Typically, a fund's objective is to achieve a specific type of return, which is sometimes based on a specific timeframe. To achieve that objective - whether it is long-term growth or capital preservation - the fund managers invest in the securities they believe will provide the best results at the acceptable level of risk.
For example, equity funds might invest based on capitalization. Funds aiming for greater return might invest in small-cap companies, while those looking for a combination of dividend income and growth might invest in the stock of large-cap corporations.
Bond funds, on the other hand, tend to look at the bond's issuer, rating and term to achieve their objectives. A bond fund aimed at capital preservation might invest in short-term Treasuries, while one interested in greater current income might invest in high-yield bonds with longer maturity dates.
Investors should consider the investment objectives, risks, charges, and expenses of a mutual fund carefully before investing. A prospectus contains this and other information. A mutual fund prospectus is available through www.scottrade.com or through a Scottrade branch office. The prospectus should be read carefully before investing