Chapters 1 & 2
Introduction & Mutual Fund Products
Time to revise: 20 minutes
Key Points
• Mutual fund is a pool of money collected from investors and is invested according to stated
investment objectives
• Mutual fund investors are like shareholders and they own the fund.
• Mutual fund investors are not lenders or deposit holders in a mutual fund.
• Everybody else associated with a mutual fund is a service provider, who earns a fee.
• The money in the mutual fund belongs to the investors and nobody else.
• Mutual funds invest in marketable securities according to the investment objective.
• The value of the investments can go up or down, changing the value of the investors' holdings.
• NAV of a mutual fund fluctuates with market price movements.
• The market value of the investors' funds is also called as net assets.
• Investors hold a proportionate share of the fund in the mutual fund. New investors come in and
old investors can exit, at prices related t