The Fund invests primarily in equity securities of issuers from emerging foreign countries. Under normal market conditions, the Fund will invest at least 65% of its total assets in equity securities of issuers from countries whose economies are considered to be emerging or developing. The Fund may invest up to 35% of its net assets in fixed income securities issued by companies in emerging countries or by foreign governments, their agents, instrumentalities, or political sub-divisions. The Fund may invest in fixed income securities that are denominated in the currencies of emerging market countries. All of these may be high yield, high-risk fixed income securities. The Fund may invest more than 25% of its total assets in the securities of issuers located in the same country.
Under normal circumstances, at least 80% of the Fund's net assets will be in investments of emerging market issuers (the 80% policy). The Fund's 80% policy can be changed without shareholder approval. However, shareholders would be given at least 60 days' notice prior to any such change.
The Fund's portfolio manager selects growth-oriented and value-oriented investments on the basis of the investment's discount to its intrinsic value. When selecting growth-oriented securities, the Fund's portfolio manager typically seeks high growth caused by secular economic factors. These factors may include demographics, economic deregulation, and technological developments.
When selecting value-oriented securities, the Fund's portfolio manager typically seeks lower valuations caused by cyclical economic factors or temporary changes in business operations. Strong management and sustainable business franchise are key considerations in selecting both growth-oriented and value-oriented securities. In order to compare the value of different stocks, the Fund's portfolio manager considers whether the future income stream on a stock is expected to increase faster than, slower than, or in line with the level of inflation. The Fund's portfolio manager then estimates what he thinks the value of the anticipated future income stream would be worth if such income stream were being paid today. The Fund's portfolio manager believes this gives him an estimate of the stock's intrinsic value.
Because the Fund invests primarily in emerging countries, there may be less information available for the Fund's portfolio manager to use in making this analysis than is available for more developed countries. Currency analysis is an important part of the valuation exercise. The Fund's portfolio manager attempts to determine whether a particular currency is overvalued or undervalued by comparing the amount of goods and services that a dollar will buy in the United States to the amount of foreign currency required to buy the same amount of goods and services in another country. When the dollar buys less, the foreign currency may be overvalued, and when the dollar buys more, the foreign currency may be undervalued. Relative per capita income levels are also a key factor in this analysis.
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