OAK VALUE FUND
Managers’ Commentary – Fourth Quarter, and Full Year 2002
Introduction and Broad Market Context
“Only
buy a stock that you’d be comfortable owning if they closed the stock exchange
for three years.”
Warren Buffett
Lately,
we suspect most investors would prefer Mr. Buffett’s hypothetical investment
world to the real one! Speaking
charitably, 2002 investment results were disappointing. Bluntly, they resemble the fabled description
of the Grinch: stink, stank, stunk. Most stocks went down and some stocks went
down a lot in 2002, a summary that applies equally to the broad market and to
the Fund portfolio. A fourth quarter
recovery was mildly encouraging, but in truth it barely palliated a year that
remains a painful memory for most investors and for us as Fund shareholders.
Losses in the fourth quarter’s closing weeks extinguished an earlier rally,
providing perhaps fitting punctuation for a dreadful year.
The
chart below compares the performance of the Fund to results over various historical
time periods for several relevant comparables, including the Fund’s performance
benchmark, the S&P 500. Looking
backward over the 3-5 year time frame from December 2002, there were quite
clearly ample opportunities for acute capital impairment, an outcome we are
happy to have steered the Fund away from.
Some of that protection was a result of avoiding the sizable commitments
of capital that many of our professional investing competitors were making to
things we could not rationally explain.
For example, we largely steered clear of overvalued companies, mostly in
the technology area, with stock market valuations all out of rational
proportion to their inherent worth as businesses. We chose to do so at times well before
trouble showed up for many of them in terms of stock price depreciation. And while we were penalized in terms of
performance (not to mention dismissed as Luddites) in 1999’s euphoric market,
that conviction protected Fund capital as the bubble deflated over a three year
grind.
It
is our contention that a mirror situation may be present now, where despite
dismal recent results we are nonetheless quite enthused about current
price-to-intrinsic value relationships for the Fund portfolio. We certainly aren’t 180o away from
the old bubble days (look at Amazon’s or EBay’s p/e
multiple as one indicator), but we are getting there in selected pockets of the
equity market.
The
prevailing mood that we see present in the market remains pessimism. At a basic level, there are fairly garden-variety
grounds for uncertainty: a weak economy, struggling corporate
profitability. Added to these are the
current era’s distinctive concerns of war worries, terrorism, and the bubble
market/economy hangover. This latter item carries a plethora of associated
baggage that has dashed confidence in business executives, stock analysts,
company directors, auditors, regulators, and “Wall Street” in general. With all
this to worry about, is market weakness any great surprise? The historic stock market losses to which
these conditions have contributed have also now themselves become further
justification for skepticism, in a recursive, self-feeding spiral of
negativity. In our view, it will remain
a challenge for stock prices to advance in an environment with this much
headwind.
“The fox knows many things, the hedgehog, one
big thing.”
Archilocus
For
all of 2002’s sound and fury, the short term performance outcome does not
entirely shock us. “Mama said there’d be
days like these,” or at least our philosophical mentor, Professor Benjamin
Graham, did when he opined on market volatility many decades ago: “…the investor may as well resign himself to
the probability, rather than the mere possibility that most of his holdings
will advance, say, 50% or more from their low point and decline the equivalent
one-third or more from their high point at various periods in the next five
years.” Time horizons inevitably
shrink when wariness reigns. Investors’
ability to differentiate between cyclical challenges and fundamental weakness,
rarely a strong point to begin with, shrinks to virtually nil. When widespread skepticism and mistrust
abound, risk is priced cheaply, and safety held dear. Common stock ownership is viewed as risky,
based on the reinforcing effect of recent events: prices have fallen, ergo investors believe stocks are risky. As we recall, the exact opposite opinion held
sway a scant three years ago, after a decade of outsized returns had left
little chance for further upside, but we digress.
The
market “fox” is forced to know a great many things, and lately the media and
investors have been focused almost exclusively on the downside. And some, perhaps even many, of the stock
price adjustments made may have been appropriate, especially since so many stocks in the broad market began the slide
three years ago at inflated levels.
But as stock picking “hedgehogs,” we can stick to our “one big thing,” i.e.,
focusing on a select few businesses that we can understand and rationally value:
good businesses, with good management, at attractive prices. We aren’t required to assume the burden of
defending the entire stock market.
Whether the reaction to the conditions we have witnessed is judged as
extreme is currently in the eye of the beholder and will be for market
historians to discern. For our part, we
note that what may be generally
appropriate in terms of stock price markdowns in recent history needn’t be
accepted as universally accurate as
it relates to stock price versus intrinsic value.
Here
is our main point: we as Fund shareholders are faced with today’s examples of
general uncertainties - macroeconomics, geopolitics, interpretation of
financial and business outcomes, market gyrations - through which quality
businesses have historically grown their sales, earnings, and intrinsic values
over literally decades. In a market that
we think has become hyper-averse to risk, it does not surprise us that it has
been difficult for many to discern those companies with impaired business
models from those suffering temporary setbacks and/or cyclical weakness. We
think discernment will ultimately win out over equivocation; successful
business models that produce cash earnings for their owners will be rewarded
with stock prices consistent with that outcome.
Or, as Professor Graham put it in 1972, “Through all their vicissitudes and casualties, as earth-shaking as they
were unforeseen, it remained true that sound investment principles produced
generally sound results. We must act on
the assumption that they will continue to do so.”
4Q 2002 Portfolio Update
For
the fourth quarter, the Fund posted gains less than those for the S&P 500
Index. Market trailing performance in the recovery unfortunately erased a
slight lead above the Index, held for much of the year, and performance
finished slightly behind the S&P 500 for the full year. The Fund portfolio gained ground in the
Media, Healthcare, and Technology segments.
Seven stocks, E.W. Scripps, Dow Jones, Diebold, AOL Time Warner,
Comcast, Merck, and Hewlett Packard were the primary contributors to positive
results. The latter four made greater
contributions, based on the influence of sizable portfolio commitments for AOL,
Comcast, and Merck and a robust stock price performance for the lighter
weighted Hewlett Packard. Before kudos are handed out, we note that most of these “magnificent seven”
fell into the category of improvement from previous depths. Several of them made
negative contributions, some sizable, to performance for the full year. On the other side of the ledger, Charter
Communications, Interpublic Group, Waters, and Tupperware generally detracted
most from fourth quarter performance.
Let’s
talk about the trouble spots. Waters is
the leading supplier of sophisticated, integrated analytical equipment to
researchers working with chemical compounds, most typically patented drug
companies. We originally uncovered
Waters in researching suppliers to pharmaceutical companies. In fact, we owned the company briefly late in
2001 and sold it then when the stock price quickly reached our assessment of
Waters’ underlying value. We recently re-established
the Waters position and are undisturbed by price weakness there – in fact it is
a perfect example of where we see a sizable difference between higher intrinsic
value and a currently weak stock price. We
think Waters is a fine example of the opportunities being served up by market
volatility, and have built a position for the Fund at valuations that are even
more attractive to us than our earlier entry point in late 2001.
Tupperware
is a smaller position, in a brand for which we have great respect, but that is nonetheless
struggling to grow its sales and profits.
We are closely monitoring their progress in developing complementary
sales channels (retail presence via Target, mall kiosks, the
internet) to their direct distributors and improving international operations
for products that consumers know and love.
Our
views on Interpublic are essentially unchanged from the comments we made three
months ago in the portfolio commentary for the third quarter. Cyclical softness in the advertising business
and an SEC investigation of their 2002 parent company's financial restatement
has weighed heavily on Interpublic’s stock price. We do not believe it has damaged the long
term business franchise of their leading advertising agencies. We have met with management on several
occasions and are satisfied with their response to their (admittedly
self-inflicted) wounds in the area of internal controls, intra-company accounting,
and rationalization of prior acquisitions.
Most importantly, we believe we are covered by an adequate margin of
safety, as measured by the gap between the recent stock price and a reasonable
assessment of the intrinsic value of Interpublic’s prodigious cash flow. At
current prices, we believe the risk/reward tradeoff of owning Interpublic is
sufficiently attractive to warrant working through a weak economy and the
management and financial control improvements they are implementing.
And
finally Charter, which has been to us what the invasion of
We
believe that reasonable assumptions about prospective cash flows available to
Charter shareholders, after payment of debt obligations and capital spending,
indicate a sizable gap between the value of those cash flows and the current
share price. Certainly we are cognizant
of an increased level of risk in a company with sizable leverage whose stock
price has declined significantly.
Neither do we dismiss the possibility of a balance sheet restructuring
that reduces the realizable investment proceeds below our estimate of the
intrinsic value of Charter’s cable assets.
Even adjusting for these uncertainties, we believe investment
opportunity exists well in excess of the current stock price sufficient to
warrant our continued commitment of capital to Charter as an investment.
2002 Portfolio Update
We
are neither happy about nor satisfied with the investment results in 2002 and
we share our fellow shareholders’ concerns about recently declining account
balances. We take limited solace in the
protection of capital from substantive erosion over the past three years. Fund shareholders with whom we have longer
relationships than the most recent three years can at least consider our
capital preservation abilities in light of market alternatives, while those
with shorter tenure are not likely afforded even that glimmer of optimism. Attribution of under-performance in 2002’s
leg of the horrific bear market can be traced to holdings in a limited number
of business categories and a handful of portfolio positions therein. Roughly
two-thirds of the negative performance for the full year can be found in the
Telecommunications (Charter, Comcast), Marketing Services (Interpublic Group),
Finance Related (Household), and Diversified (Cendant) areas of the Fund's
portfolio.
Of
the primary performance culprits identified above, only Household now appears
to have no chance of fulfilling our original investment expectations. UK-based HSBC will apparently capture for themselves much of the business value we believe exists in
Household, having announced a buyout offer for the company at $30 per
share. While preferable to stock price
quotes in the $21 range in October, this cap on proceeds from Household as an
investment is considerably inferior to our estimate of intrinsic value. The events that culminated in this poor
outcome, we think, are reflective of the bizarre market environment and litany
of contributing uncertainties that we described in the Introduction and Broad
Market Context section. In our view, a negative chain of events for
the company made Household’s market position look worse than it actually
was. Undoubtedly influenced by a tenuous
environment that loathes all uncertainty, we suspect that Household’s
management and its board of directors concluded that acceptance of a low-ball
offer for all of Household’s common stock was an acceptable alternative to the
melt-down situation that they believed possible. Value implosion was perhaps considered all
the more credible because it had befallen several of Household’s weaker competitors,
e.g., Providian, Money Store (purchased for billions by First
In
the other largest trouble spots for 2002 - Charter, Comcast, Interpublic and
Cendant - we disagree with the stock market’s current verdict, via recently
quoted prices, of the worth of these portfolio businesses. That is not to say that their prospects are
without near-term uncertainty. We simply
don’t believe that their uncertainties are currently being appropriately
weighted nor their worthwhile attributes properly appreciated at current market
prices. We discuss Charter and
Interpublic above in the 4Q 2002 Portfolio Update section.
Our view on Comcast remains consistent with past commentaries, see
especially the 2Q ’02 Portfolio
Commentary. With Cendant,
we remain somewhat puzzled as to the stock price weakness. We can cite a few theories about why the
company trades well below intrinsic value, but that isn’t the same as being
able to explain it or agree with it.
In
the interest of equal time, allow us the illustration of a rare portfolio
bright spot in discussing EW Scripps.
The
We
believe these gems of Scripps’ business should support its management team’s
candidacy for the capital allocation Hall of Fame. For several years, while Wall Street analysts
whined about the drain on current earnings caused by network start up costs,
Scripps ignored the naysayers and kept building their value. While competitors paid top dollar to grow by
acquisition of traditional media properties, Scripps organically produced
compelling content, built relationships with advertisers, and grew subscriber
counts for the new networks through the execution of carriage agreements with
cable companies. The stock price traded
in the $40-50 band for the better part of two and a half years through early
2001.
Driven
largely by measurable progress in the cable networks, value was clearly
accruing to Scripps’ owners, though its stock price languished. Scripps' stock price subsequently made up for
some of its prior stagnation with solid performance in 2001 and again last
year. You could have done some pretty
straightforward arithmetic long before the visible price appreciation, however,
to reveal that the aggregate price at which the individual businesses would
likely change hands in sale transactions was significantly in excess of the
stock price. For those who take their
cues from an assessment of the business, rather than from the stock market
quotation, it jumped out at you like a BAMM!
on Emeril’s cooking show.
We
aren’t suggesting that this particular investment worked out so all the other
ones will too. During the two years prior
to 2001, nobody (including us) could have told you then when the market might
wake up and adjust the apparent price/value discrepancy. We simply use this illustration as a specific
example, a parable if you will, to indicate that looking to stock market prices as a necessarily valid reckoning
of value on any given day is, in our
view, as likely as not to lead you astray.
As investors, we look for quality companies run by management teams that
we think will fairly steward the business for all owners. We then seek to pay an attractive price,
i.e., one that is discounted from a reasonable estimate of the intrinsic value
of the business. In summary, we want a
good business, with good management, at an attractive price. Our estimate of intrinsic value remains the measure
we use to consider progress after acquisition because we think it’s a more
reliable guide to investment profits than stock prices. Many prefer the path of selling their
ownership interest in quality businesses supported by no logic other than that
their price quotations have fallen.
Accepting those prices as valid, lately influenced by pessimistic
psychology, reinforced by recent negative experience, and in many cases totally
divorced from underlying economics, represents to us an unlikely path to
profits.
Portfolio Activity
Activity
in the Fund portfolio was relatively light during the fourth quarter, in terms
of both numbers of positions and portfolio percentages involved. We added three new companies, Certegy,
Scientific Atlanta and IMS Health, Inc. and eliminated exposure to one prior
investment, Republic Services Group.
Purchases
We
initiated positions in three companies, Scientific Atlanta, Certegy, and IMS
Healthcare, Inc. during the fourth quarter.
We essentially re-introduced the Scientific Atlanta position, having
sold that company earlier in the year in order to reduce the Fund’s taxable
gain for 2002. Our research into the
attractiveness of cable companies’ prized new revenue streams (high speed cable
modems and digital cable and the enhanced services such as video-on-demand that
they enable) led us to recognize and analyze related businesses. Scientific
Both
of the remaining additions are in the business of managing information, Certegy
facilitating electronic financial transactions and IMS capturing data about
prescription sales and reselling it as value added information to various
members of the healthcare value chain.
These initial positions are relatively small, reflecting primarily our
valuation discipline, but also alternative portfolio opportunities and their
relative newness as businesses held in the Fund's portfolio.
As
hard as it may be to believe, building on a company history of pharmaceutical
market research and drug sale audits, IMS has largely made a billion dollar
business of tracking pills. On a global
basis, they electronically accumulate information about prescription drug sales
from sources throughout the healthcare industry. Drug manufacturers and distributors, and
point of purchase locations where consumers obtain prescription medication -
retailers, hospitals and clinics, mail order, doctors’ offices, pharmacy
benefits managers, HMOs, etc - populate
a rich database. If it participates in
the drug distribution chain and/or you can legally buy a drug there, IMS
collects volume and descriptive data about the transaction. (Wal-Mart, long
known to jealously guard its sales data, is the lone exception of consequence,
though its impact can be quite well approximated based on triangulation of the
other data points.)
The
outcome is that IMS knows which drugs are being prescribed, where, when, and
how often (patient confidentiality is protected via a unique ID number as the
identifier). IMS meticulously scrubs
their raw data, applying algorithms to filter out double counting from
transfers within the value chain (drug company to
distributor, then to retailer, for example).
They also aggregate, organize and classify the data -- geographically,
by therapeutic category, by sales channel, etc. -- in ways that are of interest
to their customers. Thus is raw data --
a simple count of how many of which pills, prescribed by which physicians, sold
where and how often, and through which channel of the medical system --
transformed into useful information and sold for handsome profits to those for
whom such information is critical to their businesses. (You’ve gotta love capitalism.) Large branded pharmaceutical companies
represent IMS’ largest customer base, using the information to support their
own market research and sales force management and compensation.
We
triangulated on IMS through prior ownership of its former Dun and Bradstreet
parent, as a cross-reference during our research of the pharmaceutical
industry, and through the natural osmosis of our immersion in company research
in general. In our opinion, IMS defines a niche business. They are far and away the market leader,
controlling roughly 70% of the market for prescription drug sales information. Long-standing customer and vendor
relationships make the threat of new competition negligible in our view. High margins, low capital intensity, dominant
market share, focused management and an attractive share price – in these we
see value.
The
Fund's purchase of Certegy, also an information based business, marked a return
to familiar ground. We owned Certegy
shares briefly as a result of receiving them in a spin-off from Equifax in the
second quarter of 2001. Our goal, at
that time, was to establish a larger position in the Fund at reasonable prices.
Unfortunately, or perhaps fortunately, we were unable to build a larger
position, as the shares appreciated beyond our target purchase price post
spin-off, and we profitably exited the Certegy
position early in 2002 based on our view of over-valuation. We again purchased shares of this company for
the Fund portfolio late this year as the market reversed that situation on
price weakness apparently related to the loss of one large customer in
Certegy
operates in three related lines of business in the area of financial
transactions, on an international basis, with each providing roughly one third
of revenues. Their customers are
community banks and credit unions on the financial service provider end of the
transaction and merchants and retail establishments on the other. Consumers sit in the middle and have the
happy experience of securely using non-cash funds for all kinds of commercial
transactions, while merchants gain efficiency and security related to
converting those transactions into cash.
Certegy operates an electronic payments network for processing credit
and debit card
|
4Q
2002 Purchase / |
|
|
Position (P/S; Industry) |
Business
Summary/Reason for |
|
IMS Health (Purchase;
Health Care Information Services) |
Reasonably priced
provider of market information and sales management data to pharmaceutical
companies. |
|
Certegy (Purchase;
Financial Transaction Processing) |
Global supplier of
electronic payment services to financial institutions and merchants. |
|
Scientific
(Purchase; Telecom
Equipment) |
A leading
provider of essential equipment purchased by the cable industry, an area that
is core to meeting those customers’ business objectives. |
|
Republic Services ( |
Price target achieved. |
transactions, facilitating acceptance of these
payments for merchants and retailers.
Though most large retail chains use one of the larger industry
competitors (First Data Corp. or Total Systems, a unit of Synovus), Certegy has
carved out a profitable competitive niche serving a large number of small
businesses that require technology solutions to accept the electronic form of
payment that consumers increasingly prefer.
Certegy also provides fraud protection and related risk management
services for check acceptance, also for merchant and retailer customers. For this segment, they do in fact serve the
very large retail chains (e.g., Sears,
Historically,
Certegy’s revenue and cash flow growth have been in the high teens, driven by
international expansion and healthy organic growth in electronic payments in
the economy. Like IMS, high profit margins, significant competitive advantages,
low capital intensity, solid management and an attractive share price present
us with, in our opinion, an attractive investment alternative.
Sales
We
eliminated one Fund position during the fourth quarter, Republic Services
Group. Republic shares fairly
dramatically outperformed the horrendous market over the past two years during
our ownership period as they appreciated moderately while the rest of the market
fell drastically. We sold shares
recently to eliminate the position as the share price moved closer to our
estimation of intrinsic value.
Portfolio Outlook
“The future will be
better tomorrow.”
Dan Quayle
As
long time shareholders know, we try to have little, if any, view on “big
picture” macro economic issues and certainly avoid future prognostications
about “the market.” Our view on the
former tends to agree with Mr. Buffett: “If I make predictions about the
economy, I don’t pay any attention to them.” As for market outlook, we view our business
as rightly focused on reducing the opportunity for error. In “predicting” the market, the variables are
too numerous and the unknowns too many to allow for an “outlook” to differ
terribly much from a guess, when all is said and done. In point of fact, depreciation in the Fund’s
aggregate portfolio value by nearly one quarter over the course of a year is
clearly not an outcome we set out to achieve.
Dismal results occurred against the backdrop of the nastiest stock
market in several generations, lately ensconced as the worst since the Great
Depression, certainly one we had no power to predict in advance.
Importantly, we’ve found that
predicting ultimately doesn’t much matter.
Over long time periods there tend to exist opportunities to buy good
businesses at attractive prices. We are careful to retain an appropriately long
term view, and to evaluate what we view as the real economic value of companies
that trade in the stock market. We try
to base our assessment of those companies on the strength of their underlying
enterprises and their competitive positions.
The final ingredient to successful investing, in our humble opinion, is
patient and careful observation of stock price activity for buying
opportunities in those limited situations where we have developed an informed
opinion of rational value. Some environs
offer more opportunity, some less, but we have found that “chance favors the
prepared mind,” and thus we continue with our diligent first-hand research into
a variety of businesses. We believe that
rational estimates of intrinsic value are not less real or less valid than current
stock prices. We allow that they are often
less than obvious to the casual observer and the ever fickle media; in fact we
count on it.
We
personally think it would NOT be prudent for investors to plan for a return to
a world of equity profits well above long term averages (roughly 11%). We have historically endorsed investor
expectations consistent with long term equity market returns: 8-12% average
annual returns, over a reasonable number of years. Single year and even multi year results will
surely vary widely outside that range, with some higher and some lower. Situation of even longer term results within
the admittedly wide range is not a guaranteed outcome. Returns near or below the low end would not
surprise us; we suspect results at the high end will likely be worth cheering
about. Additionally, placement outside
of or near the lower or upper end of the 8-12% range will vary by shareholders’
specific holding period for Fund shares, and of course also be influenced by a
variety of external factors. Our goal
will be to invest shareholders’ capital in the Fund in such a way that long
term results outperform the broad market, net of fees, over at least a five
year time horizon. We have accomplished
that goal in the past and, while past performance is no guarantee of future
results, we have no plans to vary our method of pursuing that outcome in the future.
Conclusion
“In a sluggish economy, never, ever mess
with another man’s livelihood.”
-
Risky
Business
We
recognize that the Fund’s poor posted 2002 investment results remain the
objective fact, while superior intrinsic values embedded in portfolio positions
remains our considered opinion. We know that shareholders are logically
concerned about declining portfolio values.
We also know that investment capital is valuable, and are keenly aware
of the consequences of its decline. 2002
created for us a disparity unique in our memory. We are faced on the one hand with
disappointing recent investment results and the impact that has had on the
Fund’s value, a measure of shareholders’ well-being if not their
livelihood. On the other hand, we view
the quality of underlying portfolio businesses, and the discount of current
prices from intrinsic values, as historically attractive. We will therefore remain steadfast in
maintaining our analytical rigor, our intellectual honesty, and our investment
methodology as a prudent guide to managing assets in turbulent markets. We expect our disciplined application of
proven investment principles to earn returns on capital that are both attractive
and competitive with alternatives over long time periods.
As
always, thanks for your continued support.
George W. Brumley, III
David R. Carr, Jr.
Important
Information
Authorized for
distribution only if preceded or accompanied by a prospectus. Where shown or
quoted, recent company returns (for example calendar quarter or trailing twelve
months) are stock price changes only, and reflect neither dividends nor any
fees associated with an investment in the Oak Value Fund (the “Fund”). This commentary seeks to describe the Fund
managers' current views of the market and to highlight selected activity in the
Fund. Any discussion of specific securities is intended to help shareholders
understand the Fund's investment style, and should not be regarded as a
recommendation of any security. Displays detailing a summary of holdings (e.g.,
best and worst stocks, business category distribution, etc.) are based on the
Fund’s holdings on
We do not
attempt to address specifically how individual shareholders have fared, since
shareholders also receive account statements showing their holdings and
transactions. Information concerning the performance of the Fund and our
recommendations over the last year are available upon request. Past performance
is no indication of future performance. You should not assume that future recommendations
will be as profitable or will equal the performance of past recommendations.
Statements
referring to future actions or events, such as the future financial performance
or ongoing business strategies of the companies in which the Fund invests, are
based on the current expectations and projections about future events provided
by various sources, including company management. These statements are not
guarantees of future performance, and actual events and results may differ
materially from those discussed herein. References to securities purchased or
held are only as of the date of this communication to shareholders. Although
the Fund's investment adviser focuses on long-term investments, holdings are
subject to change.
This
commentary may include statistical and other factual information obtained from
third-party sources. We believe those sources to be accurate and reliable;
however, we are not responsible for errors by them on which we reasonably rely.
In addition, our comments are influenced by our analysis of information from a
wide variety of sources and may contain syntheses, synopses, or excerpts of
ideas from written or oral viewpoints provided to us by investment, industry,
press and other public sources about various economic, political, central bank,
and other suspected influences on investment markets.
Although our
comments focus on the most recent calendar quarter and year, we use this
perspective only because it reflects industry convention. The Fund and its
investment adviser do not subscribe to the notion that three-month calendar
periods or other short-term periods are either appropriate for making judgments
or useful in setting long-term expectations for returns from our, or any other,
investment strategy. The Fund and its investment adviser do not subscribe to
any particular viewpoint about causes and effects of events in the broad
capital markets, other than that they are not predictable in advance.
Specifically, nothing contained in the Fund portfolio commentary should be construed
as a forecast of overall market movements, either in the short or long term.
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Any
performance data quoted represents past performance and the investment return
and principal value of an investment in the Fund will fluctuate so that an
investor’s shares, when redeemed, may be worth more or less than their original
cost. Average Annual Total Returns for
the Fund for periods ended
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charges and expenses, please obtain a copy of the Fund's prospectus which is
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