Shareholder service fees are those paid to persons to respond to investor inquiries and provide investors with information about their investments.
A fee that some funds separately impose
on investors for the maintenance of their accounts. For example, accounts below
a specified dollar amount may have to pay an account fee.
Named for the SEC ruling that mandates them,the fund is required to pay 12b-1 fees out of fund assets to cover the costs of marketing and selling fund shares. Sometimes 12b-1 fees also cover the costs of providing shareholder services. They include several different types of fees.
Distribution fees include compensation for brokers and others who sell fund shares. These also pay for advertising, the printing and distribution of prospectuses to new investors, and the publication of sales literature.
An organization employed by a mutual fund to give professional advice on the fund’s investments and asset management practices. Also known as investment adviser.
The total return of a fund after the effects of taxes on distributions and/or redemptions have been assessed. Funds are required by federal securities law to
calculate after-tax returns using standardized formulas based upon the highest taxrates. (Consequently, they are not representative of the after-tax returns of most mutual fund shareholders.) These standardized after-tax returns are not relevant for shareholders in tax-deferred retirement accounts.
A number of fees are necessary to operate a mutual fund. When choosing which mutual fund to buy into, investors may want to compare the expense ratio across different funds. The expense ratio is calculated by dividing all of a fund's fees and expenses by its average daily net asset value.
A measure of income (dividends and interest) earned by the securities in a fund’s portfolio less the fund’s expenses duringa specified period. A fund’s yield is expressed as a percentage of the maximum offering price per share on a specified date.
"A mutual fund is a type of investment company that pools money from many investors and invests the money in stocks, bonds, money-market instruments, other securities, or even cash."
Mutual funds are often one part of a broader retirement planning scheme.
WHY INVEST IN ONE?
People buy shares in mutual funds as part of their overall investment and financial planning strategies.
They are often used for retirement planning, college savings tools, or trust funds.
Some investors choose to participate in a mutual fund because they see it as opportunity to benefit from the long-term growth of the stock market and diverse investments without having to play the game themselves
The dollar amounts at which many mutual funds offer reduced fees to investors. There are two kinds of breakpoints.One kind is a reduction in sales charges (load fees) to investors when they initially purchase fund shares. The amount of the discount varies, depending upon the amount of the investment: the more invested, the greater the likelihood of surpassing a“breakpoint” and thus receiving a discount. The other kind of breakpoint is a reduction in management fees that fund advisers may charge their associated funds as fund assets surpass a given level.
The net asset value or "NAV" of a mutual fund (or any investment company) is the funds total assets minus its total liabilities.
PER SHARE NAV
Per share NAV is calculated by the dividing the total net asset value by the number of shares outstanding. This changes daily dependent on the number of shares held by investors and fluctuations in the mutual funds value. The per share NAV is usually published daily in financial papers.
WHAT DOES THIS ACTUALLY MEAN?
In layman’s terms, a mutual fund is formed by a number of individuals or investors contributing money to the pool.
The person or group in charge of the pool then uses the acquired capital to make investments.The mutual fund manager will purchases stocks,bonds,cash, and other securities.
The people who put money into the pool will receive profits from it when the mutual fund pays out dividends and capital gains. It provides individuals with some of the advantages of investing in a diverse portfolio without having to make multiple investment decisions and purchases themselves.
Mutual Funds © ALL RIGHTS RESERVED.