Fund Objectives & Categories — Q&A

Capital appreciation — increasing holdings’ value over time, mainly through common stock (and possibly convertible preferred stock or convertible bonds).

Balanced funds hold growth stock AND income securities including bonds. Growth & income funds hold stock only (preferred and dividend-paying common stock).

Only income-producing securities: bonds, preferred stock, and dividend-paying common stock. Capital appreciation is not the primary goal.

Ginnie Mae guarantees qualifying MBS issued by approved private lenders — it does not purchase mortgages. Fannie Mae and Freddie Mac purchase mortgages from financial institutions.

Start aggressive (heavier growth stock allocation) and become more conservative by shifting into fixed-income as the investor ages — reflecting lower risk tolerance with age.

Fixed income securities with one year or less to maturity. Money market funds are low risk, low yield, highly liquid, and priced at a consistent $1.00 per share.

Aggressive growth funds — invest in small-cap and volatile/emerging industry stocks for higher return potential.

Smaller companies have more risk and growth potential. Large-cap growth funds are typically less aggressive and less volatile than small-cap growth funds.

Match the return of a specific index through passive investing — not trying to pick the “best” securities.

A fund that invests across asset classes per a chosen allocation (e.g., 60% stock / 40% bond), either keeping a constant mix or changing it based on market expectations or fund requirements.