FINANCIAL TOOLS AND RESOURCES

Market Volatility and Diversification

How a Fund is Diversified Matters

For a fund (other than a money market fund) to qualify as "diversified," 75% of the fund's portfolio must be invested so that no more than 5% of the total portfolio is invested in any one company. The 1940 Investment Company Act also stipulates that the 5% cannot control more than 10% of that company's outstanding stock. The remaining 25% may be invested in any way as long as it complies with the fund's investment objectives and strategies. It would be possible to invest that entire 25% portion in one company.

Money Market Fund Guidelines

Money market funds have even more stringent guidelines than other mutual funds. The State Farm® Money Market Fund must invest its assets so that no more than 5% are invested in any one company. The assets may only be used to purchase short-term securities (13-months or less to maturity) such as commercial paper, repurchase agreements and negotiable CDs.

Money market funds are limited to purchasing securities that are rated highly by a nationally recognized statistical rating organization.

However, the financial difficulties of one company, country, and/or sector could affect the fund net asset value. The difficulties in one sector of the economy may cause a ripple effect that creates a downturn of the securities markets in general.

Our managers attempt to minimize the effects of any downturn in any particular company, country and/or sector by investing in a diverse portfolio.

Risk Disclosures

Investing involves risk, including potential for loss.

Diversification does not assure a profit or protect against loss.

An investment in the Money Market Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.

AP2013/10/1946

Not FDIC Insured

  • No Bank Guarantee
  • May Lose Value