Common use of Concentration Risk Clause in Contracts

Concentration Risk. To the extent that a Portfolio is exposed to securities of a single country, region, industry, structure, or size, its performance may be unduly affected by factors common to the type of securities involved. • Issuer risk. Changes in an issuer’s business prospects or financial condition, including those resulting from concerns over accounting or corporate governance practices, could significantly affect a Portfolio’s performance if the Portfolio has sufficient exposure to those securities. • Credit risk. The value of a bond or money market security could fall if its credit backing deteriorates or if the issuer encounters financial difficulties. In more extreme cases, default or the threat of default could cause a security to lose most or all of its value. Generally, credit risks are greater with respect to high-yield bonds than they are with respect to investment-grade bonds. The Individual Fund Portfolios and Individual Fund ETF Portfolios are designed to invest in a single mutual fund, separately managed account, or exchange-traded fund. Individual Fund Portfolios and Individual Fund ETF Portfolios, by design, are not as diverse as the Age-Based and Target Portfolios which are invested in a number of different Underlying Investments. Since each Individual Fund Portfolio and Individual Fund ETF Portfolio is invested in one Underlying Investment, the performance of the Individual Fund Portfolio and Individual Fund ETF Portfolio is dependent on the performance of the Underlying Investment. Consequently, the performance of each of the Individual Fund Portfolios and Individual Fund ETF Portfolios may be more volatile than the Age-Based and Target Portfolios. The Individual Fund ETF Portfolios will be exposed to the risks inherent in certain ETF investments, such as passive strategy/ index risk, index tracking risk, trading issues, fluctuation of net asset value and share premiums and discounts.