Essentials of Investments © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Fourth Edition Irwin / McGraw-Hill Bodie Kane Marcus 1 Chapter 4 Mutual Funds and Other Investment Companies

Essentials of Investments © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Fourth Edition Irwin / McGraw-Hill Bodie Kane Marcus 2 Services of Investment Companies Administration & record keeping Diversification & divisibility Professional management Reduced transaction costs

Essentials of Investments © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Fourth Edition Irwin / McGraw-Hill Bodie Kane Marcus 3 Net Asset Value Used as a basis for valuation of investment company shares Calculation

Essentials of Investments © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Fourth Edition Irwin / McGraw-Hill Bodie Kane Marcus 4 Types of Investment Organizations Unit Trusts Managed Investment Companies Other investment organizations

Essentials of Investments © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Fourth Edition Irwin / McGraw-Hill Bodie Kane Marcus 5 Open-End and Closed-End Funds: Key Differences Shares Outstanding Pricing

Essentials of Investments © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Fourth Edition Irwin / McGraw-Hill Bodie Kane Marcus 6 Investment Policies Money Market Fixed Income Equity Balance & Income Asset Allocation Indexed Specialized Sector

Essentials of Investments © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Fourth Edition Irwin / McGraw-Hill Bodie Kane Marcus 7 Costs of Investing in Mutual Funds Fee Structure Operating expenses 12 b-1 charges Fees and performance

Essentials of Investments © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Fourth Edition Irwin / McGraw-Hill Bodie Kane Marcus 8 Sources of Information on Mutual Funds Wiesenberger’s Investment Companies Morningstar Investment Company Institute Popular press Investment services