Morgan Stanley IM: Emerging Markets Equity Annual Stewardship Report 2024

Throughout our engagements, we focused on material issues, such as governance, decarbonization and supply chain management. We addressed specific challenges including the changing regulatory landscape across carbon emissions and asked for more transparency in executive compensation. We engaged with companies on technologies required for the global energy transition. We believe that our ongoing advocacy for transparency and accountability has led to notable progress and improvements, which we detail in this paper. Our understanding of EM-specific sustainability issues, supported by our team's macro and thematic research, has enabled us to engage thoughtfully and constructively with our portfolio companies in a way that benefits the best interests of shareholders and supports sustainable development.¹

Download the report to learn more through selected case studies illustrating our stewardship.

¹ For more information on MSIM level stewardship and engagement principles please refer to our most recent Sustainable Investing Policy report. https://www.morganstanley.com/im/publication/resources/msim-sustainable-investing-policy-en.pdf

^{Risk Considerations}

^{ESG strategies that incorporate impact investing and/or Environmental, Social and Governance (ESG) factors could result in relative investment performance deviating from other strategies or broad market benchmarks, depending on whether such sectors or investments are in or out of favor in the market. As a result, there is no assurance ESG strategies could result in more favorable investment performance. There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that the market values of securities owned by the Portfolio will decline and that the value of Portfolio shares may therefore be less than what you paid for them. Market values can change daily due to economic and other events (e.g., natural disasters, health crises, terrorism, conflicts, and social unrest) that affect markets, countries, companies or governments. It is difficult to predict the timing, duration, and potential adverse effects (e.g. portfolio liquidity) of events. Accordingly, you can lose money investing in this Portfolio. Please be aware that this Portfolio may be subject to certain additional risks. In general, equities securities values also fluctuate in response to activities specific to a company. Investments in foreign markets entail special risks such as currency, political, economic, market and liquidity risks. The risks of investing in frontier emerging markets are greater than risks associated with investments in other foreign or U.S. issuers and they are often considered highly speculative in nature. Investment opportunities in many frontier emerging markets may be concentrated in the banking industry, which could have a disproportionate impact on the portfolio’s performance. Stocks of small and medium capitalization companies entail special risks, such as limited product lines, markets and financial resources, and greater market volatility than securities of larger, more established companies. By investing in investment company securities, the portfolio is subject to the underlying risks of that investment company's portfolio securities. In addition to the Portfolio's fees and expenses, the Portfolio generally would bear its share of the investment company's fees and expenses. Derivative instruments may disproportionately increase losses and have a significant impact on performance. They also may be subject to counterparty, liquidity, valuation, correlation and market risks. Illiquid securities may be more difficult to sell and value than public traded securities (liquidity risk). Nondiversified portfolios often invest in a more limited number of issuers. As such, changes in the financial condition or market value of a single issuer may cause greater volatility. There is no guarantee that any investment strategy will work under all market conditions, and each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market.}

^{DEFINITIONS
“ESG” investment: Environmental Social and Governance based investment is an investment approach which takes explicit account of the environmental, social, and corporate governance aspects of all proposed investments.}

^{IMPORTANT INFORMATION
References to individual companies are provided solely for informational purposes only and are intended only to illustrate certain relevant environmental, social and governance factors. This information does not constitute an offer to sell or the solicitation to buy securities.}

^{A separately managed account may not be appropriate for all investors. Separate accounts managed according to the Strategy include a number of securities and will not necessarily track the performance of any index. Please consider the investment objectives, risks and fees of the Strategy carefully before investing. A minimum asset level is required. For important information about the investment managers, please refer to Form ADV Part 2.}