CYBER
SECURITY RISK. The Fund is
susceptible to operational risks through breaches in cyber security. A breach in
cyber security refers to
both intentional and unintentional events that may cause the Fund to lose
proprietary information, suffer data corruption or
lose operational capacity. Such events could cause the Fund to incur regulatory
penalties, reputational damage, additional
compliance costs associated with corrective measures and/or financial loss.
These risks typically are not covered by insurance.
In general, cyber incidents can result from deliberate attacks or unintentional
events. Cyber incidents include, but are not
limited to, gaining unauthorized access to digital systems (e.g., through “hacking”
or malicious software coding) for purposes
of misappropriating assets or sensitive information, corrupting data or causing
operational disruption. Cyber attacks may
also be carried out in a manner that does not require gaining unauthorized
access, such as causing denial-of-service
attacks on websites (i.e., efforts to make
network services unavailable to intended users). Cyber security failures by or
breaches of the systems of the Advisor, distributor and other service providers
(including, but not limited to, sub-advisors, index
providers, fund accountants, custodians, transfer agents and administrators),
market makers, authorized participants or the
issuers of securities in which the Fund invests, have the ability to cause
disruptions and impact business operations,
potentially resulting in: financial losses; interference with the Fund’s ability
to calculate its net asset value; disclosure of confidential
trading information; impediments to trading; submission of erroneous trades or
erroneous creation or redemption orders;
the inability of the Fund or its service providers to transact business;
violations of applicable privacy and other laws;
regulatory fines penalties, reputational damage, reimbursement or other
compensation costs; or additional compliance costs.
Substantial costs may be incurred by the Fund in order to resolve or prevent
cyber incidents in the future. While the Fund has
established business continuity plans in the event of, and risk management
systems to prevent, such cyber attacks, there are
inherent limitations in such plans and systems, including the possibility that
certain risks have not been identified and that
prevention and remediation efforts will not be successful. Furthermore, the Fund
cannot control the cyber security plans and
systems put in place by service providers to the Fund, issuers in which the Fund
invests, market makers or authorized
participants. However, there is no guarantee that such efforts will succeed, and
the Fund and its shareholders could be negatively
impacted as a result.
EQUITY
SECURITIES RISK. The value of the
Fund’s shares will fluctuate with changes in the value of the equity securities
in which
it invests.
Equity
securities prices fluctuate for several reasons, including changes in investors'
perceptions of the financial condition of an
issuer or the general condition of the relevant equity market, such as market
volatility, or when political or economic events
affecting the issuers occur. Common stock prices may be particularly sensitive
to rising interest rates, as the cost of capital
rises and borrowing costs increase. Equity securities may decline significantly
in price over short or extended periods of time, and
such declines may occur in the equity market as a whole, or they may occur in
only a particular country, company, industry or
sector of the market. Additionally, holders of an issuer's common stock may be
subject to greater risks than holders of its
preferred stock and debt securities because common stockholders' claims are
subordinated to those of holders of preferred
stocks and debt securities upon the bankruptcy of an issuer.
INDEX
CONCENTRATION RISK. The Fund will be
concentrated in an industry or a group of industries to the extent that the
Index is
so concentrated. To the extent that the Fund invests a significant percentage of
its assets in a single asset class or the securities of
issuers within the same country, state, region, industry or sector, an adverse
economic, business or political development may
affect the value of the Fund’s investments more than if the Fund were more
broadly diversified. A significant exposure makes a Fund
more susceptible to any single occurrence and may subject a Fund to greater
market risk than a fund that is more broadly
diversified. There may be instances in which the Index, for a variety of reasons
including changes in the prices of individual
securities held by the Fund, has a larger exposure to a small number of stocks
or a single stock relative to the rest of the
stocks in the Index. Under such circumstances, the Fund will not deviate from
the Index except in rare circumstances or in
an immaterial way and therefore the Fund’s returns would be more greatly
influenced by the returns of the stock(s) with the
larger exposure.
INDEX
OR MODEL CONSTITUENT RISK. The Fund may be a
constituent of one or more indices or ETF models. As a result, the Fund may be
included in one or more index-tracking ETFs or mutual funds. Being a component
security of such a vehicle could greatly affect
the trading activity involving the Fund's shares, the size of the Fund and the
market volatility of the Fund’s shares. Inclusion in
an index could increase demand for the Fund and removal from an index could
result in outsized selling activity in a
relatively short period of time. As a result, the Fund’s net asset value could
be negatively impacted and the Fund’s market price may be
below the Fund’s net asset value during certain periods. In addition, index
rebalances may potentially result in increased
trading activity. To the extent buying or selling activity increases, the Fund
can be exposed to increased brokerage costs and
adverse tax consequences and the market price of the Fund can be negatively
affected.
INDEX
PROVIDER RISK. There is no
assurance that the Index Provider, or any agents that act on its behalf, will
compile the Index accurately, or
that the Index will be determined, maintained, constructed, reconstituted,
rebalanced, composed, calculated or
disseminated accurately. The Index Provider and its agents do not provide any
representation or warranty in