Mutual funds are designed to offer flexibility to the investor. You may be interested in purchasing mutual funds if you are looking for an investment option that offers diversification or flexibility in investment styles that reflect your financial needs.

Main Investment Styles

• Growth funds: Seek above-average growth through investments in stocks of companies with strong growth potential. This type of fund is not intended for income.

• Income funds: Seek a steady income stream through bonds or dividend paying stocks.

• Growth and income funds: Seek income as well as long-term growth through a combination of stocks and bonds. Also called balanced funds.

• Stability funds: Seek primarily to preserve capital short-term investments.

Specific Investment Strategies

In addition to a particular investment style, a mutual fund may also have a specific investment strategy: These include the following funds: 

• Bond funds: invest in corporate, government or municipal bonds. These provide steady income. Bond fund values directly to the individual bonds in the fund.

• Equity (stock) funds: Focus on stocks.

• Global funds: Invest in foreign and domestic securities.

• High-yield funds: Seek income by investing 80% or more of portfolio’s assets in bonds rated below BBB (investment grade).

• Index funds: Mirror a market index such as the S&P 500. These include a representative sample of leading companies that reflect the U.S. stock market.

Note: Although the fund seeks to mirror the performance of an index, actual returns may be lower. Fees tend to be lower than other funds because there is less buying or selling (also called low portfolio turnover). Therefore, index funds may be advantageous for those at higher incomes who want to avoid paying additional taxes from capital gains.

• International funds: Invest in companies based foreign markets.

• Lifestyle funds: Focus on funds that respond to the different levels of risk and returns that are suitable for different life stages.

• Money market funds: Invest in short-term investment options that pay interest.                        - Less risky, but pay lower returns. Also called stable-value funds

An investment in a money market fund is not insured by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

• Municipal funds: invest in bonds issued by local and state governments. A major advantage of municipal investing is that the interest earned is free from federal taxation. Municipal bonds may be subject to state, local and alternative minimum tax.

• Socially responsible funds: Invest in companies whose mission is to enhance social and environmental issues.

• Specialty funds: seek capital appreciation by investing at least 65% of assets in equities of a single industry or sector.

• Value funds: invest in stocks that have a low share price in relation to their expected earnings.