1. What is a Mutual Fund Mr. Coronado

2. Definition of Mutual Fund  A Collection of stocks, bonds & other securities owned by a group of investors.  Its managed by a professional investment advisory firm.  Firm  Collects $ from investors, pools it & invests it.

3. Operations  Mutual Fund Manager  Works with a team of analysts, decides which stocks & securities to include in fund  Investing in 100 or more securities

4. Risk with MF  Mutual Funds (MF) fit the needs of a variety of risk tolerances  Everyday Fund managers & analysts evaluate performance of each security.  Focus on how current economic, social & political events might affect holdings

5. Cont  Based on events  Fund manager decides which securities in the fund to keep or sell

6. Types of Mutual Funds  There are more than 17,000 mutual funds for investors to choose from (balanced funds, stock funds, sector funds, money market funds, etc)

7. Types cont 1. Open-end funds  They sell as many shares as investors want to buy (Sometimes open end funds will stop sellng new shares when grow too big)  If want to sell shares of your open end fund, you sell back to fund. 2.) Close End Funds -collections of securities managed by a professional investment advisor. -unlike open-end mf they offer a fixed # of shares that are traded on stock exchange

8. contin 3. Exchange Traded Funds -are funds who shares, like closed end funds are traded on stock exchange -these invest in stocks or bonds

9. Mutual Funds Objectives  MF have investment objectives  Ex: Value Funds only invest in stocks fund managers believe are undervalued.  Ex: Only investing in Co’s that managers believe are “socially responsible”  Socially responsible can mean different things to pep

10. Socially Resp  More info on socially responsible funds  www.socialfunds.com www.socialfunds.com  Environment or religious standards are some specifics of “socially responsible” funds.

11. Mutual Funds help individual investor “diversify their portfolios”  Investors can buy MF shares on margin (using $ borrowed from a broker to buy stock)  Or sell them short (sale of stock borrowed from broker)  Short Sellers  Believe a stock’s price will drop enabling them to repay the borrowed shares with lower priced ones

12. Diversification Mr. Coronado

13. What is Diversification?  It is very hard to accurately predict how any one company will perform over time.  Diversification is a strategy that helps protect your portfolio  Highly successful way reduce to risk  “Don’t put your eggs in one basket”

14. Diversification Activity  Students in SMG teams brainstorm different products and services pep buy and use.  Different categories  1.) Information, 2.) Services,  3.) Manufacturing  When you are making investments you want to diversify your portfolio

15. Different categories 1. Information 2. Services 3. Manufacturing As an investor why might you want to invest in co in all three categories? How many of you would invest in products in more than one category? What if you could only buy in on category, would you $ be at risk?

16. Investing Ex’s  Your group decides to invest in Wal-Mart, target, Costco  Would you be considered to have a diverse portfolio  Why or why not?

17. Investing Exs  You invest in the Walt Disney Co. (ABC subsidiary)  And You invest in Exxon mobil.  What makes this group different then first ex?