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Diversification

Strategize. Diversify. Get Rewarded
Diversification is a powerful investment principle that can reduce risk by spreading your money among different investments.
For example, individual stocks may perform differently under the same market conditions. By investing in a number of different stocks, you can blunt the effect of a decline in the value of one particular stock.
Investing in a stock mutual fund, instead of one specific stock, is a way to diversify in a single investment.
Diversification
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Diversification can reduce risk by spreading your money into different investments.
But you can take diversification, and its benefits, even further.
Stocks make up one major asset class. Bonds make up another, and cash instruments a third.
Different asset classes have generally performed differently under the same market conditions. By diversifying among the major asset classes, you can reduce the risk of putting all your investments in just one asset class.
Many different types of funds are available to meet your needs :
Because the choice of mutual funds mirrors the financial market place, you can find virtually any kind of investment. Here are brief descriptions of the major fund categories.
Stock Funds
Stock Funds invest in the stocks of various types of companies. Traditionally, stocks have kept pace with the economy and represent your best protection against inflation. Some stock funds, such as growth, aggressive growth and value funds are based on a specific investment strategy. Others, such as small cap, mid cap, large cap and blue chip, choose securities determined by the size or financial status of the selected companies. Index funds are funds that attempt to replicate the composition of industry benchmarks, such as the S&P 500.
Bond Funds
Bond Funds seek to deliver steady income from a portfolio of bonds. Because of the added risk from price fluctuation inherent in longer-term bonds, yields vary based on the term of the bonds in the fund's portfolio. Short-term bond funds are considered safer, but tend to pay lower yields than riskier long-term bond funds. Intermediate bond funds offer higher returns than short-term bond funds with less risk than longer-term bond funds.
Hybrid Funds
Hybrid Funds combine different types of securities in one fund to meet varying objectives. For instance, a growth and income fund might invest in both stocks and bonds.
Asset Allocation Funds
Asset Allocation Funds combine securities from different asset classes in varying proportions to help manage different levels of risk and return. An example of this type is CitiSelect Portfolios, a family of mutual funds available exclusively through Citibank. Each portfolio invests in a different mix of stocks, bonds and cash in seeking different investment objectives.
International and Global Funds
These funds invest in securities issued in other countries. International funds invest only in foreign securities, while global funds invest in both foreign and U.S. securities. Many other mutual funds of all types may invest a certain percentage of their portfolio in international investments. Investors should see the risk factors section in the fund's prospectus for details regarding international investing.
Money Market Funds
Unlike all other types of mutual funds whose share prices fluctuate, money market funds attempt to maintain a stable share price of $1. To try to accomplish this, they invest in very short-term securities and commercial paper, which have less price fluctuation. Money market funds are intended as a parking place for money between investments and a place to maintain cash reserves. Over the long term, they do not keep pace with inflation. Different types of money market funds invest in taxable, tax exempt and U.S. Government securities. While money market mutual fund managers strive to maintain a stable net-asset value, the funds are not federally insured and there is no guarantee that a stable net-asset value will be maintained.
For more complete information on mutual funds, including sales and distribution charges and other expenses, ask for a prospectus. Please read it carefully before you invest or send money.
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