performance, financial condition, and market demand for the
issuer’s products or services, as well as factors unrelated to the
fundamental condition of the issuer, including general market,
economic and political conditions. Different parts of a market,
industry and sector may react differently to adverse issuer,
market, regulatory, political, and economic developments.
Foreign Investment Risk.Foreign
investments may be subject to lower liquidity, greater price
volatility and risks related to adverse political, regulatory,
market or economic developments. Foreign companies may be subject
to significantly higher levels of taxation than U.S. companies,
including potentially confiscatory levels of taxation, thereby
reducing the earnings potential of such foreign companies. Foreign
investments may involve exposure to changes in foreign currency
exchange rates. Such changes may reduce the U.S. dollar value of
the investments. Foreign investments may be subject to additional
risks such as potentially higher withholding and other taxes, and
may also be subject to greater trade settlement, custodial, and
other operational risks than domestic investments. Certain foreign
markets may also be characterized by less stringent investor
protection and disclosure standards.
Futures Contracts Risk. A Fund
that uses futures contracts, which are a type of derivative, is
subject to the risk of loss caused by unanticipated market
movements. In addition, there may at times be an imperfect
correlation between the movement in the prices of futures contracts
and the value of their underlying instruments or indexes, and there
may at times not be a liquid secondary market for certain futures
contracts.
Inflation Risk. Inflation risk is
the risk that the value of assets or income from the Fund’s
investments will be worth less in the future as inflation decreases
the value of money. As inflation increases, the real, or
inflation-adjusted, value of the common shares and distributions
can decline and the dividend payments on the Fund’s preferred
shares, if any, or interest payments on Fund borrowings, if any,
may increase.
Issuer Risk. The value of
corporate income-producing securities may decline for a number of
reasons which directly relate to the issuer, such as management
performance, financial leverage and reduced demand for the issuer’s
goods and services.
Loan Risk. Loans may be unrated,
less liquid and more difficult to value than traditional debt
securities. Loans may be made to finance highly leveraged corporate
operations or acquisitions. The highly leveraged capital structure
of the borrowers in such transactions may make such loans
especially vulnerable to adverse changes in financial, economic or
market conditions. Loans generally are subject to restrictions on
transfer, and only limited opportunities may exist to sell such
loans in secondary markets. As a result, the Fund may be unable to
sell loans at a desired time or price. If the Fund acquires only an
assignment or a participation in a loan made by a third party, the
Fund may not be able to control amendments, waivers or the exercise
of any remedies that a lender would have under a direct loan and
may assume liability as a lender.
Management Risk. Investment
decisions, techniques, analyses or models implemented by the Fund’s
manager or sub-advisor in seeking to achieve the Fund’s investment
objectives may not produce the returns expected, may cause the
Fund’s shares to lose value or may cause the Fund to underperform
other funds with similar investment objectives.
Market Price of Shares Risk.Whether investors will realize a gain or loss
upon the sale of the Fund’s common shares will depend upon whether
the market value of the shares at the time of sale is above or
below the price the investor paid, taking into account transaction
costs, for the shares and is not directly dependent upon the Fund’s
net asset value. Because the market value of the Fund’s shares will
be determined by factors such as the relative demand for and supply
of the shares in the market, general market conditions and other
factors beyond the control of the Fund, the Fund cannot predict
whether its common shares will trade at, below or above net asset
value, or below or above the initial offering price for the
shares.
Options Risk. A Fund that
purchases options, which are a type of derivative, is subject to
the risk that gains, if any, realized on the position, will be less
than the amount paid as premiums to the writer of the option. A
Fund that writes options receives a premium that may be small
relative to the loss realized in the event of adverse changes in
the value of the underlying instruments. A Fund that writes covered
call options gives up the opportunity to profit from any price
increase in the underlying security above the option exercise price
while the option is in effect. Options may be more volatile than
the underlying instruments. In addition, there may at times be an
imperfect correlation between the movement in values of options and
their underlying securities and there may at times not be a liquid
secondary market for certain options.
Prepayment Risk. During periods of
declining interest rates, the issuer of a security may exercise its
option to prepay principal earlier than scheduled, forcing the Fund
to reinvest in lower yielding securities. This is known as call or
prepayment risk. Debt securities frequently have call features that
allow the issuer to repurchase the security prior to its stated
maturity. An issuer may redeem an obligation if the issuer can
refinance the debt at a lower cost due to declining interest rates
or an improvement in the credit standing of the
issuer.