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What is a Mutual Fund? Considering the popularity of mutual funds today, most people are somewhat acquainted with how they work. Fundamentally, a mutual fund pools money from shareholders and invests in a diversified portfolio of securities. When you invest in mutual funds, you have the potential for investment earnings in two ways, either as immediate income or as growth in the value of your investment. Let's define that more clearly.
As a shareholder, you own a certain number of fund shares, depending on how much money you've invested in the fund. You will receive your portion of the gains or losses the fund experiences over time. What Is A Share Price? With most funds, the share prices are calculated every day, because the value of a fund's securities changes every day in response to the movement of the stock, bond, and money markets. Share price is calculated by dividing the value of the securities in the fund by the number of shares. To put it simply, a fund that holds $5 million in securities and has 500,000 shares, will have a share price of $10. It's important to know in advance how much change in share price you can tolerate, so you can choose a mutual fund that suits your comfort level. We can work with you to help you gain a better understanding of your risk tolerance and match the appropriate Bishop Street Fund that best meet your needs. How do I gauge Fund performance? A variety of sources provide regular performance information on mutual funds. Most local newspapers include recent total returns for hundreds, if not thousands, of funds in their daily business sections. For more in-depth fund performance information, check out financial newspapers such as the Wall Street Journal. The Journal is also legendary for its day-to-day reporting on issues affecting the markets and economy. Other finance- or business-oriented publications such as Barron's, Money, and BusinessWeek provide informative quarterly updates on mutual fund performance. Although it can be tempting to keep track of your investments on a daily basis, paying such close attention to the short-term performance of your funds can cause you to lose sight of your long-term goals. It's all too easy to jump the gun and sell out of a temporarily under-performing fund, only to see it rebound not long after. In a diversified portfolio, some funds will naturally do better than others on a day-to-day or month-to-month basis. Investment experts generally agree that the key to successful investing is to stay focused on the long-term direction of your portfolio and not be swayed by short-term trends. How does a Mutual Fund Work? As a shareholder, you own a certain number of fund shares, depending on how much money you've invested in the Fund. You will receive your portion of the gains or have reduction from any losses the Fund experiences over time. Who Should Invest in Mutual Funds? Mutual funds are appropriate for people who want a range of investment opportunities, but don't have the time or expertise to manage their investments themselves. Whatever your own investment goals - growing your wealth, earning regular income, cutting your tax bill or saving for retirement - there's a Bishop Street Fund designed to help you achieve them. How Safe is My Investment? Mutual funds are closely regulated by the Securities and Exchange Commission to protect investors. However, it's important to realize that your principal and rate of return are not insured or guaranteed by the US. Government, unlike bank accounts and CDs. Like all investments, mutual funds involve risk - including the risk of loss of principal - in exchange for the opportunity for gain. Can I Get My Money Quickly if I Need It? Yes. You can redeem your shares in the Bishop Street Funds on any business day at their end of day net asset value. Of course, share prices will fluctuate, and fund shares may be worth more or less than the original purchase price when redeemed. What Are the Costs Associated with Investing in the Bishop Street Funds? Like many other mutual funds, there is a sales charge associated with purchasing shares of the Funds. This sales charge varies per fund and can be reduced with larger investment amounts, or under special circumstances. In addition, there are normal operating expenses associated with running the Bishop Street Funds. Please review the Funds' prospectus for detailed information on the costs associated with purchasing shares of the Funds. What Are the Tax Consequences of Mutual Fund Investing? Generally speaking, dividend income from mutual funds is taxed at your regular tax rate, while capital gains distributions (if any) are taxed at the capital gains rate. Tax-exempt funds, a special kind of mutual fund, generate returns that are exempt from federal and/or state income tax. Income may be subject to the Alternative Minimum Tax (AMT) for some high-income tax payers. See Important Tax Information for more details, and/or consult your tax advisor for more information on the tax consequences of your mutual fund investment.
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