Investment in the Funds involves a certain amount of risk and is only suitable for individuals who fully understand and are capable of bearing the risks of an investment in the Funds. The following is a general discussion of certain risks and merits of different types of investments which the Fund may make.
No warranty is given by the Trustee or Investment Adviser as to the performance or profitability of any Fund, and there is no guarantee that any Fund will achieve its investment objective. A Fund may suffer loss of principal, and income, if any, will fluctuate. The value of a Fund’s investments will be affected by a variety of factors, including, but not limited to, economic and political developments, interest rates, issuer-specific events, market conditions and sector positions. Investment in a Fund is not a deposit or obligation of the Trustee or of any other bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation, Securities Investor Protection Corporation, or any other government agency or instrumentality.
In general, each Fund is subject to the risks associated with investments in common stocks and other equity securities. Stock values fluctuate in response to the activities of individual companies and in response to general market and economic conditions. Accordingly, the value of the stocks that a Fund holds may decline over short or extended periods. The U.S. stock markets tend to be cyclical, with periods when stock prices generally rise and periods when prices generally decline.
An outbreak of infectious respiratory illness caused by a novel coronavirus known as COVID-19 was first detected in China in December 2019 and has now been detected globally. This coronavirus has resulted in travel restrictions, closed international borders, enhanced health screenings at ports of entry and elsewhere, disruption of and delays in healthcare service preparation and delivery, prolonged quarantines, cancellations, supply chain disruptions, and lower consumer demand, as well as general concern and uncertainty. The impact of COVID-19, and other infectious illness outbreaks that may arise in the future, could adversely affect the economies of many nations or the entire global economy, individual issuers and capital markets in ways that cannot necessarily be foreseen. In addition, the impact of infectious illnesses in emerging market countries may be greater due to generally less established healthcare systems. Public health crises caused by the COVID-19 outbreak may exacerbate other pre-existing political, social and economic risks in certain countries or globally. The duration of the COVID-19 outbreak and its effects cannot be determined with certainty.
Funds associated with this risk:
Small Cap Fund, Small Cap Index Fund, Large Cap Fund, Large Cap Index Fund, Mid Cap Fund, Mid Cap Index Fund, Socially Responsible Fund, International Fund, International Index Fund, Diversified Real Return Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
To the extent that a Fund invests in fixed income securities, it will be subject to the risks associated with investments in fixed income securities. These risks include interest rate risk, credit risk and call/extension risk. In general, interest rate risk involves the risk that when interest rates decline, the market value of fixed income securities tends to increase (although many Mortgage-Backed Securities will have less potential than other debt securities for capital appreciation during periods of declining rates). Conversely, when interest rates increase, the market value of fixed income securities tends to decline. Credit risk involves the risk that the issuer could default on its obligations, and a Fund will not recover its investment. For example, increases in interest rates and/or a weakening of economic conditions caused by another recession or otherwise could adversely impact the ability of homeowners to repay mortgages or the value of the housing securing these mortgages. Call risk and extension risk are normally present in Mortgage-Backed Securities and asset-backed securities. For example, homeowners have the option to prepay their mortgages. Therefore, the duration of a security backed by home mortgages can either shorten (call risk) or lengthen (extension risk). In general, if interest rates on new mortgage loans fall sufficiently below the interest rates on existing outstanding mortgage loans, the rate of prepayment would be expected to increase. Conversely, if mortgage loan interest rates rise above the interest rates on existing outstanding mortgage loans, the rate of prepayment would be expected to decrease. In either case, a change in the prepayment rate can result in losses to Participating Trusts.
Funds associated with this risk:
Socially Responsible Fund, Short Term Investment Fund- Cash, Short Term Investment Fund, Bond Fund, Bond Index Fund, Diversified Real Return Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
Debt and money market securities have varying levels of sensitivity to changes in interest rates. In general, the price of a debt or money market security can fall when interest rates rise and can rise when interest rates fall. Securities with longer maturities, mortgage securities, and the securities of issuers in the financial services sector can be more sensitive to interest rate changes. In other words, the longer the maturity of a security, the greater the impact a change in interest rates could have on the security’s price. In addition, short-term and long-term interest rates do not necessarily move in the same amount or the same direction. Short-term securities tend to react to changes in short-term interest rates, and long-term securities tend to react to changes in long-term interest rates.
Funds associated with this risk:
Large Cap Fund, Large Cap Index Fund, Mid Cap Fund, Mid Cap Index Fund, Socially Responsible Fund, Short Term Investment Fund- Cash, Short Term Investment Fund, Bond Fund, Bond Index Fund, Diversified Real Return Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
Real estate, like many types of long-term investments, historically has experienced significant fluctuations and cycles in value, and specific market conditions may result in occasional or permanent reductions in the value of real property interests. The marketability and value of real property interests depend on many factors, including without limitation: changes in general or local economic conditions; changes in supply of or demand for competing properties in an area; changes in interest rates; the promulgation and enforcement of government regulations relating to land-use and zoning restrictions, environmental protection and occupational safety; unavailability of mortgage funds which may render the sale of a property difficult; the financial condition of tenants, buyers and sellers of properties; changes in real estate tax rates and other operating expenses; the imposition of rent controls; energy and supply shortages; and various uninsured or uninsurable risks.
Funds associated with this risk:
Short Term Investment Fund, Bond Fund, Bond Index Fund, Diversified Real Return Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
Income-producing real estate is often owned and operated by real estate investment trusts (“REITs”). Qualification and treatment as a REIT will depend on a Fund’s ability to meet, on a continuing basis, various tests including tests relating to its income, assets, distributions, diversity of ownership, as well as other qualification requirements imposed on REITs. If a REIT fails to qualify as a REIT for any particular year, it would be taxed at U.S. federal income tax rates applicable to corporations on all of its income, whether or not distributed to its shareholders, and this would substantially reduce the amount of cash otherwise available to be distributed to the shareholders. In addition, unless entitled to relief under specific statutory provisions, the REIT also will be disqualified from reelecting taxation as a REIT for the four taxable years following the year during which the REIT qualification was lost. If the requirements for taxation as a REIT are met, a REIT is allowed a deduction for dividends paid to its shareholders, substantially eliminating the “double taxation” at both the corporate and shareholder levels that generally results from the use of corporations. However, a REIT will still be subject to tax in certain circumstances even if it qualifies as a REIT, including without limitation: a tax on any taxable income or capital gain not distributed to its shareholders, and an additional 4% excise tax if it fails to make certain distributions for a calendar year; a tax of 100% on net income from any “prohibited transaction,” which is a sale of property held primarily for sale to customers in the ordinary course of a trade or business, unless the property is held for at least two years and certain other requirements are satisfied; and the corporate “alternative minimum tax.”
Funds associated with this risk:
Small Cap Fund, Small Cap Index Fund, Large Cap Fund, Large Cap Index Fund, Mid Cap Fund, Mid Cap Index Fund, Socially Responsible Fund, International Fund, Bond Fund, Bond Index Fund, Diversified Real Return Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
Investing in the securities of foreign issuers involves risks that are not typically associated with investing in U.S. dollar-denominated securities of domestic issuers. These investments may be adversely affected by changes in currency rates, changes in foreign or U.S. laws or restrictions applicable to such investments and in exchange control regulations (e.g., currency blockage). A decline in the exchange rate of the currency (e.g., weakening of the currency against the U.S. dollar) in which a security is quoted or denominated relative to the U.S. dollar would reduce the value of the security. In addition, if the currency in which a Fund receives dividends, interest or other payments declines in value against the U.S. dollar before such income is distributed as dividends to shareholders or converted to U.S. dollars, the Fund may have to sell portfolio securities to obtain sufficient cash to pay such dividends. Brokerage commissions, custodial services and other costs relating to investment in international securities markets are generally more expensive than in the United States. In addition, clearance and settlement procedures may be different in foreign countries and, in certain markets, such procedures have on occasion been unable to keep pace with the volume of securities transactions, thus making it difficult to conduct such transactions.
Foreign issuers are not subject to the uniform accounting, auditing and financial reporting standards, practices and disclosure requirements that are applicable to U.S. issuers. There may be less publicly available information about a foreign issuer than about a U.S. issuer. In addition, there is generally less government regulation of foreign markets, companies and securities dealers than in the U.S. and the legal remedies for investors may be more limited than the remedies available in the U.S. Foreign securities markets may have substantially less volume than U.S. securities markets and securities of many foreign issuers are less liquid and subject to more price volatility than securities of comparable domestic issuers. The securities markets of certain countries may also be marked by high concentration of market capitalization and trading volume in a small number of issuers representing a limited number of industries, as well as high concentration of ownership of securities by a limited number of investors.
Investment in sovereign debt obligations involves risks not present in debt obligations of corporate issuers. The issuer of the debt or the governmental authorities that control the repayment of the debt may be unable or unwilling to repay principal or interest when due in accordance with the terms of such debt, and a Fund may have limited recourse to compel payment in the event of a default.
Funds associated with this risk:
Small Cap Fund, Large Cap Fund, Mid Cap Fund, Short Term Investment Fund, International Fund, International Index Fund, Bond Fund, Bond Index Fund, Diversified Real Return Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
The economies of individual emerging market countries may differ unfavorably from those of developed countries in such respects as growth of gross domestic product, rates of inflation, currency valuation, capital reinvestment, resource self-sufficiency and balance of payments positions. Governments of many emerging markets countries have exercised and continue to exercise substantial influence over many aspects of the private sector. In some cases, the local government owns and/or controls many companies, including some of the largest in the country. Accordingly, government actions could have a significant effect on economic and market conditions in an emerging markets country. Government approvals can be required in connection with private transactions and such approvals may take a far longer period of time to obtain than in more developed countries. Moreover, the economies of emerging market countries generally are heavily dependent upon commodity prices and international trade and, accordingly, have been and may continue to be affected adversely by the economies of their trading partners, trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist measures imposed or negotiated by the countries with which they trade. With respect to any emerging market country, there is a possibility of nationalization, expropriation or confiscatory taxation, political changes, government regulation, economic or social instability, diplomatic developments (including war) or terrorism which could affect adversely the economies of such countries or the value of a Fund’s investments in those countries. In addition, the inter-relatedness of the economies in emerging markets countries has deepened over the years, with the effect that economic difficulties in one country often spread throughout an applicable region.
Some emerging markets countries have laws and regulations that currently limit or preclude direct foreign investment in their securities markets. Prior government approval for foreign investments may be required under certain circumstances in some emerging markets countries, and the process of obtaining these approvals may require a significant expenditure of time and resources. Repatriation of investment income, capital and the proceeds of sale by foreign investors may require governmental registration and approval in some emerging markets countries. Furthermore, investments in companies in some emerging markets countries may require significant government approvals under corporate, securities, exchange control, foreign investment and other similar laws and may require financing and structuring alternatives that differ significantly from those customarily used in more developed countries. In addition, in certain countries, such laws and regulations have been subject to frequent and unforeseen change, potentially exposing a Fund to restrictions, taxes and other obligations that were not anticipated at the time an investment was initially made.
Settlement procedures in emerging markets are frequently less developed and reliable than those in the United States and may involve a Fund’s delivery of securities before receipt of payment for their sale. In addition, significant delays are common in certain markets in registering the transfer of securities. Settlement or registration problems may make it more difficult for a Fund to value its securities and could cause the Fund to miss attractive investment opportunities, have a portion of its assets uninvested or to incur losses due to the failure of a counterparty to pay for securities the Fund has delivered or the Fund’s inability to complete its contractual obligations because of theft or other reasons.
Companies in emerging markets countries are not generally subject to uniform accounting, auditing and financial reporting standards, practices and disclosure requirements comparable to those applicable to U.S. companies. In particular, the assets and profits appearing on the financial statements of a company in an emerging markets country may not reflect its financial position or results of operations in the way they would have been reflected had such financial statements been prepared in accordance with U.S. generally accepted accounting principles. In addition, for a company that keeps accounting records in local currency, inflation accounting rules in some emerging markets countries require, for both tax and accounting purposes, that certain assets and liabilities be restated on the company’s balance sheet in order to express items in terms of a currency of constant purchasing power. As a result, financial data may be materially affected by restatements for inflation and may not accurately reflect the real condition of real estate, companies and securities markets. Accordingly, a Fund’s ability to conduct due diligence in connection with an investment and to monitor the investment may be adversely affected by these factors.
Investments in emerging markets are subject to the risk that the liquidity of a particular investment, or investments generally, in such markets will shrink or disappear suddenly and without warning as a result of adverse economic, market or political conditions or adverse investor perceptions, whether or not accurate. Because of the lack of sufficient market liquidity, a Fund may incur losses because it will be required to effect sales at a disadvantageous time and then only at a substantial drop in price. Investments in emerging markets may be more difficult to price precisely because of the characteristics discussed above and lower trading volumes.
Currently, there is no market or only a limited market for many of the management techniques and instruments with respect to the currencies and securities markets of the emerging market countries. Consequently, there can be no assurance that suitable instruments for hedging currency and market-related risks will be available at times when a Fund wishes to use them.
Funds associated with this risk:
Short Term Investment Fund, International Fund, International Index Fund, Bond Fund, Bond Index Fund, Diversified Real Return Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
Currency exchange rates may fluctuate significantly over short periods of time causing, along with other factors, a Fund’s value to fluctuate. Currency exchange rates generally are determined by the forces of supply and demand in the foreign exchange markets and the relative merits of investments in different countries, actual or anticipated changes in interest rates and other complex factors, as seen from an international perspective. Currency exchange rates also can be affected unpredictably by the intervention of U.S. or foreign governments or central banks, or the failure to intervene, or by currency controls or political developments in the United States or abroad. To the extent that a substantial portion of a Fund’s total assets, adjusted to reflect the Fund’s net position after giving effect to currency transactions, is denominated or quoted in the currencies of particular foreign countries, the Fund will be more susceptible to the risk of adverse economic and political developments within those countries.
Each Fund may purchase or sell foreign currencies on a cash basis or through forward foreign currency contracts, and may also purchase and write (sell) call and put options on foreign currencies. A forward foreign currency contract involves an obligation to purchase or sell a specific currency at a future date at a price set at the time of the contract. A foreign currency option gives the buyer the right to buy (or sell) a specified amount of currency, and the writer of the option the obligation to sell (or buy) the currency. A Fund may engage in foreign currency transactions to hedge or cross-hedge portfolio holdings; to seek to protect against anticipated changes in future foreign currency exchange rates; or to seek to increase total return, which is considered a speculative practice. Foreign currency transactions may be executed on U.S. and foreign exchanges and over-the-counter markets.
There is no assurance that a Fund’s currency hedging transactions, if used, will be successful. When a Fund purchases or sells a foreign currency exchange contract or writes an option, the Fund could be required to purchase or sell foreign currencies at disadvantageous exchange rates, thereby incurring losses. When a Fund buys a foreign currency option, it may forfeit the entire amount of the premium paid by it, plus related transaction costs, if exchange rates move in a direction that are adverse to the Fund’s position. In addition, forward foreign currency exchange contracts and other privately negotiated currency instruments are subject to the risk that the counterparty to a contract will default on its obligations. Since these contracts are not guaranteed by an exchange or clearinghouse, a default on a contract would deprive the Fund of unrealized profits, transaction costs or the benefits of a currency hedge or force the Fund to cover its purchase or sale commitments, if any, at the current market price.
Funds associated with this risk:
International Fund, International Index Fund, Bond Fund, Bond Index Fund, Diversified Real Return Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
Certain European Union member states have fiscal obligations greater than their fiscal revenue, which has caused investor concern over such countries’ ability to continue to service their debt and foster economic growth in their economies. The European debt crisis and measures adopted to address it have significantly weakened European economies. A weaker European economy may cause investors to lose confidence in the safety and soundness of European financial institutions and the stability of European member economies. A failure to adequately address sovereign debt concerns in Europe could hamper economic recovery or contribute to recessionary economic conditions and severe stress in the financial markets, including in the United States, potential events which could have such an impact on the financial markets include (i) sovereign debt default (default by one or more European governments in their borrowings), (ii) European bank and/or corporate debt default, (iii) market and other liquidity disruptions, and, (iv) if stresses become especially severe, the collapse of the European Union as a coherent economic group and/or the collapse of its currency, the euro.
Funds associated with this risk:
Large Cap Fund, Large Cap Index Fund, Mid Cap Fund, Mid Cap Index Fund, Short Term Investment Fund, International Fund, International Index Fund, Bond Fund, Bond Index Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
Political and economic conditions and changes in regulatory, tax, or economic policy in a country could significantly affect the market in that country and in surrounding or related countries.
Funds associated with this risk:
Small Cap Fund, Large Cap Fund, Large Cap Index Fund, Mid Cap Fund, Mid Cap Index Fund, Socially Responsible Fund, Short Term Investment Fund- Cash, Short Term Investment Fund, International Fund, International Index Fund, Bond Fund, Bond Index Fund, Diversified Real Return Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
A Fund’s transactions in options, futures, options on futures, swaps, structured securities, inverse floating rate securities, stripped Mortgage Backed Securities, currency transactions and other derivative investments involve additional risk of loss. Loss can result from a lack of correlation between changes in the value of derivative instruments and the portfolio assets (if any) being hedged, the potential illiquidity of the markets for derivative instruments, or the risks arising from margin requirements and related leverage factors associated with such transactions. The use of these management techniques also involves the risk of loss if the Investment Manager is incorrect in its expectation of fluctuations in securities prices, interest rates or currency prices. Each Fund may also invest in derivative investments for non-hedging purposes (that is, to seek to increase total return), which is considered a speculative practice and presents even greater risk of loss. The value of many derivative instruments can be very volatile, and the losses incurred by a Fund on some derivative investments is potentially unlimited.
Some floating rate derivative debt securities can present more complex types of derivative and interest rate risks. For example, range floaters are subject to the risk that the coupon will be reduced below market rates if a designated interest rate floats outside of a specified interest rate band or collar. Dual index or yield curve floaters are subject to lower prices in the event of an unfavorable change in the spread between two designated interest rates.
Funds associated with this risk:
Small Cap Fund, Small Cap Index Fund, Large Cap Fund, Large Cap Index Fund, Mid Cap Fund, Mid Cap Index Fund, Short Term Investment Fund, International Fund, International Index Fund, Bond Fund, Bond Index Fund, Diversified Real Return Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
The involvement of the Trustee and/or the investment Adviser and their affiliates in the management of, or their interest in, other accounts may present conflicts of interest with respect to each Fund or limit its investment activities. The Trustee and the Investment Adviser and their other advisory affiliates may engage in proprietary trading and advise accounts and funds which have investment objectives similar to those of the Funds and/or which engage in and compete for transactions in the same types of securities, currencies and instruments as the Funds. The Investment Adviser will not have any obligation to make available any information regarding their proprietary activities or strategies, or the activities or strategies used for other accounts managed by them, for the benefit of the management of the Funds. Therefore, it is possible that a Fund could sustain losses during periods in which the Investment Adviser and its affiliates and other accounts achieve significant profits on their trading for proprietary or other accounts. In addition, the Funds may, from time to time, enter into transactions in which other clients of the Investment Adviser have an adverse interest.
Funds associated with this risk:
Small Cap Fund, Large Cap Fund, Large Cap Index Fund, Mid Cap Fund, Mid Cap Index Fund, Socially Responsible Fund, Short Term Investment Fund- Cash, Short Term Investment Fund, International Fund, Bond Fund, Bond Index Fund, Diversified Real Return Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
Financial services companies are highly dependent on the supply of short-term financing. The value of securities of issuers in the financial services sector can be sensitive to changes in government regulation and interest rates and to economic downturns in the United States and abroad.
Funds associated with this risk:
Small Cap Fund, Large Cap Fund, Large Cap Index Fund, Mid Cap Fund, Mid Cap Index Fund, Socially Responsible Fund, Short Term Investment Fund- Cash, Short Term Investment Fund, International Fund, Bond Fund, Bond Index Fund, Diversified Real Return Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
Market conditions, interest rates, and economic, regulatory, or financial developments could significantly affect a group of related industries, and the securities of companies in that group of related industries could react similarly to these or other developments.
The technology industries can be significantly affected by obsolescence of existing technology, short product cycles, falling prices and profits, and competition from new market entrants.
Funds associated with this risk:
Small Cap Fund, Large Cap Fund, Large Cap Index Fund, Mid Cap Fund, Mid Cap Index Fund, Socially Responsible Fund, Short Term Investment Fund- Cash, Short Term Investment Fund, International Fund, Bond Fund, Bond Index Fund, Diversified Real Return Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
Many types of debt securities, including mortgage securities, are subject to prepayment risk. Prepayment occurs when the issuer of a security can repay principal prior to the security’s maturity. Securities subject to prepayment can offer less potential for gains during a declining interest rate environment and similar or greater potential for loss in a rising interest rate environment. In addition, the potential impact of prepayment features on the price of a debt security can be difficult to predict and result in greater volatility.
Funds associated with this risk:
Large Cap Fund, Large Cap Index Fund, Mid Cap Fund, Mid Cap Index Fund, Socially Responsible Fund, Short Term Investment Fund- Cash, Short Term Investment Fund, Bond Fund, Bond Index Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
Change in the financial condition of an issuer, changes in specific economic or political conditions that affect a particular type of security or issuer, and changes in general economic or political conditions can affect the credit quality or value of an issuer’s securities. Entities providing credit support or a maturity-shortening structure also can be affected by these types of changes. If the structure of a security fails to function as intended, the security could decline in value. The value of securities of smaller, less well-known issuers can be more volatile than that of larger issuers. Smaller issuers can have more limited product lines, markets, or financial resources. Lower-quality debt securities (those of less than investment-grade quality) and certain types of other securities tend to be particularly sensitive to these changes.
Lower-quality debt securities and certain types of other securities involve greater risk of default or price changes due to changes in the credit quality of the issuer. The value of lower-quality debt securities and certain types of other securities often fluctuates in response to company, political, or economic developments and can decline significantly over short periods of time or during periods of general or regional economic difficulty. Lower-quality debt securities can be thinly traded or have restrictions on resale, making them difficult to sell at an acceptable price. The default rate for lower-quality debt securities is likely to be higher during economic recessions or periods of high interest rates.
Funds associated with this risk:
Small Cap Fund, Small Cap Index Fund, Large Cap Fund, Large Cap Index Fund, Mid Cap Fund, Mid Cap Index Fund, Socially Responsible Fund, Short Term Investment Fund- Cash, Short Term Investment Fund, International Fund, International Index Fund, Bond Fund, Bond Index Fund, Diversified Real Return Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
The equity securities of small capitalization companies involve greater risk and portfolio price volatility than investments in large capitalization stocks. Historically, small market capitalization stocks and stocks of recently organized companies have been more volatile in price than the larger market capitalization stocks included in the S&P 500® Index. Among the reasons for this greater price volatility are the less certain growth prospects of smaller firms and the lower degree of liquidity in the markets for such stocks. The Structured Small Cap Fund (and any other Fund that invests in small capitalization companies) will be subject to these risks.
Funds associated with this risk:
Small Cap Fund, Small Cap Index Fund, Mid Cap Fund, Mid Cap Index Fund, International Fund, International Index Fund, Bond Fund, Bond Index Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
Each Fund may invest in certain illiquid securities that cannot be readily disposed of in the ordinary course of business at fair value. Illiquid securities include:
- Both domestic and foreign securities that are not readily marketable
- Certain participation interests
- Repurchase agreements and time deposits with a notice or demand period of more than seven days
- Certain over the counter options
- Certain structured securities and all swap transactions
- Certain restricted securities other than Rule 144A Securities for which a liquid institutional trading market is present
Investing in Rule 144A Securities may decrease the liquidity of a Fund to the extent that qualified institutional buyers become for a time uninterested in purchasing these restricted securities. The purchase price and subsequent valuation of restricted and illiquid securities normally reflect a discount, which may be significant, from the market price of comparable securities for which a liquid market exists.
Funds associated with this risk:
Small Cap Fund, Small Cap Index Fund, Large Cap Fund, Mid Cap Fund, Short Term Investment Fund- Cash, Short Term Investment Fund, International Fund, Bond Fund, Bond Index Fund, Diversified Real Return Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
“Growth” stocks can react differently to issuer, political, market, and economic developments than the market as a whole and other types of stocks. “Growth” stocks tend to be more expensive relative to their earnings or assets compared to other types of stocks. As a result, “growth” stocks tend to be sensitive to changes in their earnings and more volatile than other types of stocks.
Funds associated with this risk:
Small Cap Fund, Large Cap Fund, Large Cap Index Fund, Mid Cap Fund, Mid Cap Index Fund, Socially Responsible Fund, International Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
“Value” stocks can react differently to issuer, political, market, and economic developments than the market as a whole and other types of stocks. “Value” stocks tend to be inexpensive relative to their earnings or assets compared to other types of stocks. However, “value” stocks can continue to be inexpensive for long periods of time and may not ever realize their full value.
Funds associated with this risk:
Small Cap Fund, Large Cap Fund, Large Cap Index Fund, Mid Cap Fund, Mid Cap Index Fund, Socially Responsible Fund, International Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
The value of securities selected using quantitative analysis can react differently to issuer, political, market, and economic developments than the market as a whole or securities selected using only fundamental analysis, and the weight placed on those factors may not be predictive of a security’s value. In addition, factors that affect a security’s value can change over time and these changes may not be reflected in the quantitative model.
Funds associated with this risk:
Small Cap Fund, Large Cap Fund, Large Cap Index Fund, Mid Cap Fund, Mid Cap Index Fund, Socially Responsible Fund, Short Term Investment Fund- Cash, Bond Fund, Bond Index Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
The Investment Manager may be entitled to receive a fee that is based on the performance of the Funds. Such a performance-based fee may create an incentive for the Investment Manager to cause the Funds to make investments that are riskier or more speculative than would be the case in the absence of a fee based on the performance of the Funds. In addition, because any such performance-based fee is calculated on a basis that includes unrealized appreciation of the Funds’ assets, such fee may be greater than if it were based solely on realized gains.
Funds associated with this risk:
None at this time
Routine funding or settlement transactions could be adversely affected by the actions and commercial soundness of domestic or foreign financial institutions. The operations of U.S. and global financial services institutions are highly interconnected and a decline in the financial condition of one or more financial services institutions may expose the Funds to credit losses or defaults, limit their access to liquidity or otherwise disrupt their operations.
Funds associated with this risk:
Small Cap Fund, Large Cap Fund, Large Cap Index Fund, Mid Cap Fund, Mid Cap Index Fund, Socially Responsible Fund, Short Term Investment Fund- Cash, Short Term Investment Fund, International Fund, Bond Fund, Bond Index Fund, Diversified Real Return Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
Operation of the Funds may be subject to risk of loss resulting from human error, inadequate or failed internal processes and systems, or external events. Operational risks also include the risk of fraud by employees, clerical and record-keeping errors, nonperformance by vendors, threats to cybersecurity, and computer/telecommunications malfunctions.
Funds associated with this risk:
Small Cap Fund, Small Cap Index Fund, Large Cap Fund, Large Cap Index Fund, Mid Cap Fund, Mid Cap Index Fund, Socially Responsible Fund, Short Term Investment Fund- Cash, Short Term Investment Fund, International Fund, International Index Fund, Bond Fund, Bond Index Fund, Diversified Real Return Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
Because the Fund will have significant investment exposure to commodity-related derivative instruments, developments affecting commodities may have a disproportionate impact on the Fund. The Fund’s investment in commodity-linked derivative instruments may subject the Fund to greater volatility than investments in traditional securities, particularly if the instruments involve leverage. Although the Fund’s commodity exposure as a whole will not typically be leveraged (i.e., the Fund’s commodity investments will have aggregate investment exposure substantially equal to the net assets of the commodities allocation of the Fund), individual commodity-linked derivative instruments may employ leverage. The value of commodity-related derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs, sanctions, nationalization or expropriation and international economic, political and regulatory developments. The energy sector can be significantly affected by changes in the prices and supplies of oil and other energy fuels, energy conservation, the success of exploration projects, and tax and other government regulations, policies of the Organization of Petroleum Exporting Countries (“OPEC”) and relationships among OPEC members and between OPEC and oil importing nations. The metals sector can be affected by sharp price volatility over short periods caused by global economic, financial and political factors, resource availability, government regulation, economic cycles, changes in inflation or expectations about inflation in various countries, interest rates, currency fluctuations, metal sales by governments, central banks or international agencies, investment speculation and fluctuations in industrial and commercial supply and demand. In addition, the relationships between various commodities and related derivatives may not behave as expected. Use of leveraged commodity-related derivatives, if any, creates an opportunity for increased return but, at the same time, creates the possibility for greater loss, and there can be no assurance that the Fund’s use of leveraged commodity-related derivatives, if any, will be successful.
Funds associated with this risk:
Short Term Investment Fund, International Fund, Diversified Real Return Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
The Fund’s investments in securities of natural resources companies involve risks. The market value of securities of natural resources companies may be affected by numerous factors, including events occurring in nature, inflationary pressures and international politics. Because the Fund invests significantly in natural resources companies, there is the risk that the Fund will perform poorly during a downturn in the natural resources sector. For example, events occurring in nature (such as earthquakes or fires in prime natural resources areas) and political events (such as coups, military confrontations or acts of terrorism or sanctions) can affect the overall supply of a natural resource and the value of companies involved in such natural resource. Political risks and the other risks to which foreign securities are subject may also affect domestic natural resources companies if they have significant operations or investments in foreign countries. In particular, Russia’s invasion of Ukraine has increased the volatility of many natural resources investments. Rising interest rates and general economic conditions may also affect the demand for natural resources.
Funds associated with this risk:
Short Term Investment Fund, International Fund, Diversified Real Return Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
Securities and instruments of infrastructure companies are more susceptible to adverse economic or regulatory occurrences affecting their industries. Infrastructure companies may be subject to a variety of factors that may adversely affect their business or operations, including high interest costs in connection with capital construction and improvement programs, high leverage, costs associated with environmental and other regulations, the effects of economic slowdown, surplus capacity, increased competition from other providers of services, uncertainties concerning the availability of fuel at reasonable prices, the effects of energy conservation policies and other factors. Infrastructure companies may also be affected by or subject to high interest costs in connection with capital construction and improvement programs; difficulty in raising capital in adequate amounts on reasonable terms in periods of high inflation and unsettled capital markets; inexperience with and potential losses resulting from a developing deregulatory environment; costs associated with compliance with and changes in environmental and other regulations; regulation or adverse actions by various government authorities; government regulation of rates charged to customers; service interruption due to environmental, operational or other mishaps; the imposition of special tariffs and changes in tax laws, regulatory policies and accounting standards; technological innovations that may render existing plants, equipment or products obsolete; and general changes in market sentiment toward infrastructure and utilities assets.
Funds associated with this risk:
Large Cap Fund, Mid Cap Fund, Short Term Investment Fund, International Fund, Diversified Real Return Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
Occurrence of global events similar to those in recent years, such as war, terrorist attacks, natural or environmental disasters, country instability, infectious disease epidemics, such as that caused by the COVID-19 virus, market instability, debt crises and downgrades, embargoes, tariffs, sanctions and other trade barriers and other governmental trade or market control programs, the potential exit of a country from its respective union and related geopolitical events, may result in market volatility and may have long-lasting impacts on both the U.S. and global financial markets. Additionally, those events, as well as other changes in foreign and domestic political and economic conditions, could adversely affect individual issuers or related groups of issuers, securities markets, interest rates, secondary trading, credit ratings, inflation, investor sentiment and other factors affecting the value of the Fund’s investments. An outbreak of respiratory disease caused by a novel coronavirus designated as COVID-19 has resulted in, among other things, extreme volatility in the financial markets and severe losses, reduced liquidity of many instruments, significant travel restrictions, significant disruptions to business operations, supply chains and customer activity, lower consumer demand for goods and services, service and event cancellations, reductions and other changes, strained healthcare systems, as well as general concern and uncertainty. The impact of the COVID-19 outbreak has negatively affected the global economy, the economies of individual countries, and the financial performance of individual issuers, sectors, industries, asset classes, and markets in significant and unforeseen ways. Pandemics may also exacerbate other pre-existing political, social, economic, market and financial risks. The effects of the outbreak in developing or emerging market countries may be greater due to less established health care systems and supply chains. The COVID-19 pandemic and its effects may be short term or may result in a sustained economic downturn or a global recession, ongoing market volatility and/or decreased liquidity in the financial markets, exchange trading suspensions and closures, higher default rates, domestic and foreign political and social instability and damage to diplomatic and international trade relations. The foregoing could impair the Fund’s ability to maintain operational standards (such as with respect to satisfying redemption requests), disrupt the operations of the Fund’s service providers, adversely affect the value and liquidity of the Fund’s investments, and negatively impact the Fund’s performance and your investment in the Fund.
On January 31, 2020, the UK withdrew from the European Union (“EU”) an action referred to as “Brexit”. Brexit has resulted in volatility in European and global markets and could have negative long-term impacts on financial markets in the UK and throughout Europe. There is considerable uncertainty about the potential consequences of Brexit, how negotiations of trade agreements will proceed, and how the financial markets will react. As this process unfolds, markets may be further disrupted. Given the size and importance of the UK’s economy, uncertainty about its legal, political and economic relationship with the remaining member states of the EU may continue to be a source of instability. Growing tensions, including trade disputes, between the United States and other nations, or among foreign powers, and possible diplomatic, trade or other sanctions could adversely impact the global economy, financial markets and the Fund. On February 24, 2022, Russia launched a large-scale invasion of Ukraine, significantly amplifying already existing geopolitical tensions. The United States and many other countries have instituted various economic sanctions against Russian individuals and entities. The extent and duration of the military action, sanctions imposed and other punitive actions taken and the resulting future market disruptions in Europe and globally cannot be easily predicted, but could be significant and have a severe adverse effect on the global economy, securities and commodities markets. To the extent the Fund has exposure to the energy sector, the Fund may be especially susceptible to these risks. These disruptions may also make it difficult to value the Fund’s portfolio investments and may cause certain of the Fund’s investments to become illiquid. The strengthening or weakening of the U.S. dollar relative to other currencies may, among other things, adversely affect the Fund’s investments denominated in non-U.S. dollar currencies. It is difficult to predict when similar events affecting the U.S. or global financial markets may occur, the effects that such events may have, and the duration of those effects.
Funds associated with this risk:
Small Cap Fund, Small Cap Index Fund, Large Cap Fund, Mid Cap Fund, Socially Responsible Fund, Short Term Investment Fund- Cash, Short Term Investment Fund, International Fund, International Index Fund, Bond Fund, Diversified Real Return Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
The risk that investments in foreign companies through depositary receipts will expose the fund to the same risks as direct investments in securities of foreign issuers.
Funds associated with this risk:
Small Cap Fund, Large Cap Fund, Mid Cap Fund, Socially Responsible Fund, Short Term Investment Fund, International Fund, International Index Fund, Bond Fund, Diversified Real Return Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
The risk that the value of investments in larger companies may not rise as much as smaller companies, or that larger companies may be unable to respond quickly to competitive challenges, such as changes in technology and consumer tastes.
Funds associated with this risk:
Large Cap Fund, Socially Responsible Fund, Short Term Investment Fund, International Fund, Diversified Real Return Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
The risk that the fund’s principal investment strategies will result in a consistently high portfolio turnover rate. The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs.
Funds associated with this risk:
Small Cap Fund, Large Cap Fund, Mid Cap Fund, Short Term Investment Fund- Cash, Short Term Investment Fund, International Fund, Bond Fund, Diversified Real Return Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
The risk that events negatively affecting a particular market sector in which the fund focuses its investments will cause the value of the fund’s shares to decrease, perhaps significantly.
Funds associated with this risk:
Large Cap Fund, Mid Cap Fund, Short Term Investment Fund, International Fund, Bond Fund, Diversified Real Return Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
Transactions in futures carry a high degree of risk. The amount of initial margin is small relative to the value of the futures contract so that transactions are “leveraged” or “geared”. A relatively small market movement can have a proportionately larger impact on the amount invested. If the market moves against an investor’s position or margin levels are increased, an investor may be called upon to pay substantial additional funds on short notice to maintain the investor’s position. If an investor fails to comply with a request for additional funds within the time prescribed, the investor’s position may be liquidated at a loss and the investor will be liable for any resulting deficit. Investors may sustain a total loss of their investment.
Investments in futures contracts are typically effected by third-party investment advisers retained on behalf of Savings Plus Participants. Individual investment advisers in turn effect futures transactions through the use of futures commissions merchants (each an “FCM”). At any given time, the Trustee may have multiple investment advisers on retention who offer Savings Plus Participants various opportunities to participate in different futures transactions with the same FCM.
The Commodity Futures Trading Commission Rules (“CFTCRs”) require that FCMs do not (1) guarantee a client against loss; (2) limit the loss of a customer; or (3) agree not to call for margin as established by the rules of an exchange. Additionally, the CFTCRs require FCMs to combine all accounts of the same beneficial owner within the same regulatory account classification for margin purposes and in determining an account’s margin funds available for disbursement, even if such accounts are under different control. Further, under no circumstance may an FCM limit losses to funds on deposit.
For purposes of the CFTCRs, the Trustee is considered the beneficial owner of the futures accounts that Savings Plus Participants may invest in with FCMs. Because the CFTCRs do not permit FCMs to limit recourse and margin calls to a particular Trustee beneficially owned account, FCMs must look holistically at all Savings Plus Participants’ investments with the FCM even where the other investments are for different participants and are managed by another adviser, or subject to a different program of the same investment adviser. Consequently, each futures account/investment with an FCM is subject to cross collateralization against the other accounts. Therefore, in the event of a shortfall and/or default by any beneficially owned futures account with an FCM, the FCM can seek to recover against any and all other assets of Savings Plus Participants managed by unrelated advisers maintaining futures accounts with the FCM on behalf of the Trustee.
Protocols are in place with each investment adviser utilizing FCMs to reduce the risk of the accounts being cross collateralized. Additionally, investment managers will be contractually required to accept liability in the event of negligence or failure on their part that triggers the enforcement of the FCM’s cross collateralization policy, excluding normal market volatility and those associated gains/losses. However, the risks identified above will continue to exist insofar as futures transactions are concerned.
Funds associated with this risk:
Small Cap Fund, Short Term Investment Fund- Cash, Bond Fund, Diversified Real Return Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
Under existing SEC guidance, the Fund will value its individual portfolio securities with remaining maturities of 60 days or less using its amortized cost price when such price is approximately the same (as determined by policies adopted by the Fund’s Board of Trustees (“Board”)) as its fair market price (“shadow price”). If a security’s shadow price is not approximately the same as its amortized cost price, the Fund will generally use the shadow price to value that security. In such cases, the use of the shadow price could cause the Fund’s NAV to fluctuate.
Funds associated with this risk:
Short Term Investment Fund- Cash, Bond Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
On days during which there are net purchases of Fund Shares, the Fund must invest the proceeds at prevailing market yields or hold cash. If the Fund holds cash, or if the yield of the securities purchased is less than that of the securities already in the portfolio, the Fund’s yield will likely decrease. Conversely, net purchases on days on which short-term yields rise will likely cause the Fund’s yield to increase. In the event of significant changes in short-term yields or significant net purchases, the Fund retains the discretion to close to new investments. However, the Fund is not required to close, and no assurance can be given that this will be done in any given circumstance.
Funds associated with this risk:
Short Term Investment Fund- Cash, Bond Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
A significant percentage of the Fund’s shares may be owned or controlled by a large shareholder, such as other funds or accounts, including those of which the Adviser or an affiliate of the Adviser may have investment discretion. Accordingly, the Fund can be subject to the potential for large scale inflows and outflows as a result of purchases and redemptions made by significant shareholders. These inflows and outflows could be significant and, if frequently occurring, could negatively affect the Fund’s net asset value and performance and could cause the Fund to sell securities at inopportune times in order to meet redemption requests. Investments in the Fund by other investment companies also can create conflicts of interest for the Adviser to the Fund and the investment adviser to the acquiring fund. For example, a conflict of interest can arise due to the possibility that the investment adviser to the acquiring fund could make a decision to redeem the acquiring fund’s investment in the Fund. In the case of an investment by an affiliated fund, a conflict of interest can arise if, because of the acquiring fund’s investment in the Fund, the Fund is able to garner more assets from third-party investors, thereby growing the Fund and increasing the management fees received by the Adviser, which could also be the investment adviser to the acquiring fund.
Funds associated with this risk:
Large Cap Fund, Mid Cap Fund, Short Term Investment Fund- Cash, International Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
The Fund has adopted policies and procedures such that the Fund will be able to impose liquidity fees on redemptions and/or temporarily suspend redemptions for up to 10 business days in any 90-day period in the event that the Fund’s weekly liquid assets were to fall below a designated threshold, subject to a determination by the Fund’s Board that such a liquidity fee or redemption gate is in the Fund’s best interest. If the Fund’s weekly liquid assets fall below 30% of its total assets, the Fund may impose liquidity fees of up to 2% of the value of the shares redeemed and/or temporarily suspend redemptions, if the Board, including a majority of the independent Trustees, determines that imposing a liquidity fee or temporarily suspending redemptions is in the Fund’s best interest. In addition, if the Fund’s weekly liquid assets fall below 10% of its total assets at the end of any business day, the Fund must impose a 1% liquidity fee on shareholder redemptions unless the Board, including a majority of the independent Trustees, determines that imposing such fee is not in the best interests of the Fund.
Funds associated with this risk:
Short Term Investment Fund- Cash, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045
Like other funds and business enterprises, the investment manager relies on the security and reliability of information and communications technology, systems and networks. The investment manager uses digital technology, including, for example, networked systems, email and the Internet, to conduct business operations and engage clients, customers, employees, products, accounts, shareholders, and relevant service providers, among others. The investment manager, as well as its funds and certain service providers, also generate, compile and process information for purposes of preparing and making filings or reports to governmental agencies, and a cybersecurity attack or incident that impacts that information, or the generation and filing processes, may prevent required regulatory filings and reports from being made. The use of the Internet and other electronic media and technology exposes the Fund, the Fund’s shareholders, and the Fund’s service providers, and their respective operations, to potential risks from cybersecurity attacks or incidents (collectively, “cyber-events”).
Cyber-events can result from intentional (or deliberate) attacks or unintentional events by insiders or third parties, including cybercriminals, competitors, nation-states and “hacktivists,” among others. Cyber-events may include, for example, phishing, use of stolen access credentials, unauthorized access to systems, networks or devices (such as, for example, through “hacking” activity), structured query language attacks, infection from or spread of malware, ransomware, computer viruses or other malicious software code, corruption of data, and attacks (including, but not limited to, denial of service attacks on websites) which shut down, disable, slow, impair or otherwise disrupt operations, business processes, technology, connectivity or website or internet access, functionality or performance. Like other funds and business enterprises, the Fund and its service providers have experienced, and will continue to experience, cyber-events on a daily basis. In addition to intentional cyber-events, unintentional cyber-events can occur, such as, for example, the inadvertent release of confidential information. To date, cyber-events have not had a material adverse effect on the Fund’s business operations or performance.
Cyber-events can affect, potentially in a material way, the investment manager’s relationships with its customers, employees, products, accounts, shareholders and relevant service providers. Any cyber-event could adversely impact the Fund and its shareholders and cause the Fund to incur financial loss and expense, as well as face exposure to regulatory penalties, reputational damage and additional compliance costs associated with corrective measures. A cyber-event may cause the Fund, or its service providers, to lose proprietary information, suffer data corruption, lose operational capacity (such as, for example, the loss of the ability to process transactions, calculate the Fund’s NAV, or allow shareholders to transact business or other disruptions to operations), and/or fail to comply with applicable privacy and other laws. Among other potentially harmful effects, cyber-events also may result in theft, unauthorized monitoring and failures in the physical infrastructure or operating systems that support the Fund and its service providers. In addition, cyber-events affecting issuers in which the Fund invests could cause the Fund’s investments to lose value.
The Fund’s Adviser and its relevant affiliates have established risk management systems reasonably designed to seek to reduce the risks associated with cyber-events. The Fund’s Adviser employs various measures aimed at mitigating cybersecurity risk, including, among others, use of firewalls, system segmentation, system monitoring, virus scanning, periodic penetration testing, employee phishing training and an employee cybersecurity awareness campaign. Among other vendor management efforts, the investment manager also conducts due diligence on key service providers (or vendors) relating to cybersecurity. The investment manager has established a committee to oversee the investment manager’s information security and data governance efforts, and updates on cyber-events and risks are reviewed with relevant committees, as well as the investment manager and the Fund’s Boards of Directors or Trustees (or a committee thereof), on a periodic (generally quarterly) basis (and more frequently when circumstances warrant) as part of risk management oversight responsibilities. However, there is no guarantee that the efforts of the investment manager, the Fund’s Adviser or its affiliates, or other service providers, will succeed, either entirely or partially as there are limits on investment manager and the Fund’s ability to prevent, detect or mitigate cyber-events. Among other reasons, the cybersecurity landscape is constantly evolving, the nature of malicious cyber-events is becoming increasingly sophisticated and the Fund’s Adviser, and its relevant affiliates, cannot control the cyber systems and cybersecurity systems of issuers or third-party service providers.
Funds associated with this risk:
Small Cap Fund, Large Cap Fund, Mid Cap Fund, Socially Responsible Fund, Short Term Investment Fund- Cash, Short Term Investment Fund, International Fund, Bond Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
An outbreak of infectious respiratory illness caused by a novel coronavirus known as COVID-19 was first detected in China in December 2019 and has now been detected globally. This coronavirus has resulted in travel restrictions, closed international borders, enhanced health screenings at ports of entry and elsewhere, disruption of and delays in healthcare service preparation and delivery, prolonged quarantines, cancellations, supply chain disruptions, and lower consumer demand, as well as general concern and uncertainty. The impact of COVID-19, and other infectious illness outbreaks that may arise in the future, could adversely affect the economies of many nations or the entire global economy, individual issuers and capital markets in ways that cannot necessarily be foreseen. In addition, the impact of infectious illnesses in emerging market countries may be greater due to generally less established healthcare systems. Public health crises caused by the COVID-19 outbreak may exacerbate other pre-existing political, social and economic risks in certain countries or globally. The duration of the COVID-19 outbreaks and its effects cannot be determined with certainty.
Funds associated with this risk:
Small Cap Fund, Large Cap Fund, Mid Cap Fund, Socially Responsible Fund, Short Term Investment Fund- Cash, Short Term Investment Fund, International Fund, Bond Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
High relative profitability stocks may perform differently from the market as a whole and an investment strategy purchasing these securities may cause the Portfolio to at times under perform equity funds that use other investment strategies.
Funds associated with this risk:
Small Cap Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
The Fund’s ability to achieve its investment objective depends upon the manager’s skill in determining the Fund’s strategic asset class allocation and in selecting the best mix of underlying funds and direct investments. There is a risk that the manager’s evaluations and assumptions regarding asset classes or underlying funds may be incorrect in view of actual market conditions.
Funds associated with this risk:
International Fund, Short Term Investment Fund, Socially Responsible Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065
The Program allows the Custodian to lend securities within the Fund, which entails risk. The primary risks include the possibility of the borrower becoming insolvent and the potential for the value of the collateral provided to fall below the cost of replacing the lent securities. If both of these events were to occur, the Fund would incur a financial loss equal to the difference between the two, potentially negatively impacting the performance of the Fund. Securities lending revenue earned by the Plan is used to help offset Savings Plus administrative expenses.
Funds associated with this risk:
Small Cap Fund, Large Cap Fund, Large Cap Index Fund, Mid Cap Fund, Mid Cap Index Fund, Socially Responsible Fund, Short Term Investment Fund, International Fund, Bond Fund, Bond Index Fund, Diversified Real Return Fund, Target Date Fund-Income, Target Date Fund-2020, Target Date Fund-2025, Target Date Fund-2030, Target Date Fund-2035, Target Date Fund-2040, Target Date Fund-2045, Target Date Fund-2050, Target Date Fund-2055, Target Date Fund-2060, Target Date Fund-2065