Student Learning Objectives
  A.What are mutual funds, ETF’s?
  B.Open-ended vs. Closed-end 
   funds, Load vs. No Load funds
  C.Net Asset Values (NAV)
  D.Evaluating mutual fund 
   performance
  E.Managing Mutual Fund 
   Investments
           Mutual Funds
   A.Mutual funds pool funds from many 
    investors to buy securities
   B.Mutual funds have grown in importance
   C.Open-end vs. Closed-End Funds 
    1. Open-ended mutual funds continually issue and 
     redeem shares at NAV
    2. Closed-end funds issue shares once. Investors must 
     then sell (or buy) in secondary markets
   D.Net asset value (NAV) of a fund is the 
    market value of the fund’s assets less any 
    liabilities, divided by the number of shares 
    outstanding at that time
              Mutual Funds
   E.Advantages of mutual funds
    1. Diversification
    2. Smaller minimum investments to access large diversified portfolio
    3. Professional management
   F. Disadvantages of mutual funds
    1. Most funds underperform relative to the S&P 500 Index
    2. Fund expenses reduce returns
    3. Too many to choose from – adverse selection problem
    4. Many funds have minimum holding periods (to avoid trading fees / 
      penalties)
   G.Exchange Traded Funds (ETF’s)
    1. Diversified portfolios of securities traded like ordinary stocks: they are 
      continuously marked-to-market.
    2. Portfolio objective similar to regular mutual funds: indexed, growth, 
      income, sector or country, international, emerging markets, etc.
         Types of Funds
  A.Overall investment objectives
    1. Growth, Income, Growth & Income, 
      etc….
  B.Types of securities purchased
    1. Equity funds, money market funds, 
      bonds
  C.Load funds versus no-load funds
    1. Load charges are assessed when 
      shares are purchased (front-end) or 
      sold (back-end)
    Services Offered by Mutual Fund 
         Companies
  A.Automatic reinvestment of 
   distributions
  B.Automatic investment plans
  C.Check writing (money market 
   funds)
  D.Exchange privileges within fund 
   families
  E.Periodic statements