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Mutual Funds |

Strategies

Benefits of mutual fund investing
Mutual funds pool the money of people with similar investment goals, such as seeking to preserve capital, maximize current income, maximize long-term growth, or combine growth and income goals. Professional investment managers then invest these assets in securities that they've carefully researched and analyzed and that they believe will best achieve the fund's objectives.

When you buy shares in a mutual fund, you're not buying individual stocks or bonds, but rather a proportionate share of ownership in the collective portfolio. Some of what the fund earns on its investments are distributed periodically in the form of dividends and/or capital gains. The rest of the earnings increase the fund's net asset value, or your "share price," or if there is a loss, reduce your net asset value. If you eventually sell your shares at a price higher than you paid for them, you'll realize a profit, or capital gain, on which you'll be taxed. If you sell at a lower price than you paid, you'll have a capital loss.

Why use mutual funds instead of buying individual stocks or bonds? Mainly because few people have the resources it takes to amass broadly diversified portfolios on their own — much less the time and expertise it takes to manage them effectively. As pooled investments, however, mutual funds offer key advantages for novice and experienced investors alike.

Diversification
Mutual funds typically are diversified across a wide range of holdings, which means that losses from any single investment shouldn't have a major impact on the portfolio. Diversification can reduce volatility while pursuing returns over the longer term.

Ready Liquidity¹
As a mutual fund investor, you can buy, sell, or exchange shares at the fund's next determined net asset value, which may be more or less than original cost.

Who should invest in mutual funds?
Mutual funds can be an appropriate investment for most individuals. They offer investors the benefits of professional management, diversification and ready liquidity.

Automatic investment/plans
By investing a fixed amount of money in the market on a regular basis, regardless of market conditions, you have a better chance of buying more shares when prices are low, and fewer shares when they are high. This strategy is called Dollar Cost Averaging,² and if you follow this approach over the long term, you'll typically pay a lower average price per share, no matter what the market is doing.

Note: While diversification and professional management can help reduce risk, nothing can guarantee you won't experience losses or investment performance below your expectations. The value of an investment in a mutual fund will fluctuate. Although mutual funds are regulated, they aren't guaranteed or insured by any government agency.

1. When buying fund shares, the NAV of a fund is generally calculated as of the close of trading on the New York Stock Exchange (NYSE) (usually 4:00 p.m. Eastern time) on days the NYSE is open for regular business. When selling shares, the shares are typically sold at the next NAV calculated after an order in proper form is accepted. Keep in mind that orders in proper form must be received before the close of business of the NYSE in order for you to receive that day's NAV.

2. Regular investing does not guarantee a profit or protect against loss in declining markets. Regular investing plans involve continuous investment in securities regardless of fluctuating price levels, and the investor should consider his or her ability to continue making purchases through periods of low price levels.

Investors should consider the investment objectives, risks, charges, and expenses of a fund carefully before investing. Download a prospectus that contains this and other information about a fund, and read it carefully before investing.