Seminar Number Understanding the Lingo of Mutual Funds Presenters Name

Seminar Number

Understanding the Lingo of Mutual Funds

Presenters Name

BETTERINVESTING NATIONAL CONVENTION

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.


Presenter

• Background


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


BetterInvesting Mutual Fund Tools


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


What are Mutual Funds?

•What are mutual funds•The advantages•The disadvantages•Terms used with mutual funds


What are Mutual Funds


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


Advantages of Mutual Funds

• Diversification• Professional

Management• Convenience• Selection

• Liquidity• Concise

Information• Protection• Only thing

offered in some retirement plans


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


Terminology

Portfolio Assets – Liabilities = NAVTotal # of Shares

Example: $10,000,000 - $100,100 = $9.90 1,000,000


Terminology

• Expense Ratio• Total Return %• Portfolio Turnover• Top 10 holdings• Management Record• Front/Back loaded fund• Redemption/Brokerage fee


Funds and Families

•Fund Types•Risk vs. Reward•Fund Families


Fund Types

• Money Market Funds• Bond Funds• Balanced Funds• Equity Funds• Actively-Managed• Index


Risk vs. Reward


Risk vs. Reward

• Diversification• Balancing your Portfolio to suit

your investment needs and tolerances

• Long-term/Short-term• Aggressive/Conservative• Growth/Income


Money Market Funds

• Short term securities that pay interest

• Best suited for short term cash needs

• Low risk/ Low return


Bond Funds

• Classifications• Risk• Maturity• Quality


Balanced Funds

• Part Equities• Part Bonds• Typical is 60%

Equity/ 40% Bond


Equity Funds

• Investment objectives

• Investment style

• Size of companies within portfolio


Investment Objective

• Index Funds• Equity Income

Funds• Growth and

Income Funds• Growth Funds

• Aggressive Growth Funds

• Sector Funds• International

Funds• Global Funds


Investment Style

•Growth•Value •Blend


Size of Companies in Fund

• Small – Cap• Mid – Cap• Large - Cap


Type of Mutual Fund

• Large• Blend


Fund Families

• Convenience• Accommodating• Responsive• Is there overlap in holdings?


Determining Overlap

• At www.morningstar .com you can check your mutual funds for overlap


Investor Awareness

• Reading a Fund’s Prospectus– Describes

•Objectives, Strategies, Fees, Expenses, Performance

•Buying / Selling Information


Investor Awareness

• Statement of Additional Information

• The Shareholder Report• Reading Mutual Fund Listings• Tax Implications


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


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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Documents

Seminar Number Understanding the Lingo of Mutual Funds Presenters Name