Seminar Number
Understanding the Lingo of Mutual Funds
Presenters Name
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Disclaimer
• The information in this presentation is for educational purposes only and is not intended to be a recommendation to purchase or sell any of the stocks, mutual funds, or other securities that may be referenced. The securities of companies referenced or featured in the seminar materials are for illustrative purposes only and are not to be considered endorsed or recommended for purchase or sale by BetterInvesting™ National Association of Investors Corporation (“BI”) or the National Investors Association, its volunteer advisory board (“BIVAB”). The views expressed are those of the instructors, commentators, guests and participants, as the case may be, and do not necessarily represent those of BetterInvesting™ orBIVAB. Investors should conduct their own review and analysis of any company of interest before making an investment decision.
• Securities discussed may be held by the instructors in their own personal portfolios or in those of their clients. BI presenters and volunteers are held to a strict code of conduct that precludes benefiting financially from educational presentations or public activities via any BetterInvesting programs, events and/or educational sessions in which they participate. Any violation is strictly prohibited and should be reported to the President of BetterInvesting or the Manager of Volunteer Relations.
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Presenter
• Background
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BetterInvesting Principles
• Invest on a regular basis• Reinvest all earnings, dividends,
interest, and profits• Invest in good quality growth
companies and equity mutual funds
• Diversify your portfolio
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BetterInvesting Mutual Fund Tools
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Core Insight
“Everyone has the
brain power to follow
the stock market. If you
made it through fifth
grade math, you can do
it.”
– Peter Lynch
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What are Mutual Funds?
•What are mutual funds•The advantages•The disadvantages•Terms used with mutual funds
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What are Mutual Funds
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What are Mutual Funds?
• When you invest in a fund your money is pooled with all other investors…you then become a shareholder
• YOUR money is managed by a professional or team of professionals…who make ALL portfolio investment decisions for you
• The value of your shares (net asset value) increase or decrease based on the value of the investments the fund manager(s) makes
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Advantages of Mutual Funds
• Diversification• Professional
Management• Convenience• Selection
• Liquidity• Concise
Information• Protection• Only thing
offered in some retirement plans
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Disadvantages of Mutual Funds
• NO Guarantees• Is Management Investing for the
Long Term• Over Diversification • Fees, Fees and more Fees• Capital Gains• Few options in some retirement
plans
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Terminology
Portfolio Assets – Liabilities = NAVTotal # of Shares
Example: $10,000,000 - $100,100 = $9.90 1,000,000
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Terminology
• Expense Ratio• Total Return %• Portfolio Turnover• Top 10 holdings• Management Record• Front/Back loaded fund• Redemption/Brokerage fee
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Funds and Families
•Fund Types•Risk vs. Reward•Fund Families
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Fund Types
• Money Market Funds• Bond Funds• Balanced Funds• Equity Funds• Actively-Managed• Index
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Risk vs. Reward
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Risk vs. Reward
• Diversification• Balancing your Portfolio to suit
your investment needs and tolerances
• Long-term/Short-term• Aggressive/Conservative• Growth/Income
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Money Market Funds
• Short term securities that pay interest
• Best suited for short term cash needs
• Low risk/ Low return
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Bond Funds
• Classifications• Risk• Maturity• Quality
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Balanced Funds
• Part Equities• Part Bonds• Typical is 60%
Equity/ 40% Bond
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Equity Funds
• Investment objectives
• Investment style
• Size of companies within portfolio
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Investment Objective
• Index Funds• Equity Income
Funds• Growth and
Income Funds• Growth Funds
• Aggressive Growth Funds
• Sector Funds• International
Funds• Global Funds
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Investment Style
•Growth•Value •Blend
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Size of Companies in Fund
• Small – Cap• Mid – Cap• Large - Cap
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Type of Mutual Fund
• Large• Blend
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Fund Families
• Convenience• Accommodating• Responsive• Is there overlap in holdings?
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Determining Overlap
• At www.morningstar .com you can check your mutual funds for overlap
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Investor Awareness
• Reading a Fund’s Prospectus– Describes
•Objectives, Strategies, Fees, Expenses, Performance
•Buying / Selling Information
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Investor Awareness
• Statement of Additional Information
• The Shareholder Report• Reading Mutual Fund Listings• Tax Implications
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In Closing
• Understanding how your money can work for you…
• Is letting your brain do the work rather than our backs; which we will all want as we get older
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References
BetterInvesting Mutual Fund Handbook
www.morningstar.com Web sitewww.investopedia.com Web siteBetterInvesting Wiki ..
http://biwiki.editme.comwww.sec.gov Web site
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opportunity.
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