Trust & Investments Information Center
By investing in mutual funds, you can put professional money managers to work to help you achieve your financial goals.
Before investing, you’ll want to understand the basics of mutual funds. Simply put, a mutual fund is a company that makes investments on behalf of its shareholders. The fund pools your money from many other people who have similar investment objectives. Professional money managers then take the pool and invest it in securities such as stocks, bonds and money market instruments.
Mutual funds can make money for you in two ways. First, they can pay dividends earned from the funds’ investments. And second, if a security held by a fund is sold at a profit, the fund can pay you capital gains.
As a shareholder, you own a proportionate share of the fund. Each share represents ownership in all the fund’s underlying securities. Funds pay dividends and capital gains in proportion to the number of fund shares owned. Thus, if you invest $1,000, you’ll get the same rate of return as if you invest $10,000.
Types of Mutual Funds
There are funds for investors that may fit just about any investment need.
Growth Funds typically invest in stocks and seek capital growth through price appreciation of the securities held in their portfolios. Their primary aim is to produce an increase in the value of their investments rather than a flow of dividends. Growth funds with a more aggressive focus seek maximum capital gains as their investment objective. These funds may invest in stocks that are somewhat out of the mainstream- such as smaller, lesser-known companies that managers believe possess dynamic potential.
Growth and Income Funds invest primarily in the common stocks of companies with longer track records. These funds seek equities with a higher share value that also maintain a solid record of paying dividends.
International Funds seek growth in their investments and invest primarily in stocks of companies located outside the U.S.
Global Funds typically seek growth in the value of their investments and generally invest in stocks and/or bonds trades worldwide, including the U.S.
Sector or Theme Funds seek to capitalize on the return potential provided by investing primarily in a particular industry or sector of the economy.
Balanced Funds seek income and capital appreciation, which is often achieved by investing in both stocks and bonds.
You should consider a mutual fund’s investment objectives, risks, charges and expenses carefully before investing. Contact your Financial Advisor to request a prospectus, which contains this and other information about a specific mutual fund. Read it carefully before you invest.
Past performance is no guarantee of future results. Investment return and principal value of a mutual fund will fluctuate causing shares, when redeemed, to be worth more or less than their original cost.