiplan, one of Brazil’s highest-quality real estate names, is well positioned to benefit from the coming monetary easing cycle. The company owns 20 premium malls in affluent, high-traffic areas, delivering resilient tenant sales, near-full occupancy, and net operating income (NOI) margins above 90%. Inflation-linked leases provide stability, while management has a strong track record of execution and disciplined capital allocation. Trading at attractive multiples, Multiplan offers both near-term upside from expected SELIC cuts in 2026 and long-term growth from structural retail demand, premium consumer exposure, and free cash flow expansion—making it a compelling addition to the portfolio.
• P.N. Gadgil Jewellers Limited (“PNG”) (0.2% of Fund net assets*): PNG is a heritage jewelry brand with deep-rooted trust among Indian consumers, built over generations. Its customer-first model, which is anchored on personalized service, quality assurance, and transparent repurchase policies, has created a scalable moat that drives repeat business and sustainable growth. The company is well placed to capture structural tailwinds in India’s jewelry sector, including the shift toward organized retail, rising consumer aspirations, and regulatory formalization. With a strong brand, proven scalability, and balanced presence across physical and digital channels, PNG is positioned to deliver long-term value as demand for authentic, premium jewelry expands.
• Sea Limited Sponsored (“SE”) (0.5% of Fund net assets*): SE is a Singapore-based consumer internet company with three core businesses: Shopee (e-commerce), Garena (digital entertainment), and SeaMoney (digital financial services). Since 2024, EPS upgrades and multiple expansion have been supported by a more rational ASEAN market, sharper focus on profitability, and strong execution in Brazil. Sea has shifted from a turnaround story to a long-term compounder. Low e-commerce penetration in ASEAN and Brazil, rising take rates, and improving unit economics support sustained GMV growth, while SeaMoney’s evolution into a standalone fintech platform offers additional long-term value.
• Tencent Music Entertainment Group (“TME”) (0.5% of Fund net assets*): TME, often called the “Spotify of China,” operates a more innovative, fan-driven model that extends beyond streaming into concerts, karaoke, and merchandise—deepening engagement and driving higher ARPPU. Unlike global peers, TME enjoys structurally higher margins thanks to lower label costs and a growing library of self-produced content. Margins should expand further on the back of SVIP upgrades, ad monetization, and operating leverage. Trading at just 25x 2025 P/E versus Spotify’s ~57x, TME offers a compelling blend of growth, profitability, and relative value.
• Yum China Holdings, Inc. (“YUMC”) (0.5% of Fund net assets*): Yum China is the country’s largest restaurant operator, with over 16,000 stores across KFC, Pizza Hut, and emerging formats such as K Coffee. The company is improving operations through its Fresh Eye (store efficiency) and Red Eye (supply chain) initiatives while expanding with smaller, capital-light formats. White-space growth in lower-tier cities and a greater tilt toward franchising provide a clear path to 20,000 stores by 2026 with improving returns on capital. We like YUMC for its combination of scale, profitability recovery, and shareholder returns. Margins are improving (1Q25 OPM 13.4%, +80bps YoY), Pizza Hut has turned more profitable, and buybacks are accelerating ($510m in 2H25). At just 17x forward P/E—below global peers—YUMC offers a compelling way to own China’s dominant restaurant platform with both margin recovery and structural growth ahead.

During the period, we exited the following positions:

• Proya Cosmetics Co.: Proya, once a leading Chinese skincare brand, has seen growth slow to single digits as flagship products mature and new launches underperform. The brand is being squeezed between premium global players and cheaper domestic rivals like Kans and Comfy, which are rapidly gaining share via Douyin at lower price points. Execution risk has risen with multiple senior management departures, while recent festival sales significantly lagged peers. Although margins have held up, weakening top-line growth, eroding market share, and organizational instability led us to exit the position and reallocate capital to higher-conviction names such as Maogeping.
• Arcos Dorados Holdings: Arcos Dorados, the largest McDonald’s franchise in Latin America, was exited from the portfolio due to mounting macro headwinds and limited near-term visibility. Rising meat costs in Brazil, weak demand under high interest rates, and currency depreciation are pressuring margins and sales, while Argentina’s normalization phase has weighed on consumer trends. With consensus pointing to declining EBITDA and stronger opportunities in other LatAm names, we see limited upside despite the stock’s low valuation.
• Tofas Turk Otomobil Fabrikasi A.S.: Tofaş, founded in 1968 as a joint venture between Koç Holding and Stellantis, is one of Turkey’s leading auto manufacturers. Following its merger with Stellantis’ Turkey distribution assets, the company has become the country’s largest light vehicle player with a 30% pro forma market share. However, model discontinuations drove capacity utilization down to 35% in 2024 from 60% the prior year, and margins now face pressure from lower utilization and a greater distribution mix. With limited near-term catalysts and rising competition—particularly from Chinese automakers—we exited the position and remain cautious on the longer-term outlook.
• Grupo Financiero Galicia SA: Banco Galicia, one of Argentina’s largest banks, was exited from the portfolio amid rising political risk, weakening macro conditions, and reduced earnings visibility. The electoral defeat in Buenos Aires bolstered the Peronist opposition, increasing the risk of legislative gridlock, while corruption scandals further undermined reform prospects. At the macro level, tight fiscal and monetary conditions have slowed loan growth, with little near-term visibility for recovery. Although Argentina’s low credit penetration offers long-term potential, we see limited catalysts in the current environment and chose to close the position.
• Meituan Class: Meituan remains China’s market leader in food delivery but has been severely impacted by an escalating subsidy war. Unit economics fell from RMB 1.5 per order in March 2025 to RMB 0.8 in June and are expected to weaken further, as industry players collectively burned ~RMB 50bn in subsidies during Q3. While Meituan retains scale and superior delivery quality versus peers, profitability has become highly uncertain. We exited the stock as earnings visibility is weak and valuation depends on volatile assumptions around subsidies and unit economics. Despite its long-term leadership, structural headwinds from competition, regulation, and reliance on costly subsidies make the risk/reward unattractive. We believe capital is better deployed in higher-conviction opportunities.

Conclusion

We remain grounded by our investment process and our positioning reflects our convictions from a bottom-up perspective. Our process has created some positioning differentials versus the benchmark. Brazil remains overweight to start the quarter (7.7% Fund weight versus 4.1% Index weight), as does Georgia (2.0% versus 0.0% Index weight).

Taiwan, South Africa, and South Korea remain underweight versus the benchmark.

The Fund’s objective is to find long-term structural growth companies at fair prices (S-GARP). Investments are chosen based on individual company analysis, focusing on quality, governance, innovative business models and low disruption risk, with active management and detailed research guiding our selection process.

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