DELISTED - The Fund invests in long positions in stocks (i.e., purchases such stocks) identified by the Fund’s adviser as undervalued and takes short positions in stocks (i.e., sells stock that it does not own in the expectation of purchasing the same stock at a lower price) that the Fund’s adviser has identified as overvalued. Under normal circumstances, the Fund invests primarily in common stock of small to large sized companies. The Fund’s adviser defines small to large sized companies as those with market capitalizations greater than $1.5 billion at the time of purchase. The Fund’s long portfolio will focus on companies that pay dividends. The Fund may invest up to 45% of its net assets in American Depository Receipts (“ADRs”). ADRs are receipts that represent interests in foreign securities held on deposit by U.S. banks. The Fund may also invest in exchange-traded funds (“ETFs”), which are investment companies that invest in portfolios of securities designed to track particular market segments or indices and the shares of which are bought and sold on securities exchanges. The Fund’s adviser employs a proprietary investment process, the Relative Value Process (the “Process”), to identify a security’s “special investment value.” The Fund’s portfolio manager developed the Process, has applied for a patent for the Process, and has granted a license to the Fund’s adviser to use the Process in connection with its management of the Fund’s assets. The Process is based on fundamental financial factors with an emphasis on valuation. Under the Process, a security’s “special investment value” is defined relative to its own historic value and not relative to a benchmark, peer group, or index. The Process utilizes fundamental variables that the Fund’s adviser believes historically have been successful in predicting stock price movement. The Fund’s adviser considers investments across all sectors and does not focus on any one industry. The Fund uses a hedged strategy. The Fund’s adviser uses the Process to identify equity securities that are inexpensive based on their trading histories, which provide the basis for the Fund’s long portfolio. The Process also identifies equity securities that are expensive compared to their histories, which provide the foundation for the Fund’s short portfolio. The Fund intends to invest cash proceeds from short sales in short-term cash instruments to produce a return on such proceeds just below the federal funds rate. Generally the Fund’s long portfolio will consist of approximately 50 securities while the short portfolio will typically be comprised of 40 securities. The Fund will seek to be approximately 110% long and approximately 85% short with respect to its equity positions, resulting in a 25% net exposure to the market. The Fund does not intend to exceed 140% long and 110% short with respect to its equity positions. The Fund’s net equity market exposure may range from 0% to 50%. The Fund will comply with all leverage restrictions required by Section 18 of the 1940 Act and subsequent determinations of the SEC and any other regulatory limitation. The Fund intends to combine the long and short portfolios to seek to reduce both volatility and correlation relative to the U.S. equity markets. A short sale involves the sale of a security that the Fund does not own in the expectation of purchasing the same security (or a security exchangeable therefor) at a later date and at a lower price. The Fund will incur a loss as a result of a short sale if the price of the security increases between the date of the short sale and the date on which the fund replaces the security sold short. The Fund will realize a gain if the security declines in price between those two dates. The Fund's potential loss is limited only by the maximum attainable price of the security less the price at which the security was sold. The Fund’s investment strategy involves active and frequent trading. As a result, the Fund’s portfolio turnover is expected to exceed 100% on an annual basis, which will result in the Fund incurring transaction costs that detract from performance and is also expected to affect the tax treatment of the Fund’s gains.
