Portfolio Turnover. The Fund
may pay 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.
Principal Investment Strategies
The Fund seeks to track the investment results of the MSCI
Emerging + Frontier Markets Workforce Index (the “Underlying Index”), which has been developed by MSCI Inc. (the “Index Provider” or “MSCI”). The Underlying Index is designed to track the equity performance of
companies in countries from the universe of MSCI Emerging + Frontier Markets Index (the “Parent Index”) that have favorable demographic criteria. The Underlying Index selects countries based on the following demographic criteria: a
higher percentage of population below a specified age and the potential for a greater number of higher productivity employment opportunities based on higher education levels, higher relative urbanization and lower dependency on agriculture.
The constituents of the resulting eligible countries are market
capitalization-weighted. Countries with less than 0.25% market capitalization-weight are excluded and the weights of the remaining countries are rescaled proportionately. The maximum market capitalization of country weights are capped at 20% and the
remaining countries’ weights are rescaled
proportionately. Once country weights are determined, securities within each
country are weighted by their market capitalization within their country weights.
As of June 30, 2015, the Underlying Index consisted of 442
companies from the following 14 countries: Argentina, Brazil, Chile, China, Colombia, Egypt, Indonesia, Kuwait, Malaysia, Mexico, Peru, the Philippines, South Africa and Turkey. The Underlying Index may include large- and mid-capitalization
companies. Components of the Underlying Index primarily include consumer discertionary, consumer staples and financials companies. The components of the Underlying Index, and the degree to which these components represent certain industries, are
likely to change over time.
BFA uses a
“passive” or indexing approach to try to achieve the Fund’s investment objective. Unlike many investment companies, the Fund does not try to “beat” the index it tracks and does not seek temporary defensive positions
when markets decline or appear overvalued.
Indexing may
eliminate the chance that the Fund will substantially outperform the Underlying Index but also may reduce some of the risks of active management, such as poor security selection. Indexing seeks to achieve lower costs and better after-tax performance
by keeping portfolio turnover low in comparison to actively managed investment companies.
BFA uses a representative sampling indexing strategy to manage
the Fund. “Representative sampling” is an indexing strategy that involves investing in a representative sample of securities