·
Allocation risk.
The ability of the fund to achieve its investment goal depends,
in part, on the ability of the fund's portfolio manager to allocate effectively the fund's assets among
global equities, bonds and cash, and other asset classes. There can be no assurance that the actual
allocations will be effective in achieving the fund's investment goal.
·
Correlation risk.
Although the prices of equity securities and fixed-income securities, as well as other asset classes,
often rise and fall at different times so that a fall in the price of one may be offset by a rise in
the price of the other, in down markets the prices of these securities and asset classes can also fall
in tandem. Because the fund allocates its investments among different asset classes, the fund is subject
to correlation risk.
·
Risks of stock investing
. Stocks generally
fluctuate more in value than bonds and may decline significantly over short time periods. There is the
chance that stock prices overall will decline because stock markets tend to move in cycles, with periods
of rising prices and falling prices. The market value of a stock may decline due to general weakness
in the stock market or because of factors that affect the company or its particular industry.
·
Market sector risk.
The fund may significantly overweight or underweight certain companies, industries or market sectors,
which may cause the fund's performance to be more or less sensitive to developments affecting those companies,
industries or sectors.
·
Foreign investment risk.
To the extent
the fund invests in foreign securities, the fund's performance will be influenced by political, social
and economic factors affecting investments in foreign issuers. Special risks associated with investments
in foreign issuers include exposure to currency fluctuations, less liquidity, less developed or less
efficient trading markets, lack of comprehensive company information, political and economic instability
and differing auditing and legal standards. Investments denominated in foreign currencies are subject
to the risk that such currencies will decline in value relative to the U.S. dollar and affect the value
of these investments held by the fund. To the extent the fund's investments are concentrated in a limited
number of foreign countries, the fund's performance could be more volatile than that of more geographically
diversified funds.
·
Emerging market risk.
The securities
of issuers located in emerging markets tend to be more volatile and less liquid than securities of issuers
located in more mature economies, and emerging markets generally have less diverse and less mature economic
structures and less stable political systems than those of developed countries. The securities of issuers
located or doing substantial business in emerging markets are often subject to rapid and large changes
in price.
·
Foreign currency risk.
Investments in foreign currencies are subject to the
risk that those currencies will decline in value relative to the U.S. dollar or, in the case of hedged
positions, that the U.S. dollar will decline relative to the currency being hedged. Currency exchange
rates may fluctuate significantly over short periods of time. Foreign currencies are also subject to
risks caused by inflation, interest rates, budget deficits and low savings rates, political factors and
government intervention and controls.
·
Liquidity risk.
When there is little
or no active trading market for specific types of securities, it can become more difficult to sell the
securities at or near their perceived value. In such a market, the value of such securities and the
fund's share price may fall dramatically. Investments in foreign securities, particularly those of issuers
located in emerging markets, tend to have greater exposure to liquidity risk than domestic securities.
·
Derivatives risk.
A small investment in derivatives could have a potentially large impact on the fund's performance.
The use of derivatives involves risks different from, or possibly greater than, the risks associated
with investing directly in the underlying assets. Derivatives can be highly volatile, illiquid and difficult
to value. Certain types of derivatives, including swaps, forward contracts and other over-the-counter
transactions, involve greater risks than the underlying obligations because, in addition to general market
risks, they are subject to illiquidity risk, counterparty risk, credit risk and pricing risk.
·
Credit risk
.
Failure of an issuer to make timely interest or principal payments, or a decline or perception of a decline
in the credit quality of a bond, can cause a bond's price to fall, potentially lowering the fund's share
price. The lower a bond's credit rating, the greater the chance – in the rating agency's opinion
– that the bond issuer will default or fail to meet its payment obligations. High yield ("junk")
bonds involve greater credit risk, including the risk of default, than investment grade bonds, and are
considered predominantly speculative with respect to the issuer's continuing ability to make principal
and interest payments.
·
Interest rate risk.
Prices of bonds
tend to move inversely with changes in interest rates. Typically, a rise in rates will adversely affect
bond prices and, accordingly, the fund's share price. The longer the effective maturity and duration
of the fund's fixed-income portfolio, the more the fund's share price is likely to react to interest
rates. For example, the market price of a fixed-income security with a duration of three years would
be expected to decline 3% if interest rates rose 1%. Conversely, the market price of the same security
would be expected to increase 3% if interest rates fell 1%.