Key Takeaways

• EM has become an earnings story, and it is broader than AI. Outside AI, earnings momentum across emerging markets remains healthy, but the market is rewarding it unevenly, creating opportunities where durable growth is not yet reflected in valuations.
• Our on-the-ground research in Korea and Taiwan reinforced conviction in the AI supply chain. 2027 supply/demand visibility has improved, and memory producers are trading some near-term pricing upside for longer-term agreements. Fundamentals remain strong, but crowded global positioning and market concentration leave the sector vulnerable to sharp moves.
• Physical infrastructure and real assets are a growing complement to AI, and we are turning more positive on Latin America, and Brazil in particular, where resource wealth, reform orientation and quality companies at what we view as attractive valuations align.

Emerging markets fell slightly in the third quarter, maintaining an extended differentiated run versus global developed markets. The reflationary backdrop we described three months ago has largely persisted: the Middle East conflict has lasted longer than anticipated, and rates are staying higher for longer across much of the EM universe. But the more important development this quarter sat beneath the surface. EM has become an earnings story, and that story extends well beyond the AI names that have captured most of investors' attention and capital.

That shapes how we are positioned. Our research trips this quarter strengthened our conviction in the AI supply chain, which remains a core part of the portfolio. At the same time, we see growing scope for broader participation from domestic compounders and real-asset beneficiaries, including in Latin America and India, and selectively in China. AI does not need to break for the rest of EM to work, and we are positioning the portfolio to benefit from that broadening.

Themes

EM Is an Earnings Story, Underneath the Surface

AI hardware has delivered powerful earnings growth and attracted a growing share of investor capital. Less appreciated is the breadth of earnings growth elsewhere in emerging markets. Our company research and consensus earnings estimates point to healthy momentum beyond the AI supply chain, with businesses across countries and sectors delivering solid growth without receiving the same attention. The market is rewarding that growth unevenly, creating opportunities for a bottom-up investor to identify durable earnings power that is not yet fully reflected in valuations.

Our process is built for this environment. We look for businesses that sustainably earn returns above their cost of capital, supported by competitive advantages that are hard to replicate and opportunities to reinvest for growth. We then compare that earnings power with what the share price already assumes. Increasingly, the most attractive gaps between the two sit outside the most obvious AI beneficiaries.

AI: Conviction Reinforced on the Ground

We visited Korea and Taiwan during the quarter, and the trips reinforced our view that AI demand remains ahead of supply. Industry analyst estimates point to memory demand continuing to exceed supply, with supply growth constrained by physical limits: fab construction timelines, equipment lead times and skilled labor. Just as important, 2027 now offers considerably more visibility into supply/demand dynamics than it did even a few months ago, and what we heard on the ground reinforced its strength.

Taiwan reinforced that AI semiconductor demand remains very strong, with supply constraints and execution now more important than demand visibility. After our trip, we came away particularly constructive on ASICs, opticals, testing and CPUs, where demand, content growth and outsourcing opportunities continue to improve into 2027. Taiwan Semiconductor Manufacturing Co (15.9% of Fund net assets*) and the broader supply chain also continue to see tightness across leading-edge wafers, advanced packaging, memory and substrates. TSMC remains the core of our AI exposure.

The most notable shift is on the memory side. Samsung Electronics (9.2% of Fund net assets*) and SK Hynix (7.3% of Fund net assets*) are sacrificing some immediate pricing upside in exchange for longer-term agreements with customers. Contract price increases have moderated even as spot prices remain well above contract levels, a deliberate choice to prioritize earnings visibility over peak pricing. Customers are seeking to extend these commitments. In our view, a longer period of attractive earnings may be worth more than the highest possible peak. Record earnings are translating into substantial free cash flow, strengthening balance sheets and supporting larger capital returns through dividends and share buybacks. Combined with greater earnings visibility, this gives shareholders a more direct way to participate in the benefits of the AI investment cycle.

We continue to broaden the expression of the thesis beyond the most obvious beneficiaries. More complex AI systems are increasing testing requirements and demand for advanced packaging and substrates. We believe spending on semiconductor packaging and testing capacity could accelerate in 2027. We added ASMPT (0.6% of Fund net assets*) during the quarter and hold Chroma ATE (3.6% of Fund net assets*) and Unimicron (0.8% of Fund net assets*) across that chain. Power equipment offers additional exposure to the investment cycle through HD Hyundai Electric (1.4% of Fund net assets*) and Doosan Enerbility (0.8% of Fund net assets*), with long-dated order backlogs and margins that improve as newer contracts convert. We are mindful, however, that power equipment extends our AI exposure more than it diversifies it: the demand driver is the same hyperscaler capex cycle.

We also remain mindful of positioning and risks. Korea experienced a sharp, leverage-driven correction earlier in the quarter, and while that pressure appears to have eased, AI remains a crowded trade globally. Hyperscaler capex is the variable we watch most closely, given both scrutiny of its free cash flow implications and the risk that the AI safety debate leads to regulation or political backlash that slows spending or deployment. Further out, a significant wave of new memory capacity is expected late 2027, and Chinese competition in NAND is a risk to monitor. We trimmed SK Square (0.7% of Fund net assets*) during the quarter to manage concentration in SK Hynix. As other parts of EM catch up on earnings recognition, we see that broadening as an opportunity rather than a threat to our AI positioning.

Physical Infrastructure, Real Assets and Latin America

Last quarter we described our shift from cyclical hesitation to structural conviction in select commodities. That view has strengthened. Selected resources and real assets are supported by electrification, the AI data center buildout and the additional investment in factories, power and logistics required as global supply chains become more regionalized. We added to our resource exposure during the quarter through Zijin Mining (1.1% of Fund net assets*) and new positions in Vedanta Aluminium (0.7% of Fund net assets*) and AngloGold Ashanti (0.7% of Fund net assets*). Copper and aluminum provide exposure to these infrastructure needs, while our gold exposure reflects concerns about persistent fiscal deficits, the potential erosion of the U.S. dollar's purchasing power over time and geopolitical uncertainty. Across these investments, we remain focused on company quality, capital discipline and valuation.

That theme leads us to a more positive view on Latin America. The region combines meaningful exposure to resources with a more reform-oriented policy direction across many of its economies, and it offers valuable diversification from the technology-heavy positioning in the portfolio's Asia allocation. In Peru, political clarity following this year's election and commodity tailwinds remain constructive for Credicorp (1.0% of Fund net assets*), which we added to during the quarter. We also initiated a position in Banco Itaú Chile (0.8% of Fund net assets*).

Brazil: turning more positive, with fiscal delivery the next test. Our September meetings in São Paulo reinforced our conviction that Brazil offers company quality that can be overlooked amid country uncertainty. The combination of substantial resources, a large domestic market and management teams tested by difficult environments creates a broad investment opportunity. Valuations remained attractive heading into the election, while cautious positioning left room for a meaningful response to better news.

After quarter-end, the October 4 first-round result was more market-friendly than expected, improving the prospects for a more disciplined fiscal agenda. Equities and the currency rallied sharply on October 5, while longer-term bond yields declined. The result strengthens our constructive view, although the October 25 runoff remains unresolved and expectations for reform still need to translate into delivery.

Our focus remains on the policy path and its implications for interest rates. Slowing growth and high real rates create scope for easing, but its depth and durability depend on inflation and fiscal credibility. A credible economic team, a concrete spending plan and congressional support would help lower borrowing costs and support a broader market re-rating. Sustained easing could also encourage domestic savings to move from fixed income into equities, benefiting both the market and the financial platforms that channel those flows.

During the quarter, our Brazil exposure emphasized businesses with resilient earnings and strong competitive positions: Itaú Unibanco (1.4% of Fund net assets*) and newly initiated BTG Pactual (0.5% of Fund net assets*); Rede D'Or (0.6% of Fund net assets*) in healthcare; and Multiplan (0.7% of Fund net assets*), supported by inflation-linked leases. We exited Nu Holdings as we shifted toward more diversified earnings and a more conservative credit profile. The election result makes us more constructive on selected domestic businesses, including homebuilders and capital-markets beneficiaries. Following the rally, further additions will depend on the balance between improving policy prospects and valuations. Fiscal slippage, broader credit deterioration or political disputes that delay reform would challenge that view.

Country Updates

China: A Q3 Bounce and a Reshuffled Book

Chinese equities rebounded in the third quarter, but the underlying economy remains K-shaped: areas supported by innovation and policy continue to strengthen, while domestic consumption remains soft. The Xi-Trump meeting yielded more of the same. The relationship continues to stabilize, with an extension of the existing truce, but there was no breakthrough.

Our China portfolio has evolved over recent months. We exited a number of consumer-facing and internet names, including NetEase, Kuaishou, Yum China, H World and ANTA Sports, and shifted toward businesses with stronger competitive positions and clearer structural growth drivers across healthcare, selected industrials and technology. Within healthcare, we added to WuXi Biologics (1.4% of Fund net assets*) and BeOne Medicines (1.1% of Fund net assets*), both strong performers this quarter. On the technology side, we initiated positions in NAURA Technology (0.7% of Fund net assets*) and Cambricon Technologies (0.3% of Fund net assets*), which benefit from China's rising AI investment and drive toward a self-sufficient semiconductor ecosystem. We also initiated Zhongji Innolight (0.6% of Fund net assets*), whose optical interconnect business also provides exposure to AI infrastructure spending by U.S. hyperscalers and demonstrates the global competitiveness of Chinese technology innovation. We also added to Ping An Insurance (0.7% of Fund net assets*), reflecting its position to benefit as Chinese savers seek alternatives to low-yielding deposits, a dynamic we highlighted last quarter. These changes reflect our focus on company-specific earnings drivers, competitive advantages and valuation within an uneven Chinese economy.

India: A Stock Picker's Market

“India is never as bad as it seems, and never as good as it seems.” That observation from a CFO we met in Mumbai in September captures our view well. On the ground, India is running better than the pessimists expect. Delhivery (0.9% of Fund net assets*) is one example of a business seeing resilient activity, and our broader conversations in Mumbai found little sign of stress in value-oriented consumer segments, where an input-cost squeeze would typically show up first. Public data agree: UPI transactions hit a record 24.5 billion in August, up 22% year over year according to National Payments Corporation of India (NPCI) data, and e-way bills rose nearly 8%.

The macro backdrop remains uneven. Modest income and employment growth leave households sensitive to higher prices, while oil costs and tighter monetary policy could weigh on demand. For foreign investors, currency depreciation and capital gains taxes can also materially reduce local-market returns. These conditions reinforce our emphasis on company-specific earnings growth and valuation. A more supportive currency or policy backdrop could broaden market participation, and we remain attentive to that possibility.

The result is a stock picker's market, where we favor businesses with durable competitive advantages and structural growth drivers that can withstand a less supportive macro environment. Capital goods and the power investment cycle remain important areas of exposure. Larsen & Toubro (0.7% of Fund net assets*) benefits from a multi-year infrastructure pipeline, while KEI Industries (0.8% of Fund net assets*) provides exposure through demand for the wires and cables needed to expand power networks and support electrification. We remain attentive to valuations and position sizes as market sentiment shifts across these sectors. Our trip also highlighted longer-term opportunities in pharmaceutical manufacturing and healthcare services, which we continue to evaluate. We continue to avoid large-cap IT services, where currency depreciation has cushioned the impact of competitive pricing pressure, while exploring selected businesses with differentiated AI capabilities. Across these opportunities, governance, earnings durability and the price paid remain central to our investment decisions.

Mexico: Steady Execution Through the Noise

Mexico's strategic relationship with the United States remains central to our investment case. While uncertainty around USMCA persists, the market appears increasingly willing to look beyond the timing of a comprehensive extension and focus on the commercial ties supporting investment. Growing Mexican electronics exports linked to the U.S. data center buildout illustrate that opportunity. Vesta (0.7% of Fund net assets*) cited demand from AI-related infrastructure and electronics, alongside logistics and other segments, on its second-quarter 2026 earnings call on July 23, 2026. Banks such as Banorte (0.8% of Fund net assets*) should also benefit as investment translates into demand for financing and financial services.

Domestic consumption remains weak, making business-model differentiation and execution particularly important. BBB Foods (1.4% of Fund net assets*) has continued to stand out, with its discount format and disciplined execution supporting outperformance in a difficult consumer environment. These opportunities reinforce our focus on companies with identifiable growth drivers and competitive strengths while the broader policy outlook remains unsettled.

Middle East: Resilience and Investment Cycle

We remain cautious about regional tensions, but evidence from businesses in the UAE points to resilience in domestic demand. UAE school operator Taaleem (not a Fund holding) expects private-school enrollment to rise about 7% this academic year, with nine of its 15 private schools at capacity, according to Dubai Standard. We view this recovery as an encouraging signal of resident population resilience and stabilizing demand for local services, even as regional uncertainty persists.

Energy policy is also strengthening the medium-term investment case. The UAE's exit from OPEC and OPEC+, announced on April 28, 2026 and effective May 1, 2026, provides greater flexibility to expand oil production, while its ambition to achieve gas self-sufficiency supports further upstream development. ADNOC Drilling (0.8% of Fund net assets*) provides direct exposure to both priorities through its exclusive drilling relationship with ADNOC, with long-term contracts supporting earnings visibility and providing protection for returns on invested capital.

Across the UAE and Saudi Arabia, the conflict has reinforced the strategic need for alternative energy export routes, storage and more resilient infrastructure. We expect these priorities to support a multi-year investment cycle, creating financing opportunities for selected banks. Our exposure includes Abu Dhabi Commercial Bank (0.7% of Fund net assets*), which we added to this quarter, alongside Al Rajhi Bank (0.7% of Fund net assets*) and Saudi National Bank (0.6% of Fund net assets*).

We also remain constructive on Saudi insurance, where expanding coverage and improving underwriting performance support the sector's development. Tawuniya (0.5% of Fund net assets*) offers broad exposure to this opportunity, while Rasan (0.7% of Fund net assets*) benefits from the shift toward digital insurance distribution. These holdings give us distinct company-level growth drivers alongside our exposure to the region's infrastructure investment.

Eastern Europe and Central Asia: Financials and Domestic Growth

Financials across emerging Europe and Central Asia remain an important source of domestic growth and capital returns within the portfolio. Their exposure to local credit demand, financial-services adoption and shareholder distributions provides a useful balance to our AI supply-chain holdings. We favor businesses with strong customer franchises, disciplined underwriting and the capacity to translate growth into shareholder returns.

For banks such as OTP Bank (1.1% of Fund net assets*) and Piraeus (1.1% of Fund net assets*), interest rates remaining higher for longer should support net interest margins, provided deposit costs and credit quality remain manageable. Hungary offers an additional policy catalyst: the new government's improving relationship with the EU has advanced the prospect of restoring withheld funding, with the European Commission proposing the release of €4.2 billion in frozen cohesion funds on September 23, 2026. We see scope for stronger investment and credit demand, supporting our position in OTP. In Greece, Piraeus combines growing lending and fee income with strong profitability and shareholder distributions.

Further east, Lion Finance (1.3% of Fund net assets*) provides exposure to expanding banking markets in Georgia and Armenia, where deepening customer relationships and digital adoption are supporting growth and high returns on equity. Kaspi (1.1% of Fund net assets*) offers a distinct opportunity through its integrated payments, commerce and financial-services ecosystem in Kazakhstan, alongside its expansion into Türkiye.

Since quarter-end, French sovereign-debt concerns have added pressure to European banking sentiment. Our investment case continues to rest on the domestic earnings drivers and financial strength of our holdings, while we monitor whether market stress translates into higher funding costs, tighter liquidity or weaker credit demand.

Turkey: A Market Dislocation

Turkey experienced a significant market dislocation during the quarter. On September 17, 2026, according to Reuters, Turkey's Capital Markets Board (SPK) referred 38 individuals to prosecutors over suspected share-price manipulation, after a number of local investment funds had built concentrated positions in thinly traded stocks. MSCI had flagged concerns about possible coordinated trading in its June 23, 2026 market classification review, warning that without credible progress by its November review it could launch a consultation on the treatment of Turkish securities. On the same day, the SPK ordered the liquidation of 130 investment funds run by seven managers (SPK Bulletin 2026/60), and according to Türkiye Today (September 29, 2026), prosecutors are investigating suspected market manipulation, money laundering and Capital Markets Law violations. The resulting fund liquidations drove sharp volatility and have weighed on confidence in market governance. Astor Enerji (0.5% of Fund net assets*) was a strong performer early in the quarter, but fell sharply in September. According to Türkiye Today (September 29, 2026), its chairman and vice chairman were among the individuals subject to asset freezes announced in the investigation, measures that remained in place for individuals after restrictions on companies were lifted. Astor is a Turkish manufacturer of power transformers and grid equipment, and we own it for its exposure to the global grid investment cycle, where electrification and data center demand are driving multi-year order growth. According to Middle East Eye (September 29, 2026), Astor stated publicly that the restrictions and freezing orders affecting the company had been lifted and that its operations were continuing uninterrupted. We believe the structural thesis remains intact, but limited clarity on the specific allegations and the investigation's timeline adds uncertainty. We are monitoring closely for any operational spillover and will adjust the position as the evidence warrants.

Our larger and longer-held Turkish position, hospital operator MLP Sağlık (0.8% of Fund net assets*), is not connected to the investigation and has been resilient through the volatility, with fundamentals that remain intact.

Outlook

Emerging markets have become an earnings story, and that story is broader than the market is currently rewarding. We remain constructive on the AI supply chain, where our on-the-ground research strengthened our conviction in persistent supply constraints and durability of earnings growth. We remain disciplined about positioning and concentration while finding a widening set of opportunities in physical infrastructure, real assets and Latin America, as well as in select domestic compounders across China, India and beyond.

U.S. midterm elections, the prolonged Middle East conflict, trade negotiations and crowded AI positioning remain potential sources of volatility. There are also encouraging developments: Brazil’s first-round election result since quarter-end has reduced political uncertainty, while parts of Latin America offer improving prospects for reform and policies supportive of private investment. Our approach remains consistent: identify businesses that can sustain returns above their cost of capital, assess how much of that earnings power is reflected in valuations, and size positions accordingly. We will give long-term investment cases time to develop, while adjusting our convictions and positioning as the evidence changes.

Fund Performance

The VanEck Emerging Markets Fund (the “Fund”) underperformed the MSCI Emerging Markets IMI Index on a quarter-to-date basis ending September 30, 2026 (-3.55% for Class A shares at NAV and -3.45% for Class I shares, versus -0.30% for the Index; see table below). Positive relative performance for the quarter was driven by stock selection in Mexico and allocation in Georgia. Negative relative performance was driven by stock selection in India and Brazil.

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

Average Annual Total Returns (%) as of September 30, 2026

Returns less than one year are not annualized

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.

The 'Net Asset Value' (NAV) of a Fund is determined at the close of each business day, and represents the dollar value of one share of the fund; it is calculated by taking the total assets of the fund, subtracting total liabilities, and dividing by the total number of shares outstanding.

Expenses: Class A: Gross 1.63%; Net 1.61%; Class I: Gross 1.23%; Net 1.01%. Expenses are capped contractually until 5/1/27 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, Information Technology, Healthcare and Consumer Staples contributed to relative performance, while Industrials, Financials and Energy detracted. On a country level, Mexico, Georgia and Greece contributed to relative performance, while India, Brazil and Turkey detracted.

Top Contributors

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

• WuXi Biologics (1.4% of Fund net assets*): WuXi Biologics is a global contract research, development and manufacturing organization for biologic drugs. It was our largest contributor as the market gained confidence in the durability of its growth, supported by a record backlog and leadership in bispecifics and antibody-drug conjugates. First-half 2026 results beat expectations on margin expansion, and concerns around the US Biosecure Act have eased as US revenue continues to grow. A new share buyback adds support, and the stock still trades below its historical average multiple.
• Taiwan Semiconductor Manufacturing Co (15.9% of Fund net assets*): TSMC is the world's largest dedicated semiconductor foundry, manufacturing advanced chips for leading designers including Nvidia, Apple and AMD. As the Fund's largest position, TSMC was our second-largest contributor, supported by its central role in the AI supply chain. Our Taiwan research confirmed continued tightness across leading-edge wafers and advanced packaging, with supply constraints and execution now more important than demand visibility. That tightness supports pricing power and confidence in the durability of its earnings growth.
• Samsung Electronics (9.2% of Fund net assets*): Samsung Electronics is one of the world's largest manufacturers of memory chips, smartphones and consumer electronics. Samsung's shares gained as its next-generation HBM4 memory, critical for AI data centers, began shipping in volume and lifted its share of HBM revenue to 33% in the second quarter of 2026 from 21% in the first, according to Counterpoint Research. With roughly 70% of its memory output now going into AI servers, the company delivered record profits, and investors are increasingly recognizing that it has narrowed the gap with its Korean rival.

Top Detractors

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

• SK Hynix (7.3% of Fund net assets*): SK Hynix is a South Korean semiconductor company and one of the world's largest memory chip producers. The company remains the leader in AI memory and reported record results, but its share of HBM revenue fell to 50% in the second quarter of 2026 from 58% in the first, mostly to Samsung, according to Counterpoint Research. Because the stock had been priced for continued dominance, the shares fell sharply after earnings. We continue to hold the position, as SK Hynix retains scale and customer advantages that one quarter of lost share does not erase.
• HD Hyundai Electric (1.4% of Fund net assets*): HD Hyundai Electric is a South Korean manufacturer of power transformers, switchgear and electrical equipment for utilities and data centers. The stock declined as sentiment rotated away from power equipment toward semiconductors, and subdued 2026 revenue and order guidance reset expectations. Margins were also pressured as high-margin legacy orders rolled off, with US tariffs an ongoing overhang. The long-term demand backdrop remains intact, but a premium valuation left the shares vulnerable.
• SK Square (0.7% of Fund net assets*): SK Square is the investment holding company of South Korea's SK Group, whose largest asset is a significant stake in SK Hynix. The shares declined alongside SK Hynix, which drives the majority of its net asset value. We trimmed the position during the quarter to manage our overall concentration in SK Hynix.

Top Buys & Sells

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

• ASMPT (0.6% of Fund net assets*): ASMPT is a leading semiconductor back-end equipment provider and the sole supplier of on-substrate thermo-compression bonding for TSMC's CoWoS-L advanced packaging. Second-quarter bookings rose about 98% year over year, with the book-to-bill ratio at a five-year high. We initiated a position as we believe AI demand is broadening across bonding and silicon photonics. A potential divestiture of its SMT segment would leave a cleaner pure-play advanced packaging business.
• Cambricon Technologies (0.3% of Fund net assets*): Cambricon is China's leading domestic AI chip supplier and a key alternative to Huawei, with products spanning accelerator cards to large-scale clusters. We initiated a position as a structural beneficiary of AI chip localization, with domestic chips offering a meaningful cost advantage over Nvidia in China. Revenue and earnings are growing at triple-digit rates on shipments to internet customers, and we believe new product ramps in 2H26 could drive further margin expansion.
• NAURA Technology (0.7% of Fund net assets*): NAURA is China's largest domestic semiconductor equipment vendor, with broad process coverage across etch, deposition, thermal, cleaning and ion implantation. We initiated a position as we believe NAURA is a primary beneficiary of China's semiconductor localization drive, supported by strong order growth from both memory and logic customers. The Kingsemi acquisition has expanded its wet-process coverage and customer stickiness. In our view, the stock trades at a reasonable valuation relative to its earnings growth outlook.
• Zhongji Innolight (0.6% of Fund net assets*): Zhongji Innolight is the global leader in high-speed optical transceivers, the components that connect servers within AI data centers. We initiated a position as we believe the 1.6T upgrade cycle, driven by hyperscaler AI investment, is a structural earnings driver for both volume and margins. In-house silicon photonics capability eases laser chip supply bottlenecks and supports premium pricing. Earnings are growing well above consensus expectations, and a next-generation product pipeline extends the growth runway.
• Banco Itaú Chile (0.8% of Fund net assets*): Itaú Chile is a leading Chilean bank and part of Itaú Unibanco, with a strong franchise in corporate and commercial banking. The recent sale of its Colombian retail business leaves a cleaner, Chile-focused franchise, which we believe marks a profitability inflection point. Digital deposit growth, cost efficiencies and high commercial lending exposure position it well for a recovery in Chilean investment. The bank still trades at a meaningful discount to its Chilean peers.
• BTG Pactual (0.5% of Fund net assets*): BTG Pactual is a leading Brazilian financial services platform spanning corporate lending, sales and trading, wealth and asset management, and investment banking. The company has evolved into a diversified institution, with investment banking now less than 10% of revenues. We initiated a position for its combination of structural market-share gains, strong earnings growth and industry-leading profitability. We believe operating leverage as its businesses scale could support sustainable mid-20% returns on equity.

• Bradsaúde (0.5% of Fund net assets*): Bradsaúde is a newly listed Brazilian healthcare platform combining Bradesco's health insurance business, dental-plan leader Odontoprev, hospital investments and a stake in diagnostics company Fleury. We initiated a position as we believe the value of these high-quality assets is not yet reflected in the share price. The insurance business is benefiting from improving medical loss ratios, and the partnership with Rede D'Or builds an increasingly integrated healthcare ecosystem.
• PB Fintech (0.3% of Fund net assets*): PB Fintech is the parent of Policybazaar, India's leading online insurance marketplace. We initiated a position as a direct way to own the structural growth of Indian insurance in one of the world's most under-insured large economies. The removal of GST on individual health and life premiums is accelerating adoption, and PB Fintech's consolidated operating revenue grew about 40% year over year in the quarter ended June 30, 2026, with net profit up 92%, according to the company's results. The mix is also shifting toward higher-margin protection products such as term and health insurance.
• AngloGold Ashanti (0.7% of Fund net assets*): AngloGold Ashanti is one of the world's five largest gold producers, with assets across Africa, the Americas and Nevada. We initiated a position to gain leveraged exposure to gold, where we remain constructive given persistent central bank demand and a structural shift away from the dollar. The company's net-cash balance sheet supports a dividend policy of 50% of free cash flow and a new buyback program. Management also targets 10-15% organic production growth from existing operations.
• Astor Enerji (0.5% of Fund net assets*): Astor Enerji is Türkiye's largest manufacturer of power and distribution transformers, with exports to more than 90 countries. We initiated a position as a direct play on a multi-year transformer shortage driven by ageing grids, renewable integration and data center demand. A capacity expansion that almost triples power transformer capacity is primarily dedicated to the US, the tightest and highest-margin market, which should lift group margins. The stock trades at a substantial discount to global transformer peers. The shares fell sharply in September amid the investigation discussed in the Turkey section above.
• Rasan Information Technology (0.7% of Fund net assets*): Rasan is Saudi Arabia's leading insurtech platform, processing roughly 10% of the market's gross written premium through its Tameeni aggregator. We initiated a position for exposure to the digitization of Saudi insurance distribution, supported by the National Insurance Strategy. The business is capital-light, debt-free and generates returns on equity in the high 30s. Mandatory medical insurance enforcement and a move into digital auto finance expand its addressable market.
• Vedanta Aluminium (0.7% of Fund net assets*): Vedanta Aluminium is India’s largest aluminum producer, with integrated alumina refining and smelting operations. We initiated a position to gain exposure to rising aluminum demand from electrification, AI data centers and the investment in factories, power and logistics required as supply chains regionalize. The company also offers attractive self-help potential through capacity growth, lower costs and deleveraging. As with our other resource holdings, we remain focused on company quality, capital discipline and valuation.

During the period, we exited the following positions:

• Kuaishou Technology: Kuaishou is a Chinese short-video and live-streaming platform. We sold as weaker consumer sentiment, rising competition and heavy AI investment pressured margins and earnings estimates.
• ANTA Sports: ANTA Sports is China's largest sportswear group. We sold as softening demand, a slow brand turnaround and the risks of the planned Puma investment limited near-term catalysts.
• H World Group: H World is one of China's largest hotel operators. We sold on persistent pressure on revenue per available room from consumer downtrading, weak business travel and rising supply.
• Yum China: Yum China operates KFC and Pizza Hut across China. We sold on continued same-store sales pressure and added risk from the Pizza Hut license acquisition.
• Grab Holdings: Grab is Southeast Asia's leading ride-hailing, delivery and digital financial services platform. We sold as renewed competition from Uber Eats raised the risk of price wars that could stall margin expansion.
• NetEase: NetEase is one of China's largest online game developers. We sold given a thin near-term game pipeline, with its next major release not due until 2027, and slowing earnings growth.
• Lemon Tree Hotels: Lemon Tree is India's largest mid-priced hotel chain. We took profits after a strong re-rating as new supply arrives in its core markets and room rate growth moderates.
• Jio Financial Services: Jio Financial is a financial services company demerged from Reliance Industries. We sold as earnings delivery lagged the story while the shares traded at about 70x trailing earnings (70.4x as of September 28, 2026, according to Value Research), though we may revisit it at a better price.
• Nu Holdings: Nu Holdings is Latin America's largest digital bank. We exited as we shifted our Brazil exposure toward more diversified earnings and a more conservative credit profile amid rising household credit stress; according to the Banco Central do Brasil's September 2026 Monetary Policy Report, default on free-market household credit reached 7.8%, the highest in the series.
• Optasia: Optasia is an AI-led digital lending platform operating across emerging markets. We exited as regulatory uncertainty in Nigeria and trimmed guidance reduced earnings visibility.
• Pepkor: Pepkor is South Africa's largest discount and value retailer. We exited as a weaker South African consumer and heavy investment in its new banking initiative pushed out the near-term thesis.
• Eurobank: Eurobank is one of Greece's leading banks. We took profits after strong performance left key catalysts largely reflected in the price.

To receive more Emerging Markets Equity insights, sign up in our subscription center.