Mutual Fund Marketing
Mutual fund shares are marketed according to the rules established by the Investment Company Act of 1940.

Any mutual fund advertisement containing performance data must include a legend that discloses these important facts:

  • the data represents past performance and is not an indication of future results
  • an investor's principal value will fluctuate and may be worth less than the original amount invested.

Mutual fund advertisements are also required to state where a potential investor may obtain a prospectus, and they must recommend that the investor read the prospectus carefully before investing any money. No application to invest in the investment company's fund may accompany any type of mutual fund advertisement. You can find more detailed information on FINRA rules concerning mutual fund marketing in the Marketing and Sales Presentation section.

Mutual Fund Pricing
Investors must always pay the full price when buying mutual fund shares. The full price represents the net asset value plus a sales charge (if applicable). This is called the public offering price (POP).

Net Asset Value (NAV) Per Share
Net asset value
(NAV) is determined by dividing the net assets of the fund by the total number of outstanding shares. The NAV must be computed at least once a day. The NAV is calculated at the end of trading on the New York Stock Exchange; orders to buy and sell the fund are based on the price to be computed at that time, so if an investor buys shares of the fund at 10:30 a.m., the price paid will not be known until after the close of trading on that day.

To calculate the NAV of a mutual fund, remember the following formula:
 

NAV = (Assets - Liabilities ) / Number of outstanding shares



Sales Charges and Expenses

Related Articles
  1. Financial Advisor

    A Mutual Funds Guide for Young Investors

    Learn how mutual funds work, why they are so popular and how younger investors can get started by putting mutual funds in their IRAs or 401(k)s.
  2. Investing

    What You Need to Know About Mutual Funds

    Mutual funds are a good investment opportunity, but investors should know how they operate.
  3. Investing

    4 Mistakes to Avoid When Choosing Mutual Funds to Invest in

    Mutual funds are a great way to build wealth but not all of them are the same. Investors have to be mindful of fees, turnover, redundancy and performance.
  4. Financial Advisor

    Advising FAs: Explaining Mutual Funds to a Client

    More than 80 million people, or half of the households in America, invest in mutual funds. No matter what type of investor you are, there is bound to be a mutual fund that fits your style.
  5. Investing

    A Guide to Mutual Funds Trading Rules

    Make sure to review this guide on the dos and don'ts of mutual fund trading before you invest, including how trades are executed and which fees to look out for.
  6. Investing

    Trading Mutual Funds For Beginners

    Learn about the basics of trading and investing in mutual funds. Understand how the fees charged by mutual funds can impact the performance of an investment.
  7. Financial Advisor

    How to Rate Your Mutual Fund Manager

    What to really look for when you're deciding on a mutual fund.
  8. Investing

    Are Mutual Funds A Relic?

    We list some options other than mutual funds for your retirement plan.
  9. Financial Advisor

    5 Secrets You Didn’t Know About Mutual Funds

    Learn five of the "secrets" about mutual funds that can have a significant impact on mutual fund choices and investor profitability.
  10. Investing

    The Advantages Of Mutual Funds

    Learn how to get diversification, liquidity and professional management at an affordable price.
Frequently Asked Questions
  1. How do you calculate r-squared in Excel?

    Calculate R-squared in Microsoft Excel by creating two data ranges to correlate. Use the Correlation formula to correlate ...
  2. What is the Difference Between International Monetary Fund and the World Bank?

    Learn about the International Monetary Fund and the World Bank and how they are differentiated by their respective functions ...
  3. Where Did the Bull and Bear Market Get Their Names?

    The terms bull and bear are used to describe general actions and attitudes, or sentiment, either of an individual (bear and ...
  4. What's the difference between Google's GOOG and GOOGL stock tickers?

    Learn the difference between Google's GOOG and GOOGL ticker symbols. Splitting shares into classes prevents management from ...
Trading Center