

The 0-8 Years old Portfolio is designed for beneficiaries ages 0-8. The portfolio is the most aggressive of the Age-based options and has a higher concentration to equities in comparison to the other Age-based investments. As the beneficiary ages, the account is automatically reallocated with a progressively heavier weighting toward bond and money market funds, positioning your account for income and capital preservation at the time you need to pay for college costs.
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Global Equity | |
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AllianzGI Best Styles Global Equity | 44.0% |
AllianzGI Global Small-Cap | 4.0% |
Multi Asset Class | |
AllianzGI Global Allocation | 38.0% |
Commodity-Related | |
PIMCO Commodity Real Return Strategy | 5.0% |
Fixed Income | |
PIMCO Real Estate Real Return Strategy | 4.0% |
PIMCO Real Return | 5.0% |
Underlying Funds (in alphabetical order)
AllianzGI Best Styles Global Equity Fund
Investment Objective and Principal Strategies. The Fund seeks long-term capital appreciation. The Fund
seeks to achieve its investment objective by creating a diversified portfolio of global equities. The Fund
will normally invest at least 80% of its net assets (plus borrowings made for investment purposes) in equity
securities and equity-related instruments. The Fund normally invests at least 40% of its assets in non-U.S.
securities, including emerging market securities. The portfolio managers intend to diversify the Fund's
investments across geographic regions and economic sectors. The Fund may invest in issuers of any size
market capitalization, including smaller capitalization companies.
The Fund's investment strategy centers on the portfolio managers' belief that individual investment styles
(as described below) carry long-term "risk premiums" that are largely independent of the current economic
or market environment and that can be captured using a disciplined investment approach.
The investment process begins with a broad investment universe containing at least 4,000 equity securities.
Next, individual securities are evaluated based on quantitative "investment style" research and may also be
evaluated by the Sub-Adviser's fundamental research team. Investment style research categorizes
companies through a proprietary quantitative model that scores each company along several investment
style categories, described below (Value, Earnings Change, Price Momentum, Growth, and Quality).
Fundamental research evaluates each company identified as an investment candidate through the
quantitative "investment style" research process using a wide range of company-specific information
gathered by in-house analysts and external sources. In selecting individual stocks with attractive
fundamental characteristics, the portfolio managers seek to diversify the mix of investment styles
represented across the whole portfolio (i.e., by making sure high-scoring issuers from all of the investment
styles are among the final holdings). The portfolio managers attempt to control for risk factors (such as
over- and under-weights relative to the MSCI All Country World Index and the portfolio's sensitivity to
broader market movements (or "beta")). The portfolio is managed with reference to the MSCI All Country World Index and the portfolio managers intend, under normal circumstances, to have at least 300 equity
securities in the Fund's portfolio. The Fund may and intends to hold stocks that are not included in the
MSCI All Country World Index.
The Value investment style selects equity securities that the portfolio managers believe have attractive
valuations based on metrics including dividend yield and price-to-earnings, price-to-cash flow and price-tobook
ratios, as compared to other equity securities in the investable universe. The Earnings Change
investment style is designed to capture shorter-term, trend-following investment opportunities and generally
selects equity securities with positive earnings revisions, announcements or surprises. The Price Momentum
investment style is also trend-following and generally selects equity securities with positive price momentum
and relative strength within the investable universe. The Growth investment style generally selects equity
securities with expected and historical earnings growth and dividend growth. The Quality investment style
generally emphasizes equity securities with strong profitability and historical earnings stability, and considers
additional factors, such as whether a company has improving margins, positive net income, positive operating
capital, decreasing long-term debt and high-quality earnings, among others.
The Fund's research suggests that, while each of the investment styles described above can be individually
successful over the long-term and during certain periods, each investment style may also experience
"downswings" (i.e., during certain market, economic, or other conditions an individual investment style
may underperform compared to the relevant broad equity market). Building a portfolio with a diversified
mix of investment styles is the Fund's attempt to mitigate what the portfolio managers believe to be the
cyclical nature of the individual investment styles. The Fund's diversified mix of investment styles is
expected to remain fairly stable over time.
The Fund may participate in initial public offerings (IPOs). The Fund may also utilize foreign currency
exchange contracts, stock index futures contracts, warrants and other derivative instruments.
Principal Risks. The principal risks of investing in the Fund, which could adversely affect its net asset
value, yield and total return, are equity securities risk, market risk, issuer risk, non-U.S. investment risk,
emerging markets risk, smaller company risk, credit and counterparty risk, currency risk, derivatives risk,
focused investment risk, IPO risk, leveraging risk, liquidity risk, management risk and turnover risk.
AllianzGI Global Allocation Fund
Investment Objective and Principal Strategies. The Fund seeks after-inflation capital appreciation and current
income. The Fund seeks to achieve its investment objective through a combination of active allocation
between asset classes and actively managed strategies within those asset classes. The Fund allocates its
investments among asset classes in response to changing market, economic, and political factors and events
that the portfolio managers believe may affect the value of the Fund's investments. In making investment
decisions for the Fund, the portfolio managers seek to identify trends and turning points in the global markets.
To gain exposure to the various asset classes, the Fund incorporates actively managed strategies and/or
passive instruments, including exchange-traded funds ("ETFs") and exchange-traded notes, and derivative
instruments such as futures. The Fund also seeks to limit portfolio volatility. Volatility is a statistical
measurement of the magnitude of up and down fluctuations in the value of a financial instrument or index
over time.
The Fund invests directly and indirectly in globally diverse equity securities, including emerging market
equities, and in U.S. dollar denominated fixed income securities. The Fund targets a long-term average
strategic asset allocation of 60% to global equity exposure (the "Equity Component") and 40% to fixed
income exposure (the "Fixed Income Component"). The Fund may also use an "Opportunistic Component"
whereby it invests up to 10% of its assets in any combination of the following asset classes: emerging
market debt, international debt, intermediate and long-term high yield debt (commonly known as "junk
bonds"), commodities, U.S. and international small capitalization stocks and real estate securities, including
U.S. and non-U.S. real estate investment trusts ("REITs"). The Fund may either invest directly in these
different asset classes or indirectly through derivatives and other instruments.
Allocations to "opportunistic" asset classes within underlying diversified strategies are not included in the
calculation of the Opportunistic Component of the Fund. For example, allocations to REITs within
diversified equity strategies or instruments that are similar to that of the MSCI ACWI are not counted
within the Fund's Opportunistic Component; however, direct allocations to REITS using futures on a REIT
index or REIT ETFs will be counted within the Fund's Opportunistic Component. Similarly, when
underlying diversified bond funds have risk and volatility profiles that the portfolio managers believe to be
similar to (or less than) that of the Barclays U.S. Aggregate Bond index, any allocations within those
underlying diversified bond funds to "opportunistic" asset classes, such as high yield or emerging market
debt, are also not counted towards the Opportunistic Component's 10% limit. Only securities, instruments
or actively managed strategies whose primary purpose is to gain exposure to one or more of the
opportunistic asset classes count towards the Opportunistic Component's 10% limit.
The portfolio managers analyze market cycles, economic cycles and valuations, of each asset class and their
components and may adjust the Fund's exposures to individual holdings and asset classes. Depending on
market conditions, the Equity Component may range between approximately 50% and 70% of the Fund's
assets and the Fixed Income Component may range between approximately 30% and 50% of the Fund's
assets. Apart from this strategic asset allocation, the Fund may use its Opportunistic Component. Combined
investments in the Equity Component and the Opportunistic Component are limited to 80% of the Fund's
assets at the time of investment. The portfolio managers adjust the Fund's exposure to the Equity
Component, the Fixed Income Component, and the Opportunistic Component in response to momentum
and momentum reversion signals in an effort to mitigate downside risk in times of severe market stress, and to increase the return potential in favorable markets. While the portfolio managers attempt to mitigate the
downside risk to stabilize performance, there can be no assurance that the Fund will be successful in doing
so. Momentum is the tendency of investments to exhibit persistence in their performance. Momentum
reversion is the tendency that a performance trend will ultimately change and move in an opposite
direction. The portfolio managers believe negative momentum suggests future periods of negative
investment returns and increased volatility. When the portfolio managers recognize negative momentum for
an asset class, the Fund may reduce its exposure to that asset class.
The portfolio managers believe positive momentum suggests future periods of positive investment returns
and typical levels of market volatility. When the momentum signals for an asset class indicate positive
momentum, the portfolio managers may increase the Fund's exposure to that asset class.
In addition to the momentum and momentum reversion signals, the portfolio managers also apply fundamental
analysis to locate opportunities to seek to improve the Fund's return. Fundamental analysis may contribute to an
adjustment of the Fund's exposure to the asset classes that exhibit the strongest return prospects. The
fundamental analysis attempts to locate opportunities not identified from momentum-related signals.
After determining the asset allocation among the Components, the portfolio managers select particular
investments in an effort to obtain exposure to the relevant mix of asset classes. The Fund may invest in any
type of equity or fixed income security, including common and preferred stocks, mutual funds, ETFs,
warrants and convertible securities, mortgage-backed securities, asset-backed securities and government
and corporate bonds. The Fund may invest in securities of companies of any capitalization, including
smaller capitalization companies. The Fund also may make investments intended to provide exposure to
one or more commodities or securities indices, currencies, and real estate-related securities. The Fund is
expected to be highly diversified across industries, sectors, and countries. The Fund may liquidate a holding
if it locates another instrument that offers a more attractive exposure to an asset class or when there is a
change in the Fund's target asset allocation, or if the instrument is otherwise deemed inappropriate.
In implementing these investment strategies, the Fund may make substantial use of over-the-counter (OTC)
or exchange-traded derivatives, including futures contracts, interest rate swaps, total return swaps, credit
default swaps, options (puts and calls) purchased or sold by the Fund, currency forwards, and structured
notes. The Fund may use derivatives for a variety of purposes, including: as a hedge against adverse
changes in the market price of securities, interest rates, or currency exchange rates; as a substitute for
purchasing or selling securities; to increase the Fund's return as a non-hedging strategy that may be
considered speculative; and to manage portfolio characteristics. The Fund may maintain a significant
percentage of its assets in cash and cash equivalents which will serve as margin or collateral for the Fund's
obligations under derivative transactions.
Principal Risks. The principal risks of investing in the Fund, which could adversely affect its net asset
value, yield and total return, are allocation risk, market risk, issuer risk, equity securities risk, management
risk, credit and counterparty risk, currency risk, derivatives risk, emerging markets risk, fixed income risk,
focused investment risk, high yield risk, index risk, interest rate risk, IPO risk, leveraging risk, liquidity
risk, mortgage-related and other asset-backed risk, non-U.S. investment risk, REIT and real-estate related
investment risk, smaller company risk, tax risk, turnover risk, underlying fund and other acquired fund
risks, and variable distribution risk.
AllianzGI Global Small-Cap Fund
Investment Objective and Principal Strategies.
The Fund seeks long-term capital appreciation. The Fund
seeks to achieve its objective by normally investing at least 80% of its net assets (plus borrowings made for
investment purposes) in companies with market capitalizations comparable to those of companies included in
the MSCI World Small-Cap Index (between $113.8 million and $8.2 billion as of June 30, 2015). Under
normal market and other conditions, the Fund expects to maintain a weighted-average market capitalization
between 50% and 200% of the weighted-average market capitalization of the securities in the MSCI World
Small-Cap Index, which as of June 30, 2015 would permit the Fund to maintain a weighted- average market
capitalization ranging from $1.4 billion to $5.7 billion. The Fund normally will allocate its investments
among securities of issuers located in at least eight different countries (which may include the United States)
and expects that the majority of its non-U.S. investments will normally be in Japan and Western Europe. The
Fund will normally invest no more than 25% of its assets in issuers located in any one country outside the
U.S., other than France, Germany, Japan and the United Kingdom. The Fund may invest up to 30% of its
assets in emerging market securities (but no more than 10% in any one emerging market country). Regional portfolio managers in the United States, Europe, Japan and Asia (ex-Japan) collaborate to produce a portfolio
that is believed likely to have the best investment opportunities from each of those regions. The allocation of
Fund assets among these four regions is set from time to time and periodically adjusted through a
collaborative effort among the most senior portfolio managers in the regions.
The portfolio managers in Europe, Japan and Asia (ex-Japan) develop forecasts of economic growth,
inflation and interest rates that are used to help identify countries and other geographies within the applicable
region that are likely to offer the best investment opportunities. The portfolio managers may consider the
anticipated economic growth rate, political outlook, inflation rate, currency outlook and interest rate
environment for the country and the region in which a company is located. The portfolio managers in Europe
and Asia ordinarily look for the following characteristics: higher than average growth and strong potential
for capital appreciation; substantial capacity for growth in revenue through either an expanding market or
market share; a strong balance sheet; superior management; and differentiated or superior products and
services or a steady stream of new products and services.
The portfolio managers in the United States follow a disciplined, fundamental bottom-up research process
focusing on North American companies with sustainable growth characteristics that are undergoing positive
fundamental change. The portfolio managers look for what they believe to be the best risk-reward candidates
within the investment universe, defined as equities that are expected to appreciate based on accelerating
fundamental performance and related multiple expansion. Company-specific research includes industry and
competitive analysis, revenue model analysis, profit analysis and balance sheet assessment. Once the
portfolio managers in the United States believe that positive fundamental change is occurring and will likely
lead to accelerating fundamental performance, they seek evidence that performance will be a longer-term
sustainable trend. Lastly, these portfolio managers determine if the investment is timely with regard to
relative valuation and price strength, exploiting stocks that are under-priced relative to their potential.
In addition to common stocks and other equity securities (such as preferred stocks, convertible securities and
warrants), the Fund may invest in securities issued in initial public offerings (IPOs) and real estate
investment trusts (REITs), and may utilize foreign currency exchange contracts, options, stock index futures
contracts and other derivative instruments. Although the Fund did not invest significantly in derivative
instruments as of the most recent fiscal year end, it may do so at any time.
Principal Risks. The principal risks of investing in the Fund, which could adversely affect its net asset value,
yield and total return, are market risk, issuer risk, equity securities risk, non-U.S. investment risk, emerging
markets risk, smaller company risk, credit and counterparty risk, currency risk, derivatives risk, focused
investment risk, IPO risk, leveraging risk, liquidity risk, management risk, REIT and real estate-related
investment risk and turnover risk.
PIMCO Commodity Real Return Strategy Fund
Investment Objective and Principal Strategies. The Fund seeks maximum real return, consistent with prudent
investment management. The Fund seeks to achieve its investment objective by investing under normal
circumstances in commodity-linked derivative instruments backed by a portfolio of inflation-indexed
securities and other Fixed Income Instruments. "Fixed Income Instruments" include bonds, debt securities and
other similar instruments issued by various U.S. and non-U.S. public- or private-sector entities. "Real Return"
equals total return less the estimated cost of inflation, which is typically measured by the change in an official
inflation measure. The Fund invests in commodity-linked derivative instruments, including commodity indexlinked
notes, swap agreements, commodity options, futures and options on futures, that provide exposure to
the investment returns of the commodities markets, without investing directly in physical commodities.
Commodities are assets that have tangible properties, such as oil, metals, and agricultural products. The value
of commodity-linked derivative instruments may be affected by overall market movements and other factors
affecting the value of a particular industry or commodity, such as weather, disease, embargoes, or political
and regulatory developments. The Fund may also invest in common and preferred stocks as well as
convertible securities of issuers in commodity-related industries.
The Fund will seek to gain exposure to the commodity markets primarily through investments in leveraged
or unleveraged commodity index-linked notes, which are derivative debt instruments with principal and/or
coupon payments linked to the performance of commodity indices, and through investments in the PIMCO
Cayman Commodity Fund I Ltd., a wholly-owned subsidiary of the Fund organized under the laws of the
Cayman Islands (the "Subsidiary"). These commodity index-linked notes are sometimes referred to as
"structured notes" because the terms of these notes may be structured by the issuer and the purchaser of the
note. The value of these notes will rise or fall in response to changes in the underlying commodity or
related index of investment. The Fund may also gain exposure to commodity markets by investing in the
Subsidiary. The Subsidiary is advised by PIMCO, and has the same investment objective as the Fund. As
discussed in greater detail elsewhere in this prospectus, the Subsidiary (unlike the Fund) may invest without
limitation in commodity-linked swap agreements and other commodity-linked derivative instruments.
The derivative instruments in which the Fund and the Subsidiary primarily intend to invest are instruments
linked to certain commodity indices and instruments linked to the value of a particular commodity or
commodity futures contract, or a subset of commodities or commodity futures contracts. These instruments
may specify exposure to commodity futures with different roll dates, reset dates or contract months than
those specified by a particular commodity index. As a result, the commodity-linked derivatives component
of the Fund's portfolio may deviate from the returns of any particular commodity index. The Fund or the
Subsidiary may overweight or under-weight its exposure to a particular commodity index, or a subset of
commodities, such that the Fund has greater or lesser exposure to that index than the value of the Fund's
net assets, or greater or lesser exposure to a subset of commodities than is represented by a particular
commodity index. Such deviations will frequently be the result of temporary market fluctuations, and under
normal circumstances the Fund will seek to maintain notional exposure to one or more commodity indices
within 5% (plus or minus) of the value of the Fund's net assets.
Assets not invested in commodity-linked derivative instruments or the Subsidiary may be invested in
inflation-indexed securities and other Fixed Income Instruments, including derivative Fixed Income
Instruments. In addition, the Fund may invest its assets in particular sectors of the commodities market.
The average portfolio duration of the fixed income portion of this Fund will vary based on PIMCO's
forecast for interest rates and under normal market conditions is not expected to exceed ten years. Duration
is a measure used to determine the sensitivity of a security's price to changes in interest rates. The longer a
security's duration, the more sensitive it will be to changes in interest rates. The Fund may invest up to 10% of its total assets in high yield securities ("junk bonds") rated B or higher by Moody's Investors Service,
Inc. ("Moody's"), or equivalently rated by Standard & Poor's Ratings Services ("S&P") or Fitch, Inc.
("Fitch"), or, if unrated, determined by PIMCO to be of comparable quality. The Fund may invest up to
30% of its total assets in securities denominated in foreign currencies and may invest beyond this limit in
U.S. dollar-denominated securities of foreign issuers. The Fund may invest up to 10% of its total assets in
securities and instruments that are economically tied to emerging market countries (this limitation does not
apply to investment grade sovereign debt denominated in the local currency with less than 1 year remaining
to maturity). The Fund will normally limit its foreign currency exposure (from non-U.S. dollardenominated
securities or currencies) to 20% of its total assets. The Fund may, without limitation, seek to
obtain market exposure to the securities in which it primarily invests by entering into a series of purchase
and sale contracts or by using other investment techniques (such as buy backs or dollar rolls). The Fund
may also invest up to 10% of its total assets in preferred stocks. The Fund may purchase and sell securities
on a when-issued, delayed delivery or forward commitment basis and may engage in short sales.
Principal Risks. The principal risks of investing in the Fund, which could adversely affect its net asset
value, yield and total return, are interest rate risk, call risk, credit risk, high yield risk, market risk, issuer
risk, liquidity risk, derivatives risk, commodity risk, equity risk, mortgage-related and other asset-backed
securities risk, foreign (non-U.S.) investment risk, emerging markets risk, currency risk, leveraging risk,
management risk, tax risk, subsidiary risk and short sale risk.
PIMCO Real Estate Real Return Strategy Fund
Investment Objective and Principal Strategies.
The Fund seeks maximum real return, consistent with
prudent investment management. The Fund seeks to achieve its investment objective by investing under
normal circumstances in real estate-linked derivative instruments backed by a portfolio of inflationindexed
securities and other Fixed Income Instruments. “Fixed Income Instruments” include bonds,
debt securities and other similar instruments issued by various U.S. and non-U.S. public- or privatesector
entities. The Fund may invest in real estate-linked derivative instruments, including swap
agreements, options, futures, options on futures and structured notes. The value of real estate-linked
derivative instruments may be affected by risks similar to those associated with direct ownership of real
estate. Real estate values can fluctuate due to losses from casualty or condemnation, and changes in
local and general economic conditions, supply and demand, interest rates, property tax rates, regulatory
limitations on rents, zoning laws and operating expenses. The Fund may also invest directly in real
estate investment trusts (“REIT”) and in common and preferred stocks as well as convertible securities
of issuers in real estate-related industries. The Fund may also invest in exchange-traded funds.
The Fund typically will seek to gain exposure to the real estate market by investing in REIT total
return swap agreements. In a typical REIT swap agreement, the Fund will receive the price appreciation
(or depreciation) of a REIT index or portion of an index, from the counterparty to the swap agreement
in exchange for paying the counterparty an agreed-upon fee. Investments in REIT swap agreements may
be susceptible to additional risks, similar to those associated with direct investment in REITs, including
changes in the value of underlying properties, defaults by borrowers or tenants, revisions to the Internal
Revenue Code of 1986, as amended (the “Code”), changes in interest rates and poor performance by
those managing the REITs. Assets not invested in real estate-linked derivative instruments may be
invested in inflation-indexed securities and other Fixed Income Instruments, including derivative Fixed
Income Instruments. In addition, Index derivatives may be purchased with a fraction of the assets that
would be needed to purchase the securities directly, so that the remainder of the assets may be invested
in Fixed Income Instruments. The Fund is non-diversified, which means that it may invest its assets in a
smaller number of issuers than a diversified fund.
The average portfolio duration of the fixed income portion of this Fund will vary based on Pacific
Investment Management Company LLC’s (“PIMCO”) forecast for interest rates and under normal
market conditions is not expected to exceed ten years. Duration is a measure used to determine the
sensitivity of a security’s price to changes in interest rates. The longer a security’s duration, the more
sensitive it will be to changes in interest rates. The Fund may invest up to 10% of its total assets in high
yield securities (“junk bonds”) rated B or higher by Moody’s Investors Service, Inc. (“Moody’s”), or
equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or Fitch, Inc. (“Fitch”), or, if
unrated, determined by PIMCO to be of comparable quality. The Fund may invest up to 10% of its total
assets in securities and instruments that are economically tied to emerging market countries. The Fund
may invest up to 30% of its total assets in securities denominated in foreign currencies and may invest
beyond this limit in U.S. dollar denominated securities of foreign issuers. The Fund will normally limit
its foreign currency exposure (from non- U.S. dollar-denominated securities or currencies) to 20% of its
total assets. The Fund may, without limitation, seek to obtain market exposure to the securities in which
it primarily invests by entering into a series of purchase and sale contracts or by using other investment
techniques (such as buybacks or dollar rolls). The Fund may also invest up to 10% of its total assets in
preferred stocks. The Fund may invest, without limitation, in derivative instruments, such as options,
futures contracts or swap agreements, or in mortgage- or assetbacked securities, subject to applicable
law and any other restrictions described in the Fund’s prospectus or Statement of Additional Information. The Fund may purchase or
sell securities on a when-issued, delayed delivery or forward commitment basis and may engage in
short sales.
Principal Risks. The principal risks of investing in the Fund, which could adversely affect its net
asset value, yield and total return, are interest rate risk, credit risk, high yield risk, market risk, issuer
risk, liquidity risk, derivatives risk, equity risk, mortgage-related and other asset-backed securities risk,
foreign (non-U.S.) investment risk, real estate risk, emerging markets risk, currency risk, issuer nondiversification
risk, leveraging risk, management risk and short sale risk.
PIMCO Real Return Fund
Investment Objective and Principal Strategies. The Fund seeks maximum real return, consistent with the preservation of real capital and prudent investment management. The Fund seeks to achieve its investment objective by investing under normal circumstances at least 80% of its net assets in inflation-indexed bonds of varying maturities issued by the U.S. and non-U.S. governments, their agencies or instrumentalities, and corporations. The Fund invests primarily in investment grade debt securities, but may invest up to 10% of its total assets in high yield securities ("junk bonds") rated B or higher by Moody's or S&P, or, if unrated, determined by PIMCO to be of comparable quality. The Fund may also invest up to 30% of its total assets in securities denominated in foreign currencies, and may invest beyond this limit in U.S. dollar-denominated securities of foreign issuers. The Fund may invest up to 10% of its total assets in securities and instruments that are economically tied to emerging market countries. The Fund will normally limit its foreign currency exposure to 20% of its total assets. The Fund is non-diversified, which means that it may concentrate its assets in a smaller number of issuers than a diversified fund. The Fund may invest all of its assets in derivative instruments, such as options, futures contracts or swap agreements, or in mortgage- or asset-backed securities. The Fund may also invest up to 10% of its total assets in preferred stocks. The Fund may lend its portfolio securities to brokers, dealers and other financial institutions to earn income.
Principal Risks. The principal risks of investing in the Fund, which could adversely affect its net asset value, yield and total return, are: interest rate risk, credit risk, high yield risk, market, risk, issuer risk, liquidity risk, derivatives risk, equity risk, mortgage-related and other asset-backed risk, foreign (non- U.S.), investment risk, emerging markets risk, currency risk, issuer non-diversification risk, leveraging risk, management risk, and short sale risk.
Use of derivative instruments may involve certain costs and risks such as liquidity risk, interest rate risk, market risk, credit risk, management risk and the risk that a fund could not close out a position when it would be most advantageous to do so. Portfolios investing in derivatives could lose more than the principal amount invested in those instruments.
Investing in non-U.S. securities may entail risk due to foreign economic and political developments; this risk may be enhanced when investing in emerging markets. Concentrating investments in individual sectors may add additional risk and additional volatility compared to a diversified equity portfolio. Investments in small and mid-cap companies may be more volatile than investments in larger companies.
Each sector of the bond market entails risk. Mortgage-backed securities are subject to prepayment risk. With Corporate bonds there is no assurance that issuers will meet their obligations. High-yield bonds typically have a lower credit rating than other bonds. Lower rated bonds generally involve a greater risk to principal than higher rated bonds. In an environment where interest rates may trend upward, rising rates will negatively impact most bond funds, and fixed income securities held by a fund are likely to decrease in value. Bond funds and individual bonds with a longer duration (a measure of the expected life of a security) tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations.
Please see the section "Underlying Fund Risks" following the Underlying Fund Descriptions in the Plan Disclosure Statement for a description of these and other risks of investing in the Fund.
Certain of the investment management firms that manage underlying mutual Funds in the Program — Allianz Global Investors U.S. LLC, and Pacific Investment Management Company (PIMCO) — are affiliated with the Program Manager, Allianz Global Investors Distributors, LLC.