Summarized below are certain common types of investment options available to you, along with their principal objectives and features. You should, of course, read the prospectus for each fund you are considering, together with other literature provided by the fund's sponsor. In reading the objectives of each type of fund, keep in mind that there is no assurance those objectives will be met by any given fund.

Fixed Annuities

Under fixed annuities, insurance companies guarantee your principal and a specified rate of future interest. The companies invest in long-term government bonds, corporate bonds, mortgages, real estate, and private loans. These investments lend safety and stability to your account. There may be additional growth, above and beyond the guaranteed rate, from dividends. Dividends can change, so you should expect some variation in the total interest rate over the years. But these changes will generally be small in comparison to money market or other investment funds. Because of the insurance company guarantees, fixed annuities are a good option for those who may be worried about fluctuations in the value of their savings or rate of accrual, or who want to balance variable investments. They provide a base of guaranteed income that people may want as part of their financial plan. Of course, the guarantees are provided only by the insurance companies themselves and not by the University, the U.S. government, or any other entity. Independent agencies issue ratings of insurance companies to help you determine a particular company's financial strength. An "A++" from A.M. Best Co., an "AAA" from Duff & Phelps Credit Rating Co., an "AAA" from Standard & Poor's, or an "Aaa" from Moody's Investors Service means that the company has demonstrated superior stability, claims-paying abilities, sound investments, and financial strength. The following investments are provided by mutual funds and variable annuities.

Money Market Funds

The primary objective of money market funds is stability of price. This means that the share price is managed to remain at $1. The underlying securities in these funds are very short-term in maturity, normally ranging anywhere from one day to one year. Assets are normally invested in debt securities such as Treasury bills, agency bills, certificates of deposit, and foreign money market instruments. Because the maturities of these securities are so short, their underlying value generally does not fluctuate much in reaction to market conditions. As a result, while these funds normally maintain a stable share price, the interest rate will vary. Historically, money market rates have paralleled changes in the inflation rate. Money market funds may be appropriate for investors who can accept little investment risk and for people whose investment time horizon is short. Many investment professionals believe that money market funds have a place in virtually every portfolio because their stability and monthly dividends can balance more aggressive, higher-risk investments. They may also be considered a convenient place to safely hold assets while you evaluate other investment opportunities.

Bond Funds

The objective of bond funds is to offer you the opportunity to earn higher current income than you could earn from investments in money market or growth stock funds. These funds may be invested in government and/or corporate bonds and/or mortgage pools (e.g., Ginnie Maes). Interest, dividends, and/or capital gains are paid monthly or quarterly and will be reinvested in your account. Share prices of these funds will fluctuate; when interest rates fall, bond prices tend to rise, and when interest rates rise, bond prices usually fall. The more aggressive the income fund, the greater the potential range of price risk. Funds that are considered conservative are invested in shorter-term bonds that have high ratings (for example, AAA corporate bonds or federal government issues). Stability of principal may be a priority for these funds. More aggressive "high yields" funds are invested in longer-term securities and/or lower-quality corporate bonds. In return for assuming more risk, these bonds offer potentially higher yields. Income rather than price stability is usually a priority for these funds. They are considered riskier than funds with high-quality ratings. Bond funds are appropriate for investors who are willing to tolerate some price fluctuations; investors who seek higher current income than that earned in money market funds, along with some potential capital gains; and investors who want to be diversified.

Balanced Funds

Balanced funds have a dual objective: capital appreciation as well as current income. Growth in value through participation in the stock market is a priority for these funds. Current income is an objective as well, and is often gained by the funds' dividend yields and potential for long-term growth. Convertible securities, bonds, and preferred stocks that can be exchanged or "converted" into common stock may be important in these portfolios as well. These funds are considered riskier than conservative bond funds because they contain stocks. However, they are generally not as risky as funds that hold only stocks, because dividend and interest income tends to offset or balance the volatility of stock prices. Balanced funds may be appropriate for investors who wish to diversify their portfolios and who wish to participate in the stock market for longer-term growth with current income as well.

Stock Funds

The primary objective of stock funds is capital appreciation. Stock funds generally invest in the common stock of a variety of companies, selected according to the objective of the specific fund. Some stock funds pursue moderate growth and current income through investment in established high-quality companies. Others seek the highest potential for long-term growth through investments in small companies in their formative years or companies that may offer special opportunities for growth. Such opportunities involve the highest amount of risk. Stock funds are appropriate for investors who are willing to tolerate moderate to above-average price risk; who have an investment horizon of at least three years; and who seek high long-term growth of their original investment.