INVESTMENT OBJECTIVE,
INVESTMENT STRATEGIES, AND RELATED RISKS
The Fund’s investment objective is long term
capital appreciation. The Fund’s investment objective is fundamental and may not
be changed without shareholder approval.
The Fund invests primarily in equity securities of
companies which the Adviser believes are undervalued and have the potential to
achieve significant capital appreciation, overweighting its core twenty-five
equity positions. The Adviser invests in companies whose stocks are selling at a
significant discount to their private market value (“PMV”). PMV is the value the
Adviser believes informed investors would be willing to pay to acquire the
entire company. If investor attention is focused on the underlying asset value
of a company due to expected or actual developments or other catalysts, an
investment opportunity to realize this PMV may exist.
Undervaluation of a company’s stock can result from
a variety of factors, such as a lack of investor recognition of:
•the underlying value of a company’s fixed assets,
•the value of a consumer or commercial franchise,
•changes in the economic or financial environment
affecting the
company,
•new, improved or unique products or services,
•new or rapidly expanding markets,
•technological developments or advancements
affecting the company or its products, and
•changes in governmental regulations, political
climate or competitive
conditions.
The actual events that may lead to a significant
increase in the value of a company’s securities include:
•a change in the company’s management or
management
policies,
•an investor’s purchase of a large portion of the
company’s
stock,
•a merger, reorganization, or recapitalization of
the
company,
•a sale of a division of the company,
•a tender offer (an offer to purchase investors’ shares),
•the spin-off to shareholders of a subsidiary,
division, or other substantial assets, and
•the retirement or death of a senior officer or
substantial shareholder of the
company.
In selecting investments, the Adviser also
considers the market price of the issuer’s securities, its balance sheet
characteristics and the perceived strength of its management.
The Fund’s assets will be invested primarily in
common stock. Many of the common stocks the Fund will buy will not pay
dividends. These stocks will be bought for the potential that their prices will
increase, providing capital appreciation for the Fund. The value of equity
securities will fluctuate due to many factors, including the past and predicted
earnings of the issuer, the quality of the issuer’s management, general market
conditions, the forecasts for the issuer’s industry and the value of the
issuer’s assets. Holders of equity securities only have rights to value in the
company after all debts have been paid, and they could lose their entire
investment in a company that encounters financial difficulty.
The Fund may also use the following investment techniques:
•Foreign
Securities. The Fund may invest up
to 25% of its total assets in the securities of non-U.S. issuers, including
issuers in emerging
markets.