Mutual fund Selection

Mutual Fund Rankings:

Mutual fund rankings, ratings or other evaluations of fund performance can provide an important way for you to compare your fund's past performance with other funds. Unfortunately, investors often interpret these rankings as recommendations, or even as projections for future performance, which they clearly are not.

Your best protection is being an informed investor. Request prospectuses from the funds you are considering and read them carefully to understand their goals, risk factors, performance record and procedures for buying and selling shares.

Professional ranking services, financial magazines and investment newsletters are the most prominent sources for this information, but there are others -- and not all present the same information or use the same criteria for evaluating funds. As an investor, you should be aware of how these reports differ and how this information can be used by you in making sound investment choices.

Rankings or ratings provide another piece of important information that can be used in the selection of fund investments, but they should not be used as the only basis for your decisions. You still need to do your homework on the funds you are considering. Identify your goals and evaluate a fund's ability to meet your goals within your investment timeframe and at the level of risk you are able to accept.

All performance rankings and ratings show how a fund has performed in the past and is no guarantee that it will continue to do so. Rankings are a good barometer, however, for determining if a fund has been well-managed over the years, or if it has consistently performed in a particular manner.

Mutual Fund Selection:

Bond Funds:

These funds are suitable for investors in medium to high tax brackets in high tax states who want income with maximum exemption from taxes.

Fixed Income Funds:

Fixed-income funds are suitable for investors who want to maximize current income and who can assume a degree of capital risk in order to do so.

Growth Stock Mutual funds:

They are suitable for growth-oriented investors but not investors who are unable to assume risk or who are dependent on maximizing current income from their investments.

Income Funds:

Income funds have low to moderate stability of principal and moderate potential for current income and growth. They are suitable for investors who can assume some risk to achieve growth of capital but who also want to maintain a moderate level of current income.

International Investing Mutual Funds:

While international offer opportunities for growth and diversification, this type of funds do carry some additional risks over domestic funds and should be carefully evaluated and selected according to the investor's objectives, timeframe and risk profile. Because most international funds are considered to be growth stock mutual funds, investors must be willing to assume the risk of potential loss in value in the hope of achieving substantial gains.

Money Market Mutual Funds:

Money market Mutual funds are suitable for conservative investors who want high stability of principal and moderate current income with immediate liquidity.

Sector Funds:

Sector funds are suitable for investors seeking to invest in a particular industry who can monitor industry performance regularly and alter investment strategies accordingly.