its credit rating
and possibly its ability to meet its contractual obligations. Even in the case
of collateralized debt obligations, there is no assurance that the sale of
collateral would raise enough cash to satisfy an issuer’s payment obligations or
that the collateral can or will be liquidated.
Income
Risk.
The Fund’s income may decline when interest rates fall because the Fund may hold
a significant portion of short duration securities and/or securities that have
floating or variable interest rates. To the extent that the Fund invests in
lower yielding bonds, and as the bonds in its portfolio mature, the Fund needs
to purchase additional bonds, thereby reducing the Fund’s income.
Call
Risk.
If interest rates fall, it is possible that issuers of callable securities with
high interest coupons will “call” (or prepay) their bonds before their maturity
date. If an issuer exercises such a call during a period of declining interest
rates, the Fund may have to replace such called security with a lower yielding
security. If that were to happen, the Fund’s net investment income could
fall.
Reinvestment
Risk.
Reinvestment risk is the risk that the Fund will not be able to reinvest income
or principal at the same return it is currently earning. Reinvestment risk is
greater during periods of declining interest rates, as prepayments often occur
faster. It is related to call risk, since issuers of callable securities with
high interest coupons may call their bonds before their maturity date. This may
require the Fund to reinvest the proceeds at an earlier date, and it may be able
to do so only at lower yields, thereby reducing its return.
Liquidity
Risk.
Liquidity risk exists when a particular investment is difficult to purchase or
sell. If the Fund invests in illiquid securities or current portfolio securities
become illiquid, it may reduce the returns of the Fund because the Fund may be
unable to sell the illiquid securities at an advantageous time or
price.
Rule
144A Securities and Other Exempt Securities Risk. The market for Rule
144A and other securities exempt from certain registration requirements
typically is less active than the market for publicly-traded securities. Rule
144A and other exempt securities, which are also known as privately issued
securities, carry the risk that their liquidity may become impaired and the Fund
may be unable to dispose of the securities at a desirable time or
price.
Currency
Risk.
Because the Fund's NAV is determined in U.S. dollars, the Fund's NAV could
decline if the currency of a non-U.S. market in which the Fund invests
depreciates against the U.S. dollar. Generally, an increase in the value of the
U.S. dollar against a foreign currency will reduce the value of a security
denominated in that foreign currency, thereby decreasing the Fund's overall NAV.
Exchange rates may be volatile and may change quickly and unpredictably in
response to both global economic developments and economic conditions, causing
an adverse impact on the Fund. As a result, investors have the potential for
losses regardless of the length of time they intend to hold Shares.
Issuer-Specific
Changes Risk. The value of an
individual security or particular type of security may be more volatile than the
market as a whole and may perform differently from the value of the market as a
whole.
Valuation
Risk.
Financial information related to securities of non-U.S. issuers may be less
reliable than information related to securities of U.S. issuers, which may make
it difficult to obtain a current price for a non-U.S. security held by the Fund.
In certain circumstances, market quotations may not be readily available for
some Fund securities, and those securities may be fair valued. The value
established for a security through fair valuation may be different from what
would be produced if the security had been valued using market quotations. Fund
securities that are valued using techniques other than market quotations,
including “fair valued” securities, may be subject to greater fluctuations in
their value from one day to the next than would be the case if market quotations
were used. In addition, there is no assurance that the Fund could sell a
portfolio security for the value established for it at any time, and it is
possible that the Fund would incur a loss because a security is sold at a
discount to its established value.