Principal Investment Strategy
The Fund invests primarily in the equity securities of smaller companies that the Adviser believes to be undervalued relative to the underlying earnings potential of the company.
Under normal circumstances, the Fund will invest at least 80% of its net assets in equity securities of small companies. The Fund will not change this policy unless it notifies shareholders at least 60 days in advance.
"Small companies" are companies that at the time of purchase have market capitalizations within the range of companies comprising the Russell 2000
®
Value Index. As of December 31, 2013, the Russell 2000
®
Value Index included companies with approximate market capitalizations between $36 million and $5 billion. The size of companies in the index changes with market conditions and the composition of the index.
The Adviser invests in companies that it believes to be high quality based on criteria such as market share position, profitability, balance sheet strength, competitive advantages, management competence and the ability to generate excess cash flow. The Adviser uses a bottom-up investment process in conducting fundamental analysis to identify companies that have sustainable returns trading below the Adviser's assessment of intrinsic value and prospects for an inflection in business fundamentals that will enable the stock price to be revalued higher. The Adviser may sell a security if it believes the stock has reached its fair value estimate, if a more attractive opportunity is identified, or if the fundamentals of the company deteriorate.
The Fund may invest a portion of its assets in equity securities of foreign companies traded on U.S. exchanges, including American and Global Depositary Receipts (ADRs and GDRs).
For purposes of the Fund's investment strategy, "net assets" includes any borrowings for investment purposes.
There is no guarantee that the Fund will achieve its objective.
Principal Risks
The Fund's investments are subject to the following principal risks:
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Smaller, less seasoned companies may lose market share or profits to a greater extent than larger, established companies as a result of deteriorating economic conditions.
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The portfolio manager may not execute the Fund's principal investment strategies effectively.
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A company's earnings may not increase as expected.
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Foreign securities (including ADRs and GDRs) could be affected by factors not present in the U.S., including expropriation, confiscation of property, and difficulties in enforcing contracts. Compared to U.S. companies, there generally is less publicly available information about foreign companies and there may be less governmental regulation and supervision of foreign companies. Foreign securities generally experience more volatility than their domestic counterparts.
You may lose money by investing in the Fund. The likelihood of loss may be greater if you invest for a shorter period of time.
By itself, the Fund does not constitute a complete investment plan and should be considered a long-term investment for investors who can afford to weather changes in the value of their investment.