CCP 01-03-1995 - Laserfiche WebLink

Home Browse Search

.. . ~ [NVESTMENT OBJECTIVE AND POUCIES - The Fund., invesrment objective ser forrh below cannor be changed wirhour shareholder approval. The investment policies and techniques employed in pursuit of the Fund's investment objective may be changed without shareholder appro\'al. unless otherwise nored. Investment Objective The Fund's investment ooiecrive is;1 high level oi current income consisrem with preservation of capitaL In view of rhe risks inherent in an investment in securities. there is no assuri1nce th::u this objective will be - achieved. The Fund may be subject TO significanr vobriliry-See "Investment Policies and Techniques," - below. Investment Policies .and Techniques - As a fundamenral policy which may nor be changed wirhout shareholder approval, rhe Fund may invesr - only in securities which are issued or guaranteed as to paymenr of principal and interest b~. the U.S. . government or its agencies or instrumentalities e'U.$. Government securities U), and in repurchase agreements fuIiy secured by such securities. The Fund im'ests a significant porrion of irs assets in mortgage. . related U.S. Government securities, which include deri\'ative morrgage securities. The market experience of 1994 ha.s sho\\'ll that certain derivative mortgage securities mar be exrremeJy sensitive to changes in interest rates and in prepayment rates on the underlying mortgage assets and, as a result, the prices of such securities may be highly volatile. .. The U.S. Governmenr securities in which rhe Fund inves!S are issued or guaranreed as to paymeor of principal and interest by the U.S. Government or itS agencies or instrumentalities. The current market prices for such securities are not guaranteed and wiIl /Iuauaro. The Fund may invesr in direa obligations of rhe U.S. . Treasury, such as U.S. Treasury bills, nores and bonds, and in obligations of U.S. Governmenr agencies or instrumentalities, including, bur nor limired ro, Federal Home Loan Banks, me Farmers Home Administrarion, Federal Farm Credir Banks, rhe Federal National Morrgage Association, the Governmem . National Morrgage Association, rhe Federal Home Loan Morrgage Corporation, rhe Financing Corporarion and rhe Srudeor Loan Marketing Association. Ob1igarions of U.S. Governmeor agencies or insrrumenraliries are backed in a variery of ways by rhe U.S. . Government or its agencies or instrumentalities. Some of these:: obligations, such as Government National Mortgage Association morrgage.backed securities, are backed by the full faith and credit of the u.s. Treasury. Orhers. such as obligarions of rhe Federal Home Loan B3nks. are backed by rhe righr of rhe issuer ro borrow from rhe Treasury. Srill orhers, such as rhose issued by rhe Federal Narional Morrgage Associarion, are backed . by the discretionary authority of the U.S. Governmenr [0 purchase cerrain obligations of the agency or instrumentaliry. Finally. obli~3rions of other agencies or instrumentalities are backed only by the credit of the .:1genc~- or instrumentaliry issuin;: the' nhli~arions. . v'olati/ity. Hisroricall)\ rhe Fund has arrempred ro mainrain an average weighred life of irs porrfolio securiries (orher rhan inverse floating CMOs) ranging from 3pproximareJy rhree ro five years as parr of an overall srraregy ro limir rhe volariliry of rhe Fund. The volariliry of a securiry is rhe sensiriviry of rhe securiry's . price to chnnges in interest Tates. In the wake of the market developments which occurred in 1994, the Fund's CUrrenr projmed vOI31i1iry is significanrly Il=rer than irs targered range, and rhere can be no assurance rhar rhe Fund's projecred volariliry will move h.1ck wirhin irs rargered range in rhe near furure. The . Fund invests .a significant porrion of its assets in mort~:'Ige.related securities, the <1vernge lire of which is determined using m:nhemaricnl models that incorporate prep.:Jyment assumptions and other factors that invoke estimates of future economic and mnrker conditions. These estimates may vary from actual funlre . results. porricui.Jrly during periods of extreme m3rkct volatihry. In .addition, under certain market I 6 .