Investment Risk

 
  
Investors should be aware that the following types of funds involve additional risks:
 
Sector Funds: Funds which focus their investments on a single economic sector / industry, or sub- sector. The lack of industry diversification results in greater risks that are specific to that one industry.
 
Mid Cap Funds: Funds that invest in companies with market capitalizations below $10 billon. The securities of such companies may be more volatile and less liquid than the securities of larger companies.
 
Small Cap Funds: Funds that invest in stocks of small companies with market capitalization below $2 billion. Smaller companies typically have a higher risk of failure and are not as well established as larger blue-chip companies. Historically, smaller-company stocks have demonstrated a greater degree of market price volatility than the overall market.
 
International Funds/Emerging Market Funds: Funds that invest on international securities (outside the U.S.). These risks include, but are not limited to, currency risk, and risk associated with varying accounting standards. Investing in emerging markets may increase these risks even further.
 
High-Yield Bond Funds: Funds investing in excess of 65% in U.S. corporate bonds or related instruments with an overall credit quality of 'BBB' or lower. Funds that invest in lower-rated debt securities (also known as junk bonds) may have additional risks because of the lower credit quality of the securities in the fund, which could possibly result in a higher level of volatility and increased risk default.
 
Tax-Free Municipal Bond Funds: Funds seeking income free from federal taxation through investment in municipal debt issues. The income from tax-free municipal bond funds may be subject to state and local taxes and the Alternative Minimum Tax.