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PROSPECTUS SUPPLEMENT -- January 29, 1996
Managed Retirement
Supplement to Managed Retirement Fund Prospectus (Jan. 29, 1996)
Form No. S-6141 K (1/96)
The fund's prospectus is revised to include the following
information:
Types of fund investments
The fund is a diversified mutual fund that invests in U.S. equity
securities, U.S. and foreign debt securities, international equity
securities and money market instruments. The fund provides
diversification among these major investment categories. The fund
has a market mix that represents the way the fund's investments
will be allocated over the long term. This mix will vary over
short-term periods based on the management team's outlook for the
different markets. The fund may also use derivative instruments.
Some of the fund's investments may be considered speculative and
involve additional investment risks.
Investment policies and risks
The fund allocates its investments generally among four asset
classes: U.S. equities, U.S. and foreign debt securities, foreign
equity securities and cash. It may use derivative instruments and
make investments not in these classes. The portion to be invested
in each class is determined by the investment management team based
on its judgment as to which mix of assets will provide the most
favorable total return. That mix, called the Market Mix, will be
reset every 12 to 18 months.
Day-to-day the asset mix will vary from the Market Mix but will
remain within the ranges described below.
Range Market Mix
U.S. equity securities 25-75% 50%
U.S. and foreign debt securities 10-50 25
foreign equity securities 10-50 25
cash 0-30 0
No more than 15% of the fund's total assets will be invested in
below investment-grade debt securities and no more than 50% will be
invested in foreign securities. The fund seeks to reduce its
overall risk by diversification but its performance will be
affected by many factors. Because of diversification the fund's
investment performance, in certain market conditions, will not be
as great as a fund that invests in only one class of securities.
Debt securities:
The prices of bonds generally fall as interest rates increase and
rise as interest rates decrease. The price of bonds also
fluctuates if the credit rating is upgraded or downgraded. The
price of debt securities below investment grade may react more to
the ability of a company to pay interest and principal when due
than to changes in interest rates. They have greater price
fluctuations, are more likely to experience a default and sometimes
are referred to as "junk bonds". Reduced market liquidity for <PAGE>
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these bonds may occasionally make it more difficult to value them.
In valuing bonds, the fund relies both on independent rating
agencies and the investment manager's credit analysis. Securities
that are subsequently downgraded in quality may continue to be held
and will be sold only when the fund's investment manager believes
it is advantageous to do so.
Debt securities sold at a deep discount:
Some bonds are sold at deep discounts because they do not pay
interest until maturity. They include zero coupon bonds and PIK
(pay-in-kind) bonds. To comply with tax laws, the fund has to
recognize a computed amount of interest income and pay dividends to
shareholders even though no cash has been received. In some
instances, the fund may have to sell securities to have sufficient
cash to pay the dividend.
Foreign investments:
The fund may invest up to 50% of its total assets in foreign
investments.
Money market instruments:
The fund may invest up to 30% of its total assets in short-term
debt securities rated in the top two grades to meet daily cash
needs and if the portfolio management team decides that asset
category is most appropriate.
Form No. S-6141-22 A (1/96)
