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Investment Philosophy

Main Investment Strategies

Under normal market conditions, the Fund invests mainly in equity securities (including securities convertible into, or that the Investment Manager expects to be exchanged for, common or preferred stock) of companies of any nation that the Investment Manager believes are available at market prices less than their value. The Investment Manager will seek to identify securities through extensive analysis and research, taking into account, among other factors, the relationship of book value to market value, cash flow and multiples of earnings.

The Investment Manager will follow a global approach to investing that combines the following key elements:

Activism and Arbitrage

If the Fund takes an activist role, it will seek to influence or control management, or invest in other companies that do so when the Investment Manager believes the Fund may benefit. Arbitrage opportunities will typically involve securities of companies involved in restructurings (such as mergers, acquisitions, consolidations, liquidations, spinoffs or tender or exchange offers) or that the Investment Manager believes are attractively priced relative to an economically equivalent security of the same or another company.

Bankruptcy

Securities of companies that are, or are about to be, involved in bankruptcy.

Cash and Convertibles

Cash equivalent instruments and debt securities or preferred stock convertible into common stock.

Distressed Companies

Securities of companies that are, or are about to be, involved in reorganizations, financial restructurings, or bankruptcy.

Equities That Are Undervalued

Securities trading at a discount to intrinsic value.

Financings

Securities of companies that are, or are about to be, involved in financial restructurings, or participation in such financings.

Global

Securities of both U.S. issuers and non-U.S. issuers, including securities of issuers in emerging markets.

Hedging

Hedging strategies designed to reduce potential loss as a result of certain economic or market risks, including risks related to fluctuations in interest rates, currency exchange rates, and broad or specific market movements may be used. The Fund will primarily engage in forward foreign currency exchange contracts. The Fund may also engage in other currency transactions such as currency futures contracts, currency swaps, options on currencies, or options on currency futures, or it may engage in other types of transactions, such as the purchase and sale of exchange-listed and OTC put and call options on securities, equity and fixed-income indices and other financial instruments; and the purchase and sale of financial and other futures contracts and options on futures contracts.

Integrity

Evaluating management ability and incentives to deliver superior returns to shareholders.

With an emphasis on undervalued equities, risk arbitrage and other arbitrage transactions and distressed companies, the Fund will focus its investments in areas where it finds the most compelling opportunities at any given moment and on situations that, in the Investment Manager's opinion, have the potential for capital appreciation. The Investment Manager will examine each security separately and will not apply these factors according to any predetermined formula. In order to maintain investment flexibility, the Investment Manager has not established guidelines as to the size of an issuer, its earnings or the industry in which it operates in order for a security to be included or excluded for purchase by the Fund.

The Fund's investments in Distressed Companies typically involve the purchase of bank debt, lower-rated or defaulted debt securities, comparable unrated debt securities, or other indebtedness (or participations in the indebtedness) of such companies. The debt securities which the Fund may purchase may either be unrated, or rated in any rating category established by one or more independent rating organizations, such as Standard & Poor's Ratings Group (S&P) or Moody's Investors Service (Moody's). The Fund may invest in securities that are rated in the medium to lowest rating categories by S&P and Moody's, some of which may be so-called "junk bonds." The Fund will invest in debt securities based on their overall potential for capital appreciation, and therefore, such debt securities will have varying maturity dates. The Fund may also engage from time to time in an "arbitrage" strategy. When engaging in an arbitrage strategy, the Fund typically buys one security while at the same time selling short another security. While the Fund generally purchases securities for investment purposes, the Investment Manager may seek to influence or control management, or invest in other companies that do so, when the Investment Manager believes the Fund may benefit.

The Fund expects to invest substantially and may invest up to 100% of its assets in foreign securities, which may include sovereign debt and participations in foreign government debt, some of which may be issued by countries with emerging markets.

Because the securities the Fund holds fluctuate in price, the value of your investment in the Fund will go up and down. You could lose money.

Principal Risks

The Fund is subject to several risks, any of which could cause an investor to lose money.

With a portion of the Fund's assets allocated to stocks, the Fund is subject to the following associated risk:

Stock Market Risk

Stock Market Risk, which is the chance that stock prices overall will decline. Stock markets tend to move in cycles, with periods of rising prices and periods of falling prices.

With a portion of its assets allocated to debt securities, the Fund is subject to the following associated risks:

Interest Rate Risk

Interest Rate Risk, which is the chance that the value of debt securities overall will decline because of rising interest rates;

Income Risk

Income Risk, which is the chance that the Fund's income will decline because of falling interest rates; and

Credit Risk

Credit Risk, which is the chance that a debt issuer will fail to pay interest and principal in a timely manner, or that negative perceptions of the issuer's ability to make such payments will cause the price of that debt to decline.

With a portion of its assets allocated to foreign securities, the Fund is subject to the following associated risks:

Foreign Securities and Emerging Markets Risk

Foreign Securities and Emerging Markets Risk, which is the risk associated with investments in foreign countries and emerging markets. The following factors make foreign securities more volatile: political, economic and social instability; foreign securities may be harder to sell, brokerage commissions and other fees may be higher for foreign securities; and foreign companies may not be subject to the same disclosure and reporting standards as U.S. companies.

Currency Risk

Currency Risk, which is the risk the value of foreign securities may be affected by changes in currency exchange rates.

With a portion of its assets allocated to derivatives for risk management or hedging purposes, the Fund is subject to the following associated risk:

Derivatives Risk

Derivatives Risk , which is the risk that the greater complexity involved with the use of derivatives may expose the Fund to greater risks and result in poorer overall performance.