Mutual Funds

In 2005, more than $9 trillion was invested in mutual funds, and the number of funds is larger than the number of stocks listed on the New York Stock Exchange.

Mutual funds vary based on a number of factors, including:

• Investment objective: such as growth vs. preservation of principal
• Investment style: such as rapidly growing vs. undervalued by the market
• Investment strategy: such as a passively managed index vs. actively managed individual company analysis

Money-Market Funds

• Seek to preserve price stability at a value of $1 per share.
• Invest in short-term IOUs from industry and government agencies.
• Generally accrue dividends daily and credit them monthly.

Income or Bond Funds

• Seek high current income.
• Invest in securities that pay both dividends and interest.
• Some invest in a variety of bonds; others specialize in only one type.

Stock Funds

• Growth stock funds invest in securities with high growth potential.
• Value stock funds invest in securities that, for one reason or another, are ignored or are selling at an unusually low price compared to true market value.
• Balanced stock portfolios invest in both growth and value stock funds.
• Growth funds tend to invest in large, well-established companies.
• Aggressive growth funds tend to invest in smaller, riskier companies believed to be on the fast track.
• Funds may invest in small, mid, or large cap stocks or any combination thereof.

Balanced Funds

• Divide investments among stock, bond, and cash investments.
• Generally invest in higher-grade securities.
• Are ideal for investors seeking moderate returns and low risk.

International and Global Funds

• Provide access to securities outside the U.S.
• International funds invest solely in non-U.S. securities.
• Global funds invest in foreign and U.S. securities.

Specialized or Sector Funds

• Concentrate on a particular industry or country/region.

Page 8 of 10: Different Asset Classes

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