Broad Category
Each mutual fund is placed into one of six broad categories: domestic equity, domestic fixed income (taxable), domestic fixed income (tax-exempt), international equity, international fixed income or money market.
Investment Style
Each fund is classified into one of 42 investment styles based on the fund's historical pattern of investing. The styles are: Balanced Large-Cap, Balanced Mid-Cap, Balanced Small-Cap, Equity Sector, Large-Cap Blend, Large-Cap Growth, Large-Cap Value, Mid-Cap Blend, Mid-Cap Growth, Mid-Cap Value, Small-Cap Blend, Small-Cap Growth, Small-Cap Value, High Yield Municipal (National), High Yield Municipal (Single State), Intermediate-Term Municipal (National), Intermediate-Term Municipal (Single State), Long-Term Municipal (National), Long-Term Municipal (Single State), Short-Term Municipal (National), Short-Term Municipal (Single State), Low Quality Bond, Intermediate-Term High Quality, Intermediate-Term Medium Quality, Long-Term High Quality, Long-Term Medium Quality, Mortgage Asset Backed, Short-Term High Quality, Short-Term Medium Quality, Specialty Bond, Developed Single Country, Emerging Single Country, Global, International, International Balanced, International Equity Sector, Regional Market/Developed, Regional Market/Emerging, Global Bond, Government Guaranteed Money Market, Municipal Money Market and Taxable Money Market.
Fixed-Income Funds
<DIR> The goal of fixed income funds is to provide high current income consistent with the preservation of capital. Growth of capital is of secondary importance.
Income funds that invest primarily in common stocks are classified as equity income funds. Those that invest primarily in bonds and preferred stocks are classified as fixed-income funds. These funds invest in corporate bonds or government-backed mortgage securities that have a fixed rate of return.
Since bond prices fluctuate with changing interest rates, there is some risk involved despite the fund's conservative nature. When interest rates rise, the market price of fixed-income securities declines and so will the value of the income fund's investments. Conversely, in periods of declining interest rates, the value of fixed-income funds will rise and investors will enjoy capital appreciation as well as income.
Fixed-income funds offer a higher level of current income than money market funds, but a lower stability of principal.
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Risk of Fixed-Income Funds: Fixed-Income Funds are generally more stable in price than funds that invest in stocks. Within the fixed-income category, funds vary greatly in their stability of principal and in their dividend yields. High-yield funds, which seek to maximize yield by investing in lower-rated bonds of longer maturities, entail less stability of principal than fixed-income funds that invest in higher-rated but lower-yielding securities.
Some fixed-income funds seek to minimize risk by investing exclusively in securities whose timely payment of interest and principal is backed by the full faith and credit of the U.S. Government. These include securities issued by the U.S. Treasury, the Government National Mortgage Association ("Ginnie Mae" securities), the Federal National Mortgage Association ("Fannie Maes")and Federal Home Loan Mortgage Corporation ("Freddie Macs"). All are backed by pools of mortgages.
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. Debt securities are particularly vulnerable to credit risk and interest rate fluctuations. Interest rate increases can cause the price of a debt security to decrease; "junk bonds" are less sensitive to this risk than are higher-quality bonds.
Suitability of Fixed Income Funds: Fixed-income funds are suitable for investors who want to maximize current income and who can assume a degree of capital risk in order to do so. Again, carefully read the prospectus to learn if a fund's investment policy with respect to yield and risk coincides with your own objectives. An investment in this fund is not a bank deposit. It is not FDIC-insured or government-endorsed.
Past performance is no guarantee of future results.
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