COMMON STOCK FUNDS

Apart from the money market funds, common stock funds make up the largest and most important fund group. Some common stock funds take more risk and some take less, and there is a wide range of funds available to meet the needs of different investors.

When you see funds "classified by objective", the classifications are really according to the risk of the investments selected, though the word "risk" doesn't appear in the headings. "Aggressive growth" or "maximum capital gain" funds are those that take the greatest risks in pursuit of maximum growth. "Growth" or "long-term growth" funds may be a shade lower on the risk scale. "Growth-income" funds are generally considered middle-of-the-road. There are also common stock "income" funds, which try for some growth as well as income, but stay on the conservative side by investing mainly in established companies that pay sizable dividends to their owners. These are also termed "equity income" funds, and the best of them have achieved excellent growth records.

Some common stock funds concentrate their investments in particular industries or sectors of the economy. There are funds that invest in energy or natural resource stocks; several that invest in gold-mining stocks, others that specialize in technology, health care, and other fields. Formation of this type of specialized or "sector" fund has been on the increase.

There are several types of mutual funds other than the money market funds and common stock funds. There are a large number of bond funds, investing in various assortments of corporate and government bonds that invest in growing companies (like software development). There are tax-exempt bond funds, both long-term and shorter-term, for the high-bracket investor There are "balanced" funds which maintain portfolios including both stocks and bonds, with the objective of reducing risk And there are specialized funds which invest in options, foreign securities, etc.