1. TYPES OF MUTUAL FUNDS CH. 6 Decoding Wall Street Fundamentals of Investing

2. Investment Objectives  What the manager of the fund seeks to provide  3 primary-  Retirement  College education  Rainy day fund  33 real investment objectives

3. Stock funds  Aggressive growth  Growth funds  Sector funds  Can be more volatile  Growth-and-income  Income equity  Emerging markets  Global equity  Regional equity Capital Appreciation fundsTotal Return funds World Equity funds

4. Other foreign investments/risks  WEBs- World Equity Benchmark  Sold on the AMEX  Political risk  Costs- average management fee = 1.87%  Currency- profits lost in conversion  Regulation-

5. Bond Funds  General- 2/3 in US securities  Intermediate term  Short term  High yield- junk bonds with poor credit ratings  State municipal- NY and CA  Federal municipal TaxableTax Free

6. Money Market Funds  Invest in short term, high grade securities (IOU’s)  Taxable and tax-exempt  Convenience while waiting to return to stocks and bonds

7. Hybrid and Index funds  Hybrid  Invest in a mix of stocks, bonds, derivatives  Futures and options  Index- cheap fees  Mirror the selected index  S & P 500, Wilshire 5000, SPDR’s

8. Picking and choosing  Balance- diversification  Styles- true to original goals  Cost- fee structure  Risk- compare beta, Morningstar risk, P/E ratio

9. Warning signs  New manager  3 quarter underperformance  Heavy turnover  Large bets in certain sectors  Style changing from original objectives