Seeking undervalued companies with long-term potential?

What is a value fund?
Value funds search for bargains — stocks that are considered undervalued. These can be strong companies that are considered to be inexpensively priced relative to their perceived intrinsic value. Value managers expect the market will recognize the potential value of these stocks and that their prices will rise.

What type of stocks do value managers look for?
Value managers seek out companies that are temporarily out of favor on Wall Street because of short-term developments such as earnings disappointments or competitive threats. They also look for signs that these short-term problems are being addressed by management, and that a company's growth potential may eventually be realized. As a result, these stocks typically have lower price-to-earnings ratios, which means the portfolio managers are paying lower prices for the company's earnings.

Why include value investing in my portfolio?
A stock with a bargain price may offer a greater long-term potential for growth than an expensive growth stock. Value stocks may offer greater protection against loss than growth stocks because, depending on market conditions, an inexpensive stock may not decline as much as an expensive one.

Value funds may also be less volatile than other stock funds in part because value investing attempts to compare market price to the intrinsic value of a company's stock. Value companies can appear underpriced according to certain financial measurements. Because a stock can remain undervalued for years, value investors often look for factors that could trigger a rise in price.

As market conditions change, so can market leaders.
In selecting mutual funds for your portfolio, it is important to realize that economic and market conditions will change. Sometimes they'll favor value stocks and sometimes they'll favor other styles of investing.

Instead of investing in only value funds, you might consider a mix of styles in your portfolio. Over the long term, you'll potentially benefit by not having to guess which investment style will outperform.

How can I add value to my portfolio?
Do you have the time, resources, or inclination to actively manage a portfolio of value stocks? Even experienced investors may find identifying the right investment opportunities at the right time a challenge. By investing in a Dreyfus value fund, you're able to tap into the investment expertise and resources of a professional management team.

A Dreyfus mutual fund's professional management team can consist of portfolio managers, economists, analysts and traders who can perform their own research, conduct in-depth company analysis, meet with corporate management and use a range of sophisticated techniques in making investment decisions. Their experience, knowledge and resources are critical to optimizing performance potential and managing risk.

What are the special benefits and risks?
Value stocks may outpace the returns of other equity investments in some economic conditions and may also be less volatile. Value stocks are typically sensitive to the economic cycle — the ebb and flow of economic growth over time. Stocks often favored by value funds are so-called cyclical stocks — stocks in industries that tend to rise and fall in line with the economy. Examples include stocks in the housing and automobile industries.

Equity funds are subject generally to market, market sector, market liquidity, issuer and investment style risks, among other factors, to varying degrees, all of which are more fully described in the fund's prospectus.

Value stocks involve the risk that they may never reach what the manager believes is their full market value, either because the market fails to recognize the stock's intrinsic worth or the manager misgauged that worth. They also may decline in price, even though in theory they are already undervalued. Because different types of stocks tend to shift in and out of favor depending on market and economic conditions, the fund's performance may sometimes be lower or higher than that of other types of funds (such as those concentrated in growth stocks).

Questions? Contact us.

Investors should consider the investment objectives, risks, charges, and expenses of a fund carefully before investing. Download a prospectus that contains this and other information about a fund, and read it carefully before investing.

Click here to read our Online Privacy Policy and Terms of Use.
© MBSC Securities Corporation, Distributor