adverse changes in
overall economic or market conditions, such as the level of economic activity
and productivity, unemployment and labor force participation rates, inflation or
deflation (and expectations for inflation or deflation), interest rates, demand
and supply for particular products or resources including labor, and debt levels
and credit ratings, among other factors. Such adverse conditions may contribute
to an overall economic contraction across entire economies or markets, which may
negatively impact the profitability of issuers operating in those economies or
markets. In addition, geopolitical and other globally interconnected
occurrences, including war, terrorism, economic or financial crises, uncertainty
or contagion, trade disputes, government debt crises (including defaults or
downgrades) or uncertainty about government debt payments, public health crises,
natural disasters, climate change and related events or conditions have led, and
in the future may lead, to disruptions in the US and world economies and
markets, which may increase financial market volatility and have significant
adverse direct or indirect effects on the fund and its investments. Adverse
market conditions or disruptions could cause the fund to lose money, experience
significant redemptions, and encounter operational difficulties. Although
multiple asset classes may be affected by adverse market conditions or a
particular market disruption, the duration and effects may not be the same for
all types of assets.
Russia's military
incursions in Ukraine have led to, and may lead to, additional sanctions being
levied by the United States, European Union and other countries against Russia.
Russia's military incursions and the resulting sanctions could adversely affect
global energy, commodities and financial markets and thus could affect the value
of the fund's investments. The extent and duration of the military action,
sanctions and resulting market disruptions are impossible to predict, but could
be substantial.
Other market
disruption events include the pandemic spread of the novel coronavirus known as
COVID-19, which at times has caused significant uncertainty, market volatility,
decreased economic and other activity, increased government activity, including
economic stimulus measures, and supply chain disruptions. While COVID-19 is no
longer considered to be a public health emergency, the fund and its investments
may be adversely affected by its lingering effects well into the
future.
Adverse market
conditions or particular market disruptions, such as those caused by Russian
military action and the COVID-19 pandemic, may magnify the impact of each of the
other risks described in this “MAIN RISKS” section and may increase volatility
in one or more markets in which the fund invests leading to the potential for
greater losses for the fund.
Large-sized
companies risk. Returns on
investments in securities of large companies could trail the returns on
investments in securities of smaller and mid-sized companies. Larger companies
may be unable to respond as
quickly as smaller
and mid-sized companies to competitive challenges or to changes in business,
product, financial or other market conditions. Larger companies may not be able
to maintain growth at the high rates that may be achieved by well-managed
smaller and mid-sized companies. During different market cycles, the performance
of large-capitalization companies has trailed the overall performance of the
broader securities markets.
Medium-sized
company risk. Medium-sized
company stocks tend to be more volatile than large company stocks. Because stock
analysts are less likely to follow medium-sized companies, less information
about them is available to investors. Industry-wide reversals may have a greater
impact on medium-sized companies, since they lack the financial resources of
larger companies. Medium-sized company stocks are typically less liquid than
large company stocks.
Liquidity
risk.
In certain situations, it may be difficult or impossible to sell an investment
at an acceptable price. This risk can be ongoing for any security that does not
trade actively or in large volumes, for any security that trades primarily on
smaller markets, and for investments that typically trade only among a limited
number of large investors (such as restricted securities). In unusual market
conditions, even normally liquid securities may be affected by a degree of
liquidity risk. This may affect only certain securities or an overall securities
market.
Although the fund
primarily seeks to redeem shares of the fund on an in-kind basis, if the fund is
forced to sell underlying investments at reduced prices or under unfavorable
conditions to meet redemption requests or other cash needs, the fund may suffer
a loss or recognize a gain that may be distributed to shareholders as a taxable
distribution. This may be magnified in circumstances where redemptions from the
fund may be higher than normal.
Focus
risk.
To the extent that the fund focuses its investments in particular industries,
asset classes or sectors of the economy, any market price movements, regulatory
or technological changes, or economic conditions affecting companies in those
industries, asset classes or sectors may have a significant impact on the fund’s
performance. The fund may become more focused in particular industries, asset
classes or sectors of the economy as a result of changes in the valuation of the
fund’s investments or fluctuations in the fund’s assets, and the fund is not
required to reduce such exposures under these
circumstances.
Information
technology sector risk. To the extent that
the fund invests significantly in the information technology sector, the fund
will be sensitive to changes in, and the fund’s performance may depend to a
greater extent on, the overall condition of the information technology sector.
Information technology companies are particularly vulnerable to government
regulation and competition, both domestically and internationally, including
competition from foreign