Mutual Fundamentals

1
Mutual Fundamentals
2
Mutual Funds

• Professional management
• Competitive returns
• Simplicity
• Diversification

3
What is a mutual fund and how does it work?

• Preservation of Capital Liquidity
• Income
• Balance
• Growth

4
Buying and Redeeming Mutual Funds

• Direct from company
• From stockbroker

5
Mutual Fund Expenses

• Found in prospectus
• Sales charges
• Load and no-load funds
• Redemption fees
• Management fees
• 12b-1 fees

6
Income and Distributions

• Dividends
• Capital Gains
• Share Price Increases (paper profit)

7
Types of Funds

• Growth Funds
• Bond Funds
• Money Market Funds
• Hybrid Funds
• Other

8
Dollar Cost Averaging
Date Investment Share Price Shares
Jan 2005 200 10 20
Feb 200 8 25
Mar 200 5 40
Apr 200 4 50
May 200 5 40
June 200 10 20
TOTAL 1200 42 195
Ave share cost 1200/195 6.15
Ave share price 42/6 7
9
Advantages and Disadvantages of Mutual Funds

•  Expenses
• Lack of Control
• Price Uncertainty

• Management
• Diversification
• Affordability
• Liquidity

10
Are Mutual Funds Right for YOU?

• Know your investment goals
• Is there a place for mutual funds in YOUR
  portfolio?
• Where to go with problems