Seafarer®

Pursuing Lasting Progress in Emerging Markets

Ask Seafarer

Andrew Foster addresses questions:

- Worthwhile resources regarding recent events in China

What resources might be helpful in explaining recent events in China, and how these events impact the rest of the world?

Morningstar has published two videos addressing these topics:

- The Seafarer Overseas Growth and Income Fund’s allocation to government bonds

What is the role of government bonds in the Fund? What is the process for evaluating and selecting government bonds?

The First Quarter 2014 Portfolio Review discussed the rationale for adding a small basket of long-dated, foreign currency-denominated government bonds to the Seafarer Overseas Growth and Income Fund in early 2014.

Government bonds are one of the security types included within the Fund’s “principal investment strategies” in the Prospectus. As such, there are no formal limits on the Fund’s allocation to government bonds – in a theoretical sense, they could comprise 100% of the Fund’s net asset value. However, it is highly unlikely that the Fund’s total “straight” fixed income exposure (government bonds and corporate bonds, but excluding convertible bonds) would exceed 20% of net assets. For practical purposes, government bonds are likely to be less than 5% of net assets for the foreseeable future. Also, no single bond exposure (i.e. to one government) is likely to exceed 2% of net assets (measured at the time of purchase).

The Role of Government Bonds in the Fund

Seafarer believes government bonds play a unique role within the portfolio:

  • They provide substantial liquidity, both different in source, and typically higher than, most common equities;
  • They exhibit much lower price volatility than emerging market equities;
  • Provided they are issued in the local currency of the sovereign, they have a low likelihood (near zero) of default;
  • Provided they are held to maturity (which is Seafarer’s foreseeable intention), they have a near-guaranteed rate of return, as expressed in the local currency.

Seafarer does not consider government bonds to be a direct proxy for cash, for three reasons:

  1. They have marginally lower liquidity than cash;
  2. They have greater price volatility than cash — but much less than emerging market equities; and
  3. They have much better absolute return potential than cash.

However, from a functional perspective, Seafarer intends to treat government bonds as a cash-like reserve, to manage the Fund’s overall liquidity, to dampen the portfolio’s overall volatility, and as a resource that could be re-deployed into equities during extreme market conditions.

Primary Risks

The Fund’s Prospectus describes certain risks associated with government bonds. Seafarer would highlight two risks in particular:

  1. The bonds are denominated in local currencies, and if the local currencies depreciate against the dollar over the maturity of the bond, the dollar-denominated return from the bonds will be depressed; and
  2. It is possible that Seafarer might need to sell the bonds prior to their maturity in order to manage the Fund’s overall liquidity levels; doing so at a disadvantageous time might undermine the realized returns from the bonds.

Selection Criteria

Seafarer employs a number of criteria when selecting government bonds, but the four most important are:

  1. The bond’s liquidity must be ample, and the source of that liquidity must be distinguishably different from the liquidity prevalent among emerging market stocks;
  2. Yield to maturity must be roughly on par with equity-like returns (i.e. higher than 8%);
  3. The maturity must be long-dated, typically over five years, so that imminent currency risks are less likely to determine (or overwhelm) the entire return profile of the bond; and
  4. Ideally the bond’s coupon must comprise a high proportion of the bond’s yield to maturity, such that duration risk is mitigated.

Selection Decision

To date, the Fund has accumulated government bonds when:

  1. The Fund had an excess of liquidity (as embodied in a then-outsized cash position);
  2. Yields on the bonds had risen to levels that Seafarer considered to be roughly on par with emerging market equities (i.e., local currency yields to maturity in excess of 8%); and
  3. Sufficient bonds were available at favorable valuations issued by a diverse group of governments, such that the Fund could readily compose a small “basket” of bonds so as to diversify against currency, default and liquidity risks.

- Taking advantage of the lower expenses afforded by the Funds’ Institutional classes

How might shareholders gain access to the Institutional share class, even if they are unable to immediately meet the investment minimum?

Seafarer would like to encourage broader usage of the Institutional class. We will describe three ways that certain shareholders might gain access to this share class, even if they are unable to immediately meet the investment minimum.

First, financial advisers might discover that their platform will waive the minimum if the adviser invests with the intention to reach the minimum. Every platform evaluates waiver requests differently, and Seafarer has no influence over whether a particular platform will entertain such requests. Platforms that do grant waivers may require that Seafarer submit the request on behalf of the adviser. We are happy to help with such waiver requests. Advisers can contact us at (415) 578-9080 or contact@seafarerfunds.com.

Second, advisers can meet the investment minimum for the Institutional class by aggregating Fund holdings across multiple client accounts, if permitted by the platform.1 If you are an adviser and you encounter difficulty with aggregation at the platform, please let us know; we will try to resolve the issue with the platform.

Third, our firm has some influence over the application of the minimum as it pertains to shareholders who subscribe to a Fund on a direct basis via an Automatic Investment Plan (“AIP”). We will do our utmost to waive the Institutional class minimum for accounts that activate an AIP. Learn more about the Institutional Class Waiver Program.

What is the Institutional Class Waiver Program?

Shareholders who sign up for an Automatic Investment Plan (“AIP”) can request a waiver of the Institutional class investment minimum.2 Accounts must satisfy all of the following criteria:

  1. The account must be established directly with Seafarer Funds, not with a platform or intermediary.
  2. The account must activate an AIP.
  3. The account holder must request the waiver on the Account Application or Account Options Form; when establishing a new account online; or by calling Shareholder Services at (855) 732-9220. The applicant must request the waiver in good faith, with the intent to eventually meet the Institutional class minimum via a program of sustained investment over time.

In addition, existing AIP participants can convert from the Investor class to the Institutional class of the same Fund (known as a “share class transfer”), provided they satisfy all three criteria above. To request a share class transfer, call (855) 732-9220.

  1. Similarly, individual investors can reach the investment minimum for the Institutional class by aggregating multiple accounts within a Fund, if permitted by the platform.
  2. In the case of the Institutional class waiver, the Investor class AIP initial investment minimum ($1500) applies.

- The Seafarer Overseas Growth and Income Fund’s investment approach

What type of growth does the Fund seek?

As stated in the Prospectus, the Seafarer Overseas Growth and Income Fund seeks to provide long-term capital appreciation (growth) along with some current income (typically dividends from common stocks). When I seek growth, I favor “sustainable growth” - companies that are capable of producing steady growth that can compound over long periods of time. I measure such growth mainly by looking at a company’s revenues but also by examining free cash flow. I prefer companies with seasoned operating histories and proven business models, even as they may operate in fast-growing and risky markets. I avoid companies that derive growth from one-off or temporary events, even if this would result in dramatic short-term growth. I also de-emphasize companies that derive their growth from government protection or subsidy, as those advantages might be withdrawn in an unpredictable manner, for political reasons, in the future.

Why is income important to the Fund’s strategy?

Seafarer seeks to combine growth (as described in the question above) with current income for three reasons:

  • Income as a common metric. Seafarer invests across a broad geographical range of countries, with widely-varying standards for accounting and corporate transparency. Seafarer utilizes current income (dividend yield) as a tangible, standardized means to measure both relative and absolute valuation.
  • Income as a valuation anchor. In Seafarer’s experience, stocks in emerging markets with sustainable yields exhibit lower volatility during periods of market distress. Seafarer believes that due to certain structural inefficiencies in emerging markets, stable dividends act as a “valuation anchor,” helping to mitigate volatility and to establish the “defensiveness” of the portfolio.
  • Income as an indicator of quality. In Seafarer’s experience, businesses that generate steady cash earnings are far less risky than those that produce accounting profits on paper. Seafarer values current income as a means to validate a company’s cash flow, which serves as a proxy for its overall quality.

How do you mitigate currency risk in the Fund?

Currency risks play a central role in both the research process and the portfolio construction process. Our aim is to mitigate such risks (even as we can’t completely negate them) through individual security selection and by limiting (or outright constraining) the portfolio’s exposure to riskier currencies. However, to be clear, the Seafarer Overseas Growth and Income Fund has not yet (and may never) explicitly hedge a currency via a financial derivative.

Within the research process, we spend a lot of time evaluating what I call “micro foreign exchange risk” (“micro FX,” abbreviated). When we research a prospective investment candidate, we focus on companies that issue stocks or bonds, or an “issuer.” I view “micro FX” as the currency risk that impacts a specific issuer (as opposed to the risk that might impact a broad-based macro-economy).

Every time we assess a prospective issuer, we examine its micro FX risk. We do so by imagining a scenario where the issuer’s local currency suffers an extreme event (i.e., the currency depreciates by 20% versus the U.S. dollar or the Euro, or capital controls are imposed, or there is a sudden and steep change in local interest rates). We then look for quantitative and qualitative ways to measure 1) whether the issuer’s balance sheet would be severely impaired by the event, and 2) whether the issuer’s business model (i.e. revenue stream or cost structure) would be eroded by the event. If either risk is severe, we will most likely avoid the issuer’s securities altogether; if the risk is less severe, and the issuer is otherwise attractive, we may initiate the position, but we might a) limit its individual size, or b) seek to pair it against another issuer’s securities that might benefit (or act in an inverse manner) during the currency event. For example, we might pair an exporter – which would generally benefit from currency weakness – with an importer – which would generally benefit from currency strength.

At a portfolio construction level, we have a proprietary model that tries to assess “macro FX risk,” i.e. the risk that a currency would undergo an extreme event (like the one described above). The model is very simple: it does not try to predict “fair valuation” or “over valuation,” but rather it aims to give us some basic warning about where future trouble may arise. Currencies are graded green (risky and volatile, but no more so than the “average” emerging market currency), amber (heightened risk, above average), or red (severe risk, with an “extreme event” possibly looming). I use these color codes to constrain the amount of capital that the Fund has at work in each currency: green has no constraint; amber, bordering on green, 10% – 11% at the time of purchase; amber, bordering on red, 5% - 6% at the time of purchase; red, no investment whatsoever.

I take currency risk very seriously. Until 2013, when some “extreme events” were realized in certain currencies (e.g. the Turkish lira, the Indian rupee, the Indonesian rupiah, etc.), I think many professional investors paid too little attention to this risk. By contrast, I have been discussing it as an under-appreciated source of risk for some time; please see this essay on the Brazilian real, or these two essays on the Chinese yuan (part 1 and part 2), or this 2011 interview with Morningstar.

However, as concerned as I am about currency risks, I would simultaneously acknowledge that there is little I can do about them. The timing, magnitude and consequence of such risks are notoriously difficult to predict. Hedging (via financial derivatives) is either impossible, too costly, or fraught with too much risk to work as intended. I prefer to manage the risk in a more direct fashion, as described above, by controlling micro and macro FX. But such management has limited efficacy, and I would acknowledge the Fund is and will always be exposed to substantial foreign exchange risk. Thus I recommend the Fund only to investors who can withstand such risks, and who can afford to invest, without interruption or liquidation, for an extended period (i.e. five years or more). Over longer horizons, the acute risks arising from currency are both less severe and more manageable, and thus a longer investment horizon on the part of the investor / Fund shareholder is ultimately the best tool to manage such risks.

Does the Fund engage in currency hedging?

The Seafarer Overseas Growth and Income Fund’s Prospectus does contemplate the possibility of hedging, but in practice it would be a rare event. (Importantly, I would note that Seafarer does take steps to mitigate currency risk – see the question above for more details.)

I prefer not to do much currency hedging – with derivatives or swaps – due to two main concerns. First, from a practical perspective, it’s often very difficult to create long-term stable currency hedges at a reasonable cost. We are investing in a portfolio on a long-term basis and in most of the markets in which we invest, hedging tools don’t exist, except for some shorter horizons. If we were to attempt to purchase longer-term hedges, they would be inordinately expensive or non-existent.

Second, I have a philosophical concern. Even though financial theory says that one can unbundle a currency risk from a security risk, I find it a very difficult thing to do in the context of my research process. I’m trying to find companies and invest in their securities for the portfolio over the longer term, ideally for an undefined period that is as long as possible. It is difficult for me to separate the security risk from that of the underlying currency over such a horizon.

The analogy I use is finding the perfect home for your family. You find that home, and your intent is to buy it and hopefully live there for 20-30 years. You also hope it will be a good investment along the way. It’s obviously a key financial asset for you. In my view, the notion that you would somehow short or hedge out the risk of the property that is sitting underneath that house, or indeed the neighborhood around the house, is problematic over such a time horizon. Formally speaking, the property and the house are different financial assets and can - on paper - be unbundled, but their values are inextricably intertwined to an extent that you have to invest in them together, along with the surrounding neighborhood. To me, the house is analogous to the security, and the property underneath the house is analogous to the currency.

In terms of my house and neighborhood analogy, we look for markets where we think the currency is stable enough that we are willing to tolerate a certain degree of volatility. We believe that we can identify certain currency environments that are relatively healthy; I would liken them to good neighborhoods into which we are willing to move. There is also a set of neighborhoods that we try to identify and stay away from altogether because the risks are just too severe, either because we anticipate a very sharp currency drop - not a small one, but a sharp one - or the imposition of draconian capital controls.

Lastly, there may be a small set of neighborhoods in between that I would liken to transitional neighborhoods, where on limited occasions we might stake out a claim and wait for the neighborhood to improve around us a bit.

How do you define “quality” when researching companies as candidates for the portfolio?

“Quality” is not a term I use much, but here’s how I think about the characteristics that people normally associate with quality.

When researching companies I focus on three primary factors. First, I look for a control party that has the right drive and ambition to grow the company in a sustainable way. I look at the control party’s goals, the direction they set for the company, and how they incentivize management. It’s important that the control party never forgets about the small shareholders along the way. I’ve seen some very, very big companies grow very, very fast and forget entirely about their smaller shareholders, and that does make a difference.

The second key element is the sustainability of growth. Emerging markets produce a lot of types of growth. We are attracted to the kind that can be repeated over time, even if the company generating it appears to be “mature” or a “slow grower.” You can sometimes be dazzled by very high rates of growth but they are often driven by one-off factors that unfold over a year or so. Maybe they are even due to some temporary circumstances like special favors or subsidies that a particular company is receiving. We generally try to avoid these types of situations.

The last key element I seek in a portfolio holding is balance sheet flexibility. People talk about balance sheets in a lot of different ways. For me, the primary reason to invest in a healthy balance sheet - generally one that is liquid and less levered - is that it provides flexibility. So much of long-term success is just driven by survival. Companies that maintain healthy balance sheets have more flexibility to survive and ultimately prosper. During times of broad, macro-economic growth, companies with highly levered balance sheets can often generate flattering profits; but when those same companies enter a downturn, they lose several degrees of freedom, possibly compromising their very survival. I look for balance sheets that are built for long-term survival.

So I would sum up the characteristics I am looking for as: a control party whose interests are aligned with – or at least not at odds with - the interests of public, minority shareholders; sustainable growth; and balance sheet flexibility.

How do you get comfortable investing in countries that may suffer from volatile political environments, dangerous conditions, or institutionalized corruption?

This is one of the hardest things we have to do as bottom-up investors. We focus our efforts on individual companies, and the way we look at the macro environment is largely through the prism of the individual company’s experience. We want to make sure that the environment that surrounds a company is at least not an incredible impediment, and hopefully a benign environment. The simple decision rule that we use, frankly, is whether or not we are willing to put boots on the ground in a particular country. If we are so concerned over our own personal safety or the governance of a country that we are not willing to visit the companies there, that’s a telling sign right there. We don’t put shareholder capital at risk where that is an issue.

It is important to note, however, that while we carefully consider a country’s political environment and governance, we do not aim for some standard of perfection or enlightened governance before we invest. It comes down to this in my view: when you invest in emerging markets you invest in a lot of things. You do invest in the vaunted emerging market consumer and you invest in these countries’ growth. But in my view, what you are really investing in is progress: people who often are coming from very poor and difficult backgrounds, who are working hard to improve their living standards. These people often work in countries that have less than perfect government regimes and institutional frameworks. So it is important to recognize that you are investing in an imperfect environment but one that is transitioning toward a more perfect state. This transition - from a lesser state of existence to a better state – is what we try to capture in our portfolios – because in my view that’s the real “driver” of growth in emerging markets. This transition is also what fuels the expansion of the price to earnings multiple over time. I believe this is an important concept to keep in mind as we observe the political environment and governance in the emerging world.

- The role of cash in the Seafarer Overseas Growth and Income Fund’s portfolio

Why doesn’t the Fund make more use of cash as a means to avoid market risk? What if emerging market stocks become so overvalued that you can't find anything that meets your investment criteria?

Under normal market conditions, the Seafarer Overseas Growth and Income Fund hews towards full investment. We utilize cash or cash-proxies as a means to manage portfolio liquidity, but not as a haven or as a major tool to avoid market risk. There are three primary reasons for this approach:

  • The Fund’s fees are simply too high for shareholders to pay them on a portfolio holding large amounts of cash. Shareholders are paying Seafarer to put their money to work, not to sit on it at a high cost.
  • I don't have confidence in my own ability to consistently "time" short-term market cycles such that I could move out of stocks and into cash just before markets fall, or the reverse when markets supposedly bottom.
  • The Fund has a broad enough geographical mandate that I am always confident of finding growth somewhere in the world that is worthy of investment. To put it bluntly, it’s my job to search for such growth, even when the going gets tough. My investment universe is large, diverse and constantly evolving. In my experience, this means that new and viable opportunities for investment are always present, provided that I search hard enough.

However, even as I might discover a new opportunity that is worthy of investment, I don't know what the price of that investment might do over the next year or two. It could have some very sharp swings downward. Yet I am confident that if we do our job well, the strategy will function as intended over the longer haul.

Lastly, I try to be as clear as I can with clients about the risks I perceive in markets (including the risk that stocks or other assets are broadly over-valued). My hope is that such candor will help them make better decisions, even if it means moving out of our strategy. Yet even as I might warn shareholders (or conversely, inform them that markets are attractive), I still don't know where markets are going to head in the short-term. Ultimately I try to keep my head down and do the job I was hired to do, which is invest to the very best of my ability, even amid what might be challenging circumstances.

I would only utilize cash in substantial quantities if I had absolute certainty (or something very close to it) that markets were going to fall sharply. For better or worse, I think it is unlikely I'll have such clarity earlier than the overall market will.

- What are Seafarer’s views on current investment conditions?

During recent months, global financial markets have been shaken by a number of events, including concerns over the viability of the Euro, slowing growth in China, sharp declines in the value of emerging market currencies versus the dollar, and falling prices for commodities. Over the last year, we have shared our views on each of these topics; for more information, please consult the following resources:

Viability of the Euro:

Slowing growth in China:

Volatile currencies in emerging markets:

Resource prices:

- What’s worth reading regarding the world’s economies and major financial events?

From time to time, we are asked to point to resources that might shed light on the world’s economies and major financial events. The list below includes short articles, blog posts and books that we think are of significant interest.

On the causes and consequences of the Eurozone crisis:

  • What Was Spain Supposed to Have Done? Martin Wolf, Financial Times, 25 June 2012.
  • A Better Way to Save Spain’s Banks, Juan Ramón Rallo, 14 June 2012.
    [Note: This article also appeared in the Wall Street Journal with the title “A 'Bail-In' Could Save Spain’s Banks,” 14 June 2012. Seafarer does not advocate "bail-ins" that violate contractual law; however, the time has come to re-capitalize Spain’s banks, and in so doing, it is most likely necessary to wipe out existing shareholders, and begin the process of re-capitalization by swapping existing debt obligations for new equity, as is broadly described in this article.]
  • Spanish Bailout Saves German Pain [paywall link], Gareth Gore and Sudip Roy, International Financing Review, 1 July 2012

On China’s most pressing challenges:

On banking system solvency:

On noise versus information in capital markets:

- The Seafarer Overseas Growth and Income Fund’s regional composition

The Fund has a large allocation to the Asian region. How is the Fund’s regional composition likely to evolve from here?

At the present time [April 2012], the Fund’s portfolio is fairly heavily weighted toward the Asia Pacific region [81% as of March 31, 2012] for three reasons: it is the region I know best; it is where I see the best trade-offs between current valuation and prospective growth [see the Fund’s Portfolio Review – May 2012]; and lastly, Seafarer’s research leads me to believe the region is structurally underweighted (under-represented) in the prevailing benchmark index for the emerging markets – and this is a structural bias I am keen for the Fund to exploit.

I have emphasized Asia in the portfolio because I know it best: I have been following the Asian companies in the portfolio for several years, and in some cases, for over a decade. In my prior work, I had long-term convictions in those holdings – so it makes sense (to me, at least!) that I would carry over many of those holdings to the new fund. One thing is certain: I am not going to rush to build a more global fund for the sake of representing that I have done so. That stated, much of Seafarer’s current research activity is geared toward non-Asian markets. The team is finding interesting ideas around the world. Thus I expect the Fund will feature other regions more prominently over time, as valuations and market conditions allow.

Lastly, regarding the index’s structural underweight toward the Asian region: in summary, I believe that despite generally well-intentioned efforts, the indices designed to track developing countries exhibit certain structural shortcomings. In particular, there is evidence to suggest that some of the prevalent indices are not wholly aligned with the underlying fundamentals (e.g., size, scale and growth) of the markets they are meant to track. This may allow Seafarer to build a portfolio that better represents the emerging market landscape (i.e. allocations that accurately represent the underlying fundamentals), and hopefully complement that strategy with good stock-picking.

- Introduction to Seafarer

Why did you start Seafarer?

My aim in founding Seafarer Capital Partners, the firm that manages the Seafarer Overseas Growth and Income Fund, was to build something new, to take pride in its steady development, and to ensure that what resulted was a lasting endeavor. I wanted to form a small, dedicated team that would share a sense of partnership and a dedicated pursuit of excellence on behalf of clients. I am intent that the firm remains employee-owned and controlled.

At the same time, I wanted to build a firm that would approach investment in the developing world in a manner different than most other emerging market fund managers. In that regard, Seafarer’s mission is to offer products that are transparent, reasonably priced, and that emphasize risk-adjusted performance.

You can read more about my decision to found Seafarer in a commentary “On Starting Out” that I wrote in April 2011.

What are the Firm’s goals?

At Seafarer, our abiding goal as an investment adviser is to deliver long term performance.

However, even as I view performance as paramount, I will not consider our firm a success unless it also achieves three ancillary objectives over the long term:

  1. Seafarer is dedicated to lowering the costs associated with overseas investment. Investment in developing countries is legitimately an expensive proposition: there are additional layers of fees, inefficiencies and complexities that drive costs orders of magnitude higher than investment in domestic markets. Nevertheless, it is my opinion that far too few investment firms actively work to drive costs down over time for the benefit of shareholders. I view it as one of the firm’s central duties to ensure that expenses become more affordable with scale, and over time.
  2. Seafarer is determined to increase the transparency associated with developing countries. Though there has been much improvement in the past decade, developing countries’ markets are still characterized by a high degree of opacity and inefficiency. In my own view, this opacity is unfortunately augmented when investment firms do not shine sufficient light on their own experience and approach towards investment in such markets. My aim is for Seafarer to continuously improve the transparency it offers to its clients, albeit subject to constraints imposed by fiduciary standards, regulation and compliance.
  3. My hope is that Seafarer can reduce some of the frustration that often accompanies investment in developing countries. Emerging markets are typically very volatile, with positive returns often followed by steep, painful corrections. We understand the frustration that accompanies this sort of volatility: markets that are regularly rocky make it difficult to invest in a steady manner, for the long term. Seafarer’s investment strategies are necessarily exposed to risk, and cannot sidestep the volatility that will result. However, my hope is that Seafarer’s investment strategies will mitigate at least a portion of this volatility, so that clients may invest with less frustration and more confidence over time.

How is the Seafarer Overseas Growth and Income Fund different from other emerging markets funds?

The Seafarer Overseas Growth and Income Fund is at heart an emerging markets fund; however it employs an approach that we believe is less conventional in comparison to many of its peers:

  • The Fund can provide exposure to multiple asset classes, as its strategy allows for investment in equities, convertible bonds, and fixed income.
  • The Fund has a broad geographical mandate, rather than an arbitrary one prescribed by an index; it spans markets that are variously categorized as “frontier” and “emerging.” The Fund can also invest in developed countries that have significant economic and financial linkages to developing countries.

We believe an unconstrained approach of this sort will serve our clients best. The flexibility that it affords will allow the Fund to readily adapt as the world’s markets and economies continue their rapid and complex evolution.

What is the Seafarer Overseas Growth and Income Fund’s objective? What is its purpose?

The Fund seeks to provide long-term capital appreciation along with some current income. The Fund seeks to mitigate adverse volatility in returns as a secondary objective.

The Fund seeks to offer investors a relatively stable means of participating in a portion of developing countries’ growth prospects, while providing some downside protection (in comparison to a portfolio that invests only in the common stocks of developing countries).

The strategy of owning convertible bonds and dividend-paying equities is intended to help the Fund meet its investment objective while reducing the volatility of the portfolio’s returns.

We are excited about the growth and progress that we believe will accrue in the developing world, and we are pleased to offer a fund that seeks to participate in the opportunities afforded by such progress.