Mutual Funds

Mutual funds pool the money of many investors who share similar objectives, creating diversified portfolios under professional management. A mutual fund may invest its shareholders’ money in stocks, bonds, or both. Some mutual-fund companies provide families of funds, allowing you to switch your money from one fund to another as your investment objectives change.

Many funds allow an initial investment as low as $250-$1,000 and can provide convenient reinvestment of dividends and capital gains. Many also allow you to take advantage of a proven investment discipline called dollar-cost averaging - investing the same number of dollars at regular intervals.

We offer a variety of stock, bond, and balanced (stock-and-bond) mutual funds from several companies - including municipal-bond funds designed to yield tax-exempt income. We also offer unit investment trusts (UITs), which provide diversified portfolios of municipal, public debt, and equity securities.

Dollar-Cost Averaging
If you have money to invest, when is the best time to invest it? One good answer to this question is, "Invest a little at a time." If you invest the same number of dollars each month, for example, those dollars will buy more shares when prices are low and fewer shares when prices are high. This lowers your overall cost per share.

Dollar-cost averaging is an easy way to take emotions out of the investment decision. Through a systematic investment plan, an automatic monthly or quarterly deduction from your bank account is invested in a mutual fund. Payments as small as $50 each period can help build wealth for your future.

Dollar-cost averaging does not guarantee a profit or protect from loss in declining markets. Before starting a program of dollar-cost averaging, consider whether you can continue investing regularly when prices are low.

Reinvesting Distributions
Your mutual fund will normally pay income or capital-gains distributions at least once a year. Instead of taking these relatively small amounts in cash, you can have them automatically reinvested - increasing your number of shares and helping your money grow faster.

Ten Good Reasons to Invest in Mutual Funds:

1. The expertise and research capabilities of full-time investment professionals to manage the securities in the funds.
2. Portfolio diversification among a variety of securities. This broad exposure helps reduce your risk of loss from problems with a single issuer.
3. A broad choice of investment objectives, from conservative to aggressive, which enables investors to own one fund or a mix of funds with varying objectives and styles.
4. Transaction costs are reduced by well-managed funds buying and selling large blocks of shares on behalf of thousands of investors at once, versus buying and selling individual securities on your own.
5. Ready liquidity of shares, which are immediately convertible into cash at the current net asset value, and ease of exchange within a fund family as investment conditions and personal circumstances change. Investment returns and principal value fluctuate so that an investors shares when redeemed may be worth more or less than their original cost
6. High recognition value because mutual funds are considered the most popular and mainstream method of investing for individuals and institutional investors.
7. You can target growth opportunities with specialty or sector funds, where investors can choose specific industries and the fund manager can pick the stocks. Sector and/or specialty funds may have higher risks since they tend to be less diversified.
8. Published records of performance and close monitoring, with fund prices published daily in major newspapers.
9. Regular account statements detailing dividends and capital gains reinvested in additional shares.
10. Low minimum investments and the ability to dollar-cost average - an effective strategy that can help you make the most of your investment dollars.

Mutual Fund Pricing Options
Mutual funds offer a flexible selection of pricing options: Class A, Class B, and Class C shares.

Class A shares are sold with an up-front sales charge, which declines as the investment amount increases. For many shareholders - especially those with significant account balances - this remains the most cost-effective way to own mutual fund shares.

Class B shares have no up-front sales charge but have higher expenses than Class A shares. You may pay a fee if you sell shares within six years of purchase. These shares convert to Class A shares after eight years, with lower expenses and no redemption fee.

Class C shares do not have an up-front sales charge, but investors are subject to a 1% contingent deferred sales charge on shares sold within 12 months of purchase. In addition, investors pay higher expenses than on Class A shares.

Speak with your Financial Advisor to see which type of shares would be right for you and your investment goals.

Types Of Mutual Funds Available
A mutual fund pursues a specific investment objective such as long-term growth or current income on behalf of thousands of investors. While mutual funds have many investment objectives, they generally fall into five basic categories:

• Growth Funds
  Growth funds aim at maximum capital appreciation through a portfolio of equities, while dividends are secondary. Funds in this group include aggressive growth funds, growth funds, and sector funds. Aggressive growth funds offer the greatest return potential, but they also incur the highest risk.
  
• Growth and Income Funds
  Seeking total return through a combination of current income and capital appreciation, these funds invest in dividend-paying stocks and sometimes include fixed-income securities for relative principal stability. Because the growth element is tempered somewhat by the emphasis on dividends, these funds offer a more moderate level of risk and a correspondingly moderate level of potential return.
• Hybrid Funds
  These funds normally invest in a mix of equity and fixed-income securities to balance current income, total return, and capital preservation. The types of hybrid funds include asset-allocation funds, balanced funds, and flexible-portfolio funds. Since their assets are very diversified among multiple asset classes, these funds tend to be the most conservative long-term funds that invest in equities.
• Bond Funds
  Bond funds invest in debt securities in order to provide taxable or tax-exempt current income. Bond prices vary inversely with interest rates: as rates go up, bond prices go down; as rates go down, bond prices go up. Longer-term bonds are more affected by interest-rate swings than are shorter-term bonds. As a result, bond-fund volatility depends on the quality and maturity of underlying bonds.
• Money-Market Funds
  These funds invest in high-quality, short-term debt securities with an average maturity of 90 days or less. Money-market funds normally seek the highest level of income - sometimes free from taxation - consistent with preservation of capital. An investment in shares of a money-market fund is not insured or guaranteed by the FDIC or any other government agency.

Mutual funds are sold by prospectus. The prospectus contains detailed information about the particular mutual fund's goals, objectives, investment style, charges, and expenses. A prospectus for a particular mutual fund can be obtained from R. Seelaus and should be read carefully before you invest.

Investors should realize that return and principal value of shares in a mutual fund, other than a money-market mutual fund, will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Investors should also remember that funds whose investments are concentrated in a specific sector may be subject to a higher degree of market risk than funds whose investments are diversified.

Money-market mutual funds seek to preserve the value of a shareholder's investment at $1.00 per share, but it is possible to lose money by investing in a money-market mutual fund.