Portfolio Turnover
The Portfolio 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. These costs, which are not reflected in Annual Portfolio Operating Expenses or in the Expense Example, affect the Portfolio's performance.
During the most recent fiscal year, the Portfolio's portfolio turnover rate was 30% of the average value of its portfolio.
Principal Investment Strategies
Under normal market conditions, the sub-adviser (the "Sub-Adviser") invests the assets of the Portfolio primarily in a combination of other funds (collectively, the "Underlying Funds") that, in turn invest, in varying degrees, among several classes of equities, debt instruments, emerging markets debt, and money market instruments. The Portfolio normally invests at least 80% of its assets in Underlying Funds affiliated with the Investment Adviser, although the Sub-Adviser may in its discretion invest up to 20% of the Portfolio's assets in Underlying Funds that are not affiliated with the Investment Adviser, including exchange-traded funds ("ETFs").
The Portfolio invests in a combination of Underlying Funds that reflects a target allocation of approximately 39% of its net assets in equity securities and 61% of its net assets in debt instruments (the "Target Allocation").
The Portfolio's assets normally will be invested in accordance with its Target Allocation. As this is a Target Allocation, the actual allocations of the Portfolio's assets may deviate from the percentages shown. The Target Allocation is measured with reference to the principal investment strategies of the Underlying Funds; actual exposure to these asset classes will vary from the Target Allocation if an Underlying Fund is not substantially invested in accordance with its principal investment strategies. The Portfolio may be rebalanced periodically to return to the Target Allocation. The Portfolio's Target Allocation may be changed, at any time, in accordance with the Portfolio's asset allocation process. The Portfolio may periodically deviate from the Target Allocation based on an assessment of the current market conditions or other factors. Generally, the deviations fall in the range of +/- 10% relative to the current Target Allocation. The Investment Adviser may determine, in light of market conditions or other factors, to deviate by a wider margin in order to protect the Portfolio, achieve its investment objective, or to take advantage of particular opportunities.
The Underlying Funds provide exposure to a wide range of traditional asset classes which includes stocks, bonds, and cash; and non-traditional asset classes (also known as alternative strategies) which includes real estate, commodities, and floating rate loans.
The equity securities in which the Underlying Funds may invest include, but are not limited to, the following: domestic and international large-, mid-, and small-capitalization stocks; emerging market securities; and real estate-related securities, including real estate investment trusts ("REITs").
The debt instruments in which the Underlying Funds may invest include, but are not limited to, the following: domestic and international debt instruments including high-yield (high-risk) securities commonly referred to as "junk bonds" and debt instruments without limitation on maturity.
The Sub-Adviser may change the Portfolio's asset allocations, investments in particular Underlying Funds (including Underlying Funds organized in the future), Target Allocation, or other investment policies without the approval of shareholders as it determines necessary to pursue the Portfolio's investment objective.
When investing in Underlying Funds, the Sub-Adviser takes into account a wide variety of factors and considerations, including among other things the investment strategy employed in the management of a potential Underlying Fund, and the extent to which an Underlying Fund's investment adviser considers environmental, social, and governance ("ESG") factors as part of its investment process. The manner in which an Underlying Fund's investment adviser uses ESG factors in its investment process will be only one of many considerations in the Sub-Adviser's evaluation of any potential Underlying Fund, and the extent to which the consideration of ESG factors by an Underlying Fund's investment adviser will affect the Sub-Adviser's decision to invest in an Underlying Fund, if at all, will depend on the analysis and judgment of the Sub-Adviser.
The current group of Underlying Funds in which the Portfolio may invest includes "index plus" funds. Generally these funds seek to outperform a designated index of equity securities by investing in a portion of the securities included in the index. Also, some Underlying Funds may use growth or value investment strategies.
The Portfolio may invest in derivative instruments including futures and swaps (including interest rate swaps, total return swaps, and credit default swaps) to make tactical allocations, as a substitute for taking a position in the underlying asset, and to assist in managing cash.