What is a Mutual What is a Mutual Fund?Fund?

Brings groups of investors Brings groups of investors togethertogether

Actually buying shares of the Actually buying shares of the fundfund

Number of shares depend Number of shares depend upon investorsupon investors

Net Asset Value (NAV) issuesNet Asset Value (NAV) issuesData Source: Morningstar Investing Classroom

Mutual Fund Mutual Fund BenefitsBenefits

Easy to buy and sellEasy to buy and sellFinancial AdvisorsFinancial AdvisorsDirectly through fund familyDirectly through fund familyFund Supermarkets (e.g. Fund Supermarkets (e.g. 401k)401k)

Regulated and Professionally Regulated and Professionally managedmanaged

Data Source: Morningstar Investing Classroom

Quick QuizQuick Quiz Investing in a stock mutual Investing in a stock mutual

fund does NOT offer youfund does NOT offer youA.A. Indirect ownership of a group Indirect ownership of a group

of companiesof companiesB.B. Regulation by the SECRegulation by the SECC.C. An insured investmentAn insured investment

Answer is “C”Answer is “C”Data Source: Morningstar Investing Classroom

Quick QuizQuick Quiz A fund’s price per share is A fund’s price per share is

called its:called its:A.A. Stock priceStock price

B.B. Net Asset Value (NAV)Net Asset Value (NAV)

C.C. Initial InvestmentInitial Investment Answer is “B”Answer is “B”Data Source: Morningstar Investing Classroom

Quick QuizQuick Quiz Who owns Fidelity Magellan Who owns Fidelity Magellan

Fund?Fund?A.A. FidelityFidelity

B.B. Fidelity Magellan’s Board of Fidelity Magellan’s Board of DirectorsDirectors

C.C. Fidelity Magellan’s shareholdersFidelity Magellan’s shareholders Answer is “C”Answer is “C”Data Source: Morningstar Investing Classroom

Quick QuizQuick Quiz Which of the following statements is Which of the following statements is

false?false?A.A. When you own a fund, you own all the When you own a fund, you own all the

securities in that fund; when you sell securities in that fund; when you sell the fund, the fund transfers ownership the fund, the fund transfers ownership of those securities to youof those securities to you

B.B. When you own a fund, you pay a When you own a fund, you pay a manager to choose securities for youmanager to choose securities for you

C.C. You can sell a closed fund, but you You can sell a closed fund, but you cannot buy onecannot buy one

Answer is “A”Answer is “A”Data Source: Morningstar Investing Classroom

Quick QuizQuick Quiz All mutual funds registered All mutual funds registered

through the Investment Act of through the Investment Act of 1940 increase the number of 1940 increase the number of shares by IPO’s, secondary shares by IPO’s, secondary offerings, and share repurchases.offerings, and share repurchases.

A.A. TrueTrueB.B. FalseFalse

Answer is “B”Answer is “B”

Data Source: Morningstar Investing Classroom

Coming Next:Coming Next: Mutual fund fees and taxesMutual fund fees and taxes Down the road: Down the road:

Mutual funds vs. I-sharesMutual funds vs. I-shares Best mutual funds of 2002Best mutual funds of 2002 ……and much, much more!and much, much more!

Data Source: Morningstar Investing Classroom