| Companies offering mutual funds pool cash | | | | low risk, U.S. corporate bonds, U.S. government |
| investments from individuals and organizations to | | | | bonds, and other safe short term securities that |
| purchase a portfolio of stocks, bonds and other | | | | provide stable income from interest and dividends. |
| securities. The securities are expected to | | | | The bonds have short term maturities one |
| appreciate in market value and otherwise produce | | | | quarter of them will mature within one year while |
| income for the mutual funds. Thus, investors, as | | | | most of the remainder will mature in one to five |
| part owners of the portfolio, expect to receive | | | | years. Thus avoiding longer term risk the bonds |
| financial gains as the funds' assets become | | | | also have attractive ratings: 60 percent are rated |
| increasingly valuable. If you invest $1000 in a | | | | as high grade, while 40 percent are investment |
| mutual fund with a portfolio worth $100,000, you | | | | grade for safety of principal. Since it began in |
| own one percent of that portfolio. Investors in no | | | | 1984, the fund has averaged 6.75 percent annual |
| load funds are not charged sales commissions | | | | return on investment. |
| when they buy into or sell out of funds. Investors | | | | Investors seeking higher returns from income and |
| in load funds generally pay commissions of tow to | | | | capital appreciation must generally sacrifice some |
| eight percent. | | | | safety. Typically, these people look to funds that |
| The total assets invested in U.S. mutual funds | | | | hold long term municipal bonds, corporate bonds, |
| grew significantly every year from 1991-2000 to | | | | and common stocks with good dividend paying |
| a total of $7 trillion with the economic down turn | | | | records and potential for market appreciation. |
| and reports of corporate scandals by mid 2002, | | | | Mutual funds that stress preservation of capital, |
| before recovering to $7.5 trillion in 2004. Investors | | | | current income and capital appreciation are called |
| find mutual funds so attractive because it is easy | | | | balanced funds. An example is the balanced fund |
| to find one that needs any chosen financial | | | | offered by T. Rowe Price. |
| objective and it is easy to open an account by | | | | Sixty percent of the fund's assets are |
| email or phone. Remember, first of all, that the | | | | apportioned to common stocks for potential |
| funds vary in their investment goals. Different | | | | market growth in diverse industries, ranging from |
| funds are designed to appeal to the different | | | | utilities to health care to energy. Fixed income |
| motives and goals of investors. | | | | securities for steady income, comprise forty |
| Funds stressing safety include money market | | | | percent of assets. This growth and income |
| mutual funds and other funds that preserve | | | | combination provides a conservative stock |
| capital for and reliably pay current income to fund | | | | market falls. Balanced funds, as compared with |
| holders. These funds seek only modest growth | | | | other mutual funds, are regarded as moderate |
| with little fluctuation in principle value regardless of | | | | risk and moderate return investments. Since it |
| economic conditions. An example is the short | | | | began in 1939, Price's balanced funds are |
| term bond fund offered by T. Rowe Price | | | | averaged at 10.11 percent annual return on |
| investment services. The fund's assets are mainly | | | | investment. |