New Page 3

\| Home \| Site Search \| Previous Tips \|
	Mutual Fund Objectives Financial Tip of the Week by Deloitte & Touche OnLine November 1, 1999

What do your mutual funds need to do for you? Check the prospectus.

See our archive of previous tips on your money, your taxes and your financial plan.

Do you know why you own a particular mutual fund? The fund’s investment objectives should be compatible with the investor’s goals.

The prospectus will describe the fund’s objectives (for example, long-term capital growth, income), and the strategies used to achieve these goals. The discussion of investment strategies may describe risks (market risk, manager risk, country risk) faced by investors in the fund. The prospectus will note the types of securities (common stocks, preferred stocks, bonds, options) the fund purchases, and will identify any investment advisors employed by the fund. The document may set forth investment parameters that the fund follows (for example, limits on the use/purchase of derivatives, foreign stocks, short sales). The parameters may also indicate the maximum and minimum percentages for specific types of securities and/or holdings in any one company.

Stock mutual funds are either "actively" managed by a fund manager, or "passively"
managed to match the performance of an index (for example, Standard and Poor’s 500). For actively managed funds, it is important to know the manager’s tenure and track record -- changes in a fund’s manager can have a significant impact on performance.

For more on what to look for, see our article "Prospecting For Funds", in our Personal Financial Advisor section.