What is a Mutual Fund?

 Brings groups of investors together

 Actually buying shares of the fund

 Number of shares depend upon

investors
 Net Asset Value (NAV) issues

Data Source: Morningstar Investing Classroom

 Mutual Fund Benefits
 Easy to buy and sell
 Financial Advisors

 Directly through fund family

 Fund Supermarkets (e.g. 401k)

 Regulated and Professionally

managed
Data Source: Morningstar Investing Classroom
 Quick Quiz
 Investing in a stock mutual fund
does NOT offer you
A. Indirect ownership of a group of
companies
B. Regulation by the SEC
C. An insured investment
 Answer is “C”
Data Source: Morningstar Investing Classroom
 Quick Quiz
 A fund’s price per share is called
its:
A. Stock price
B. Net Asset Value (NAV)
C. Initial Investment
 Answer is “B”
Data Source: Morningstar Investing Classroom
 Quick Quiz
 Who owns Fidelity Magellan Fund?
A. Fidelity
B. Fidelity Magellan’s Board of Directors
C. Fidelity Magellan’s shareholders
 Answer is “C”

Data Source: Morningstar Investing Classroom

 Quick Quiz
 Which of the following statements is false?
A. When you own a fund, you own all the
securities in that fund; when you sell the fund,
the fund transfers ownership of those
securities to you
B. When you own a fund, you pay a manager to
choose securities for you
C. You can sell a closed fund, but you cannot
buy one
 Answer is “A”
Data Source: Morningstar Investing Classroom
 Quick Quiz
 All mutual funds registered through the
Investment Act of 1940 increase the
number of shares by IPO’s, secondary
offerings, and share repurchases.
A. True
B. False
 Answer is “B”
Data Source: Morningstar Investing Classroom
 Coming Next:
 Mutual fund fees and taxes
 Down the road:
 Mutual funds vs. I-shares
 Best mutual funds of 2002
 …and much, much more!

Data Source: Morningstar Investing Classroom