Additional Information about Principal Investment Strategies and Risk
Commodities and Derivatives Linked to Commodities
Commodities include industrial metals, gas and other energy products, natural resources, and precious metals like gold, silver, platinum, and palladium in the form of bullion and coins. The price movements of a physical commodity (such as energy, mineral, or agricultural products), a commodity futures contract, a commodity index, or another economic variable based on changes in the value of commodities or the commodities markets typically determine the value of a commodity-linked derivative investment. The Fund may invest in leveraged or unleveraged commodity-linked or index-linked notes, which are derivative debt instruments having principal and/or coupon payments correlated to the value of commodities, to gain exposure to the commodity markets. the performance of commodity indices or futures contracts. These notes are sometimes referred to as "structured notes" since the issuer and the note buyer may structure their terms.
Risk
The Fund's exposure to the commodity markets could make it more volatile than investments in conventional assets. The commodities markets may experience significant fluctuations depending on a range of variables, such as general market movements, political and economic events and policies, war, terrorist attacks, and changes in interest or inflation rates. Factors like drought, floods, weather, embargoes, tariffs, and other regulatory developments may also have an impact on commodity prices. Commodity prices can change significantly as a result of disruptions in supply and demand in key producing or consuming regions. A small group of producers may control the production of some commodities in a select few nations. Political, economic, and supply-related developments as a result in such nations may have an outsized influence on the cost of such commodities.
Commodity-Linked Securities in a "Structured" Form.
The value of a commodity-linked derivative instrument may be impacted by changes in market trends, volatility in commodity indices, changes in interest rates, or factors affecting a specific industry because the value of a commodity-linked derivative instrument is typically based on the price movements of a physical commodity. These securities' value will fluctuate according to changes in the underlying commodity or associated investment index.
Detailed Notes. The Fund is economically vulnerable to changes in commodity prices because of structured notes. The price change of the underlying commodity affects how well a structured note performs. Structured notes may not now have a highly liquid secondary market, and there may be no guarantee that one will.
Due to the frequent use of leverage, the market value of each note is more prone to fluctuations in the underlying commodity, commodity futures contract, or commodities index.
DERIVATIVES.
The term "derivatives" refers to a wide range of financial instruments, such as swap agreements, options, warrants, futures contracts, currency forwards, and structured notes, whose values are at least partially based on the value of one or more indicators, such as the value of a security, asset, index, or reference rate.
Risk
The risks connected with the usage of derivatives are distinct from, and perhaps higher than, the risks involved with investing directly in conventional securities. The usage of derivatives may result in losses due to unfavorable price or value changes in the underlying security, asset, index, or reference rate, which may be amplified by specific derivative characteristics. Derivative strategies sometimes use leverage, which may exacerbate a loss and cause the Fund to lose more money than it would have if it had invested in the underlying securities. Derivatives values may shift unexpectedly, particularly under exceptional market situations, resulting in higher volatility, among other repercussions. The usage of derivatives may potentially raise the amount of tax that owners must pay. Other risks stem from the Fund's inability to cancel or sell derivative investments. A liquid secondary market for the Fund's derivative investments may not always exist when the Fund wishes to terminate or sell such positions. Over-the-counter (OTC) instruments (investments that are not traded on an exchange) may be illiquid, and transactions in derivatives sold on the OTC market are susceptible to the risk that the other party may not satisfy its commitments. Derivatives also include the risk of mispricing or inappropriate valuation, and changes in the derivative's value may not properly correspond with the underlying security, asset, index, or reference rate.
TRANSPARENT INVESTMENTS.
Investments made directly with a company through a shareholder agreement or other similar arrangement—as opposed to publicly traded shares or interests. The amount of direct investments made by the Fund cannot exceed 10% of its total assets.
Risk
Direct investments may have a high level of commercial and financial risk, which could lead to significant losses. The Fund may take longer to liquidate these positions than it would with publicly traded assets because there is no public trading market for these investments. Although these assets might be sold again in privately negotiated deals, the price at which they are sold might be less than what the Fund originally paid for them. It may not be necessary for issuers whose securities are not traded publicly to provide public disclosures and various standards for publicly traded securities' investor protection. For the purposes of the restriction on illiquid investments, direct investments are typically regarded as illiquid and will be combined with other illiquid investments.
SECURITIES FROM EMERGING MARKETS.
Securities of companies that are primarily located in developing countries.
Risk
Emerging market assets may be especially vulnerable to certain economic events and often present considerably greater exposure to the risks listed under "Foreign Securities". Securities from emerging markets are subject to a range of hazards that could cause price volatility or make trading these products challenging. Political risks might include unstable regimes, nationalization, limits on foreign ownership, rules that make it difficult for investors to withdraw their money, and legal frameworks that do not uphold property rights to the same extent as American law. Market hazards could include economies that are concentrated on a small number of industries, securities that are issued and held by a small number of investors, and restricted trading. capacity in local exchanges and the potential for foreigners with inside information to manipulate markets or issues.
BRITISH POUND TRANSACTIONS.
Contracts used to purchase and sell foreign currency in order to acquire and sell securities denominated in that currency.
Risk
Exchange rate swings might cause an investment made in a foreign currency to lose value. Regardless of how well or poorly an investment performs, these swings have the power to change the return on an investment. The Fund has the option to engage in foreign exchange transactions to ease transaction settlement or to reduce exposure to underlying currencies. The Fund may enter into forward currency contracts to "lock in" the security's price in U.S. dollars in order to manage currency exposure. In a forward currency contract, the buyer and seller agree to buy or sell a specific currency at a certain future price that was agreed upon at contract inception.
EXTERNAL SECURITIES.
Securities that are issued by foreign corporations, traded in foreign currencies, or issued by firms with the majority of their operations abroad are defined.
Risk
Foreign investments are more vulnerable to dangers than domestic ones in the United States. The possibility of arbitrary action by foreign governments, such as the seizure of property without adequate compensation or the imposition of prohibitive taxes, as well as political, economic, or social instability, are some of these additional risks that may be present. They also include exchange rate fluctuations and exchange controls, information that is less readily available to the public, more volatile or less liquid securities markets, and less public information. Additionally, international businesses may be subject to much higher tax rates than American businesses, including rates that could be considered confiscatory, which would lower their potential for financial success. Several dangers associated with foreign investment When the Fund makes indirect investments in foreign securities via American Depositary Receipts (ADRs), European Depositary Receipts (EDRs), American Depositary Shares (ADSs), Global Depositary Shares (GDSs), and other securities that are traded on bigger, more reputable exchanges and in stronger, more recognizable currencies, the value of those securities may be reduced.
CONSTRUCTION SECTORS.
For purposes of this definition, "hard assets" are defined as precious metals (including gold), base and industrial metals, energy, natural resources, and other commodities, as well as real estate. The Fund focuses its investments in the securities of "hard asset" companies and instruments that derive their value from "hard assets."
Risk
Compared to a fund whose portfolio has exposure to a wider range of sectors, the Fund may be more susceptible to risks and market volatility. The Fund may be vulnerable to hard asset sector-related financial, economic, political, or market developments as well as government regulation. The oil and other energy fuel costs and supplies, energy efficiency, the success of exploration projects, tax and regulatory changes, and energy conservation policies can all have an impact on the energy sector. other laws from the government. The availability of resources, governmental regulations, economic cycles, changes in inflation, interest rates, currency fluctuations, sales of metals by governments, central banks, or international organizations, investment speculators, and changes in industrial and commercial supply and demand can all have an impact on the price of metals over short periods of time. The real estate industry may be impacted by a number of factors, including potential drops in real estate values, potential shortages of mortgage financing, prolonged property vacancies, general and local economic conditions, overbuilding, property taxes and operating costs, natural disasters, and changes in interest rates. Even during times of rising prices, precious metals and natural resource assets can occasionally see severe price changes.
INVESTMENTS IN OTHER INVESTMENT COMPANIES.
The Fund may invest up to 20% of its net assets in securities issued by other investment companies (excluding money market funds), including open end and closed end funds and ETFs, subject to the limitations under the 1940 Act. The Fund's investments in money market funds are not subject to this limitation.
Risk
The Fund's investment in another investment business may expose the Fund to the investment company's underlying risks indirectly. In addition to the Fund's own fees and costs, the Fund will bear its portion of the underlying investing company's fees and expenditures. Shares of closed-end funds and ETFs may trade at a premium or discount to the investment company's net asset value, which may be significant in the case of closed-end funds. If investment firm assets are acquired at a premium to net asset value, the premium may not be there when the shares are sold, resulting in a loss for the Fund.
SMALL- AND MEDIUM-CAPITALIZATION COMPANIES.
Companies with smaller and medium capitalizations. These companies may have limited product lines, markets or financial resources or depend upon a few key employees.
Risk
Small and medium-sized company securities are sometimes exposed to less analyst attention and may be in the early and less predictable stages of their organizational life. Furthermore, smaller firms often have higher price volatility, fewer trading volume, and less liquidity than bigger, more established firms. These firms often have lower revenues, narrower product lines, less managerial depth and expertise, smaller market shares in their respective product or service marketplaces, less financial resources, and lower competitive power than bigger firms. Small and medium-sized company stocks may have returns that differ, sometimes dramatically, from the entire stock market.
