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The descriptions of fund categories below are general. If you would like to see the corresponding Morngingstar categories, please see Fund Results on the Investment Performance Results page.
These funds invest in bonds issued by corporations and governments. The risk to principal is higher than in the general accounts. The level of risk will depend on the quality of the bond and the time to maturity. Lower quality bonds and long-term bonds have a higher level of risk with the potential for a higher rate of return. Higher quality bonds and short-term bonds have a lower risk and usually a lower rate of return.
These funds invest in several different categories of investments (e.g., stocks, bonds, short-term money market securities). Generally, these funds have a higher level of risk than fixed income funds with the potential for a higher rate of return.
Hybrid funds include "asset allocation" funds, which have a specific allocation among stock, bond, and short-term investments. This allocation will change depending on market conditions and interest rates.
Another type is a "balanced" fund, which maintains a specific mix of stock, bonds, and short-term investments. This allocation remains fairly stable or changes within a narrow range.
Finally, "income" funds invest in dividend-paying stocks and bonds primarily for the purpose of realizing current income.
The General Accounts are backed by the financial strength and claims-paying ability of the insurance company that offers the accounts. The company promises to pay interest on the principal at a rate stated by the company from time to time that will not decrease below a stated minimum. Some restrict the ability to transfer and withdraw funds. General Accounts are sometimes said to be "guaranteed;" this refers to the assurance of the company that it willl protect the principal and pay interest at the stated rate, based solely on its financial strength and claims-paying ability, rather than on any back-up support by any third party. .
These funds generally keep a stable net asset value while investing in short-term money market instruments that pay a rate of interest that varies with market rates.
These funds invest in the common stock of a variety of companies, selected according to the specific investment objectives of the fund. Stock funds will have a greater principal risk, but they also provide an opportunity for a higher rate of return than other types of investments.
Funds vary by the size (capitalization) of the companies whose stock they purchase and the countries where those companies are located. Funds may invest in large, mid-size, or small companies (large-cap, mid-cap, or small-cap funds). Some funds invest only in U.S. companies (domestic stock funds), in foreign companies (foreign or international funds), or both (global or world funds).
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