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CHAPTER 5

stocks and bonds. However, because they aren’t required to have spe- cific percentages, they are their own category, rather than being lumped together with asset allocation funds, The goal of a balanced fund is to preserve the principal, while making reasonable returns, and paying income, based upon dividends. They also seek to achieve long-term growth while keeping the principal preservation and cur- rent income values intact. While the percentages of the underlying investments may be changing on a regular basis, the prospectus for a balanced fund will contain the most recent holdings and stock-to-

bond breakdowns.

FLEXIBLE PORTFOLIO FUNDS.

Flexible portfolio funds are essen-

tially balanced funds except they change their asset allocation more quickly, and are permitted to hold 100 percent of any one given asset

at any time.

I N C O M E - M I X E D F U N D S .

Through investing in government and

corporate bonds, as well as common stock that pays reasonably high, consistent dividends, income-mixed funds strive to provide their shareholders with current income at a relatively high level.

Taxable Bond Funds There are times when investors want the stability of a bond, but don’t want to hold it to maturity, nor do they want to bear the risk of the bond being called. (We discuss bonds in depth in Chapter 7.) In order to achieve this, they invest in bond funds. These funds are made up of the different types of taxable bonds, and may be more heavily weighted in one type of bond over another. Since the investor is a shareholder of the fund, rather than an individual bond, there are no fixed maturity dates. The investor, therefore, may hold onto the fund in perpetuity, while the underlying bonds mature and the fund pur-

chases new ones.

U.S. TREASURY BOND FUNDS.

Investors looking for an invest-

ment that is relatively safe and income producing, look towards U.S. Treasury bond funds. These funds invest primarily in U.S. Treasury bonds, and are, thus, considered to be relatively safe. The underlying bonds have a variety of maturity dates, and due to the nature of Trea-

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