          
          
          There are over  4,300  different  mutual  funds in existence
          today.   The  Investment  Company  Institute,   a   national
          association  of mutual funds and other investment companies,
          classifies these funds into 21 major categories according to
          their investment objectives.
          
          We have listed below a brief description of each category.
          
          
                             ====================
          
          
          Aggressive Growth Funds:
          
          Seek maximum capital gains as  their  investment  objective.
          Current income is not a significant factor.  Some may invest
          in  stocks  of  businesses  that  are  somewhat  out  of the
          mainstream, such  as  fledgling  companies,  new industries,
          companies fallen on hard times,  or  industries  temporarily
          out  of  favor.   Some  may  also use specialized investment
          techniques such as option writing or short-term trading.
          
          Balanced Funds:
          
          Generally have  a  three-part  investment  objective:  1) to
          conserve the investors' initial principal, 2) to pay current
          income, and 3) to promote long-term growth of both principal
          and income.  Balanced funds have a portfolio mix  of  bonds,
          preferred stocks, and common stocks.
          
          Corporate Bond Funds:
          
          Like  income funds, seek a high level of income.  They do so
          by buying bonds  of  corporations  for  the  majority of the
          fund's portfolio.  The rest of the portfolio may be in  U.S.
          Treasury bonds or bonds issued by a federal agency.
          
          Flexible Portfolio Funds:
          
          May  be  100%  invested  in  stocks OR bonds OR money market
          instruments, depending  on  market  conditions.  These funds
          give  the  money  managers  the  greatest   flexibility   in
          anticipating or responding to economic changes.
          
          GNMA or Ginnie Mae Funds:
          
          Invest  in  mortgage  securities  backed  by  the Government
          National Mortgage Association  (GNMA).   To qualify for this
          category, the majority  of  the  portfolio  must  always  be
          invested in mortgage-backed securities.
          
          Global Bond Funds:
          
          Invest  in  the  debt  securities of companies and countries
          worldwide, including the U.S.
          
          Global Equity Funds:
          
          Invest in securities  traded  worldwide,  including the U.S.
          Compared to direct investments, global funds offer investors
          an  easier  avenue  to   investing   abroad.    The   funds'
          professional   money   managers   handle   the  trading  and
          recordkeeping  details   and   deal   with   differences  in
          currencies, languages, time zones, laws and regulations, and
          business customs and  practices.   In  addition  to  another
          layer  of diversification, global funds add another layer of
          risk - exchange-rate risk.
          
          Growth Funds:
          
          Invest in the  common  stock  of well-established companies.
          Their primary aim is to produce an increase in the value  of
          their  investments  (capital  gains)  rather  than a flow of
          dividends.   Investors  who  buy  a  growth  fund  are  more
          interested in seeing  the  fund's  share  price rise than in
          receiving income from dividends.
          
          Growth and Income Funds:
          
          Invest mainly in the common stock of companies that have had
          increasing share value but also a  solid  record  of  paying
          dividends.   This type of fund attempts to combine long-term
          capital growth with a steady stream of income.
          
          High-yield Bond Funds:
          
          Maintain  at  least   two-thirds   of  their  portfolios  in
          lower-rated corporate bonds (Baa or lower by Moody's  rating
          service  and  BBB  or  lower  by  Standard  &  Poor's rating
          service).  In return for a generally higher yield, investors
          must bear a  greater  degree  of  risk than for higher-rated
          bonds.
          
          Income-Bond Funds:
          
          Seek a high level of current income for  their  shareholders
          by  investing  at  all  times  in  a  mix  of  corporate and
          government bonds.
          
          Income-Equity Funds:
          
          Seek a high level  of  current income for their shareholders
          by investing primarily in  equity  securities  of  companies
          with good dividend-paying records.
          
          Income-Mixed Funds:
          
          Seek  a  high level of current income for their shareholders
          by investing in  income-producing securities, including both
          equities and debt instruments.
          
          International Funds:
          
          Invest in equity securities of companies located outside the
          U.S.  Two thirds of their portfolios must be so invested  at
          all times to be categorized here.
          
          Long-term Municipal Bond Funds:
          
          Invest  in  bonds  issued  by  states  and municipalities to
          finance  schools,  highways,  hospitals,  airports, bridges,
          water and sewer works, and other public projects.   In  most
          cases, income earned on these securities is not taxed by the
          federal  government,  but may be taxed under state and local
          laws.  For  some  taxpayers,  portions  of  income earned on
          these securities may be subject to the  federal  alternative
          minimum tax.
          
          Precious Metals/Gold Funds:
          
          Maintain   two   thirds  of  their  portfolios  invested  in
          securities associated with gold,  silver, and other precious
          metals.
          
          State Municipal Bond Funds - Long-term:
          
          Work just like other long-term municipal bond  funds  except
          their  portfolios  contain  the issues of only one state.  A
          resident of that state has the advantage of receiving income
          free of both  federal  and  state  tax.  For some taxpayers,
          portions of income from  these  securities may be subject to
          the federal alternative minimum tax.
          
          State Tax-exempt Money Market Funds:
          
          Work just like other tax-exempt money  market  funds  except
          their  portfolios  contain  the issues of only one state.  A
          resident of that state has the advantage of receiving income
          free of both  federal  and  state  tax.  For some taxpayers,
          portions of income from these securities may be  subject  to
          the federal alternative minimum tax.
          
          Taxable Money Market Funds:
          
          Seek  to  maintain  a stable net asset value by investing in
          the short-term,  high-grade  securities  sold  in  the money
          market,  such  as  treasury  bills,  bank  certificates   of
          deposit,  and commercial paper (the short-term IOUs of large
          U.S.  corporations).  Money  market  funds limit the average
          maturity of their portfolio to 90 days or less.
          
          Tax-exempt Money Market Funds - National:
          
          Invest  in  municipal  securities  with   relatively   short
          maturities.   Investors who use these funds seek investments
          with minimum risks.  For  some taxpayers, portions of income
          from certain of these  securities  may  be  subject  to  the
          federal alternative minimum tax.
          
          U.S.  Government Income Funds:
          
          Invest in a variety of government securities.  These include
          U.S.   Treasury  bonds, federally guaranteed mortgage-backed
          securites, and other government notes.
          
          
          
          
                             *** End of Chapter ***
                             
          
          
          
