An investment in the Fund involves certain risks, including, among others, the following:
As with any mutual fund, investment return and principal value will fluctuate, depending on general market conditions and other factors. Market risk includes political, regulatory, economic, social and health risks (including the risks presented by the spread of infectious diseases such as the COVID-19 pandemic) which can lead to increased market volatility and negative impacts on local and global financial markets, and the duration and severity of the impact of these risks on markets cannot be reasonably estimated.
Value Investing Risk
Value investors seek to invest in companies whose stock prices are low in relation to their estimated worth or future prospects. Undervalued securities are, by definition, out of favor with investors, and there is no way to predict when, if ever, the securities may return to favor.
The risk that the Fund›s performance may be hurt disproportionately by the poor performance of relatively few stocks. The fund tends to invest a high percentage of assets in its largest holdings.
Large Company Risk
Large companies tend to have less overall volatility, compared to mid-size and small companies; however, large companies may not be able to attain the high growth rates of successful mid-size or small companies. In addition, large companies may be less capable of responding to competitive challenges and disruptive changes.
Mid-Size Company Risk
Mid-size companies may be more volatile and less liquid, compared to large companies, due to the mid-size companies› limited product lines, markets, financing sources and management depth. Also, mid-size companies may be affected to a greater extent by the underperformance of a sector or changing market conditions.
Small Company Risk
Small companies may be more volatile and less liquid, compared to large and mid-size companies, due to the small companies› size, limited product lines, markets, financing sources and management depth. Also, small companies may be affected to a greater extent by the underperformance of a sector or changing market conditions.
Non-U.S. Securities Risk
The Fund may invest in securities issued by non-U.S. issuers, which securities may be denominated in U.S. dollars or foreign currencies. Investments in non-U.S. securities may involve additional risks including exchange rate fluctuation, political or economic instability, the imposition of exchange controls, expropriation, limited disclosure and illiquid markets.
Investments in Exchange Traded Funds
ETFs incur certain expenses not incurred by their applicable index, as such, the Fund will incur additional expenses as a result of investing in an ETF. ETFs that are based on a specific index may not be able to replicate and maintain exactly the composition and relative weightings of securities in the applicable index.
Short Sales Risk
The Fund sells securities that it has borrowed but does not own (“short sales”), which is a speculative technique. The Fund will suffer a loss when the price of a security that it has sold short increases; the loss of value on a short position is theoretically unlimited. Also there may be times when the Fund›s lender demands, or market conditions dictate, that the borrowed securities be returned to the lender on short notice, and the Fund may have to borrow the securities from another lender or purchase the securities at an unfavorable price. In addition, the use of short sales will increase the Fund›s expenses. And because the Fund invests in both long and short equity positions, the Fund has overall exposure to changes in the value of securities, which far exceeds the value of the Fund›s assets. This may magnify gains and losses and increase the volatility of the Fund›s returns.
The Fund may borrow from banks or brokers and pledge its assets in connection with any borrowing. If the interest and other expenses on borrowings is greater than the Fund›s returns on the proceeds of the borrowings, then the use of leverage will decrease the overall return to the Fund›s shareholders.
Securities purchased by the Fund that are liquid at the time of purchase may subsequently become illiquid due to, among other things, events relating to the issuer of the securities (e.g., changes to the market's perception of the credit quality of the issuer), market events, economic conditions, investor perceptions or lack of market participants. The Fund may be unable to sell illiquid securities on short notice or only at a price below current value.
Derivatives are instruments, such as futures and forward contracts, whose value is derived from that of other assets, rates or indices. The use of derivatives may carry more risk than other types of investments. Derivatives are subject to a number of risks including counterparty, liquidity, interest rate, market, credit and management risks, and the risk of improper valuation. Changes in the value of a derivative may not correlate perfectly with the underlying asset, rate or index, and in some cases the Fund could lose more than the principal amount invested. The use of some derivatives requires the Fund to segregate liquid assets to cover the Fund›s obligations under the derivative agreements or as required by regulations.
Failure to Meet Investment Objective
There can be no assurance that the Fund will meet its investment objective.
An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.