May 2015 Newsletter

InvestEd 2015
Mutual Fund Share Classes
Technology-Related Crime



InvestEd 2015
Richmond VA, June 12-14, 2015
Westin Richmond
Register Now!


The InvestEd conference is five weeks away, and we encourage you to register today.

The following are examples of the quality of education at InvestEd:

Doug Gerlach teaches Using Profit Margin Analysis to Identify Company Quality:
Profit margins show how much of a company's revenues are converted into profits. They also demonstrate how efficiently management is utilizing its resources. Learn how to review the strength and trend of a company's margins and compare those margins to peers and industry averages to find top-notch companies, and learn how to spot potential problems with margins.

Don Cassidy offers Learn to Sell Profitably: Profits are only on paper. In a world and economy changing constantly, and with markets in the past 15 years showing huge volatility several times, selling is a necessary skill. Explore the bias for holding a stock, improve your selling skills, and learn reasons for selling that go beyond a stock having reached its Stock Selection Guide target.

Saul Seinberg has updated his Stop-Loss Orders: Helpful or Harmful? session:
Stop-loss orders can be of significant benefit and great comfort to investors when bad news hits unexpectedly. In addition, they assist in protecting profits and preventing losses when an investor does not have access to a broker or computer. Learn to enhance your portfolio’s comfort level and sleep better at night by increasing your knowledge about and use of stop-loss orders.

The conference features 25 new or updated sessions in the Saturday-Sunday curriculum, and all eight sessions in the Friday Bonus schedule are new. Review the full conference curriculum and register today. Our guest room rate is $119 plus tax, and it includes free internet in your room and free parking.



Mutual Fund Share Classes
Sandy Gallemore

A mutual fund is a pool of money from many shareholders that is invested in stocks, bonds, or other investment assets. In general, mutual funds may be identified as those that charge a sales fee (load funds) and those that do not charge a sales fee (no-load funds). Many of the load funds offer several classes of shares.

While each share class of a given mutual fund has the same investment policies and objectives and includes money in the same investments, the fees associated with each class likely will cause some difference in the performance results. When a fund offers several share classes, the investor is able to select the class that best suits that investor's goals and time horizon. The main share classes are identified as Class A shares, Class B shares, and Class C shares.

Class A shares charge a front-end load, or sales fee. This means a sales charge is taken from the investment monies the individual sends to the mutual company before the money is invested in the fund. For example, if an individual sends $1000 to be invested in a fund with a front-end load, and the front-end load is five percent ($1000 x .05 = $50), only $950 of that money will be invested. Some mutual funds reduce the front-end load when a sizable investment is made. A low breakpoint for a reduction in the percent of the front-end load might be $25,000. Although Class A shares do charge a front-end sales fee, typically they have a lower expense ratio than the other classes of shares.

Class B shares charge a back-end load. This means that the $1000 the investor sends to the mutual fund company is invested fully, without any sales fees coming off the top. Instead, the sales fee is deferred until the fund is sold. Typically, the amount or percentage of the back-end load is reduced each year the fund is held. For example, if the fund has a six percent back-end load, the investor selling the fund during the first year will pay a six percent sales fee before receiving any money. If the investor sells the fund after holding it less than two years, that sales fee will drop to five percent. If the investor sells the fund after holding it for at least six years, no back-end load will be applicable. If the investor holds the Class B shares until the back-end load no longer exists, in effect, these shares revert to Class A shares.

Class C shares may be identified as level-load shares. Level load means they include a 12b-1 fee, which is a fee applied annually as a fixed percentage of a mutual fund's average net assets. Capped by law at one percent, many funds will put the fee at 0.25 percent because that amount allows the fund to be identified as a no-load fund. The $1000 the investor sends to the mutual fund company is invested fully, without the sales charges for Class A or Class B shares. Unlike front-end and back-end sales charges, these 12b-1 fees are included in a fund's operating expenses. They are based on a percentage of the investor's assets, and typically the fees remain in place as long as the investor holds the fund.

If you decide you like a particular mutual fund and that fund is a "load" fund, be sure to check the fund prospectus to learn about the types of share classes offered and the fees and policies associated with them. For an in-depth tutorial on mutual funds, check out the Mutual Fund Basics Tutorial at Investopedia.

Sandy is an InvestEd Inc. director and serves as vice president for education. She is lead editor and prepares the general program brochure for the conference. Sandy has helped form investment clubs, presented introductory investing programs, and taught stock study and mutual fund classes at local, regional, and national events. In her leisure time she participates in a line dance group, plays handbells, bridge, and golf, and enjoys a variety of other activities, including investing. Sandy is professor emeritus of kinesiology, Georgia Southern University.



Technology-Related Crime
Sandy Gallemore

Technology moves forward, and criminals move forward right along with it. Technology-related crime is happening all around us. Most of us use the computer and other technological devices throughout every day for a multitude of legitimate purposes. Unfortunately, some people use the computer, the Internet, mobile phones, and other technologies for criminal purposes. As regular technology users, we need to raise our awareness level about this issue.

Cybercrime is real. A cybercrime may be defined as an intentional act using various technologies (computer, phones, etc.) for criminal behavior taking place in a virtual setting (such as on the Internet). The Center for Strategic and International Studies (CSIS) in its "Net Losses: Estimating the Global Cost of Cybercrime" report estimates the annual cost of cybercrime to the global economy is more than $400 billion.

Unsolicited email, often known as "spam," may or may not be considered cybercrime. But, it is a common problem and is annoying. Most of us have a spam email box to keep these messages from cluttering our Inbox, and we know how to filter any spam that gets into our Inbox. More than annoying, though, is when such a message carries a virus or is a "phishing" message asking for personal information. This elevates the annoying messages to cybercrime. If you respond to such a message (please unsubscribe me, for example), that leaves you open to "spoofing," which means the person sending you the message now knows he or she has a real email address and has the ability to send you many more emails in hopes that you will, indeed, break down and respond with the information requested, hoping that will end the email stream. Of course, responding will just ramp up the messages.

Phishing is a common form of cybercrime. These messages may appear to come from a recognized business, so recipients not paying attention may end up a victim. We need to be suspect of any message we receive, including those from phone calls, asking for personal information. Of course, many of us receive phone calls that fall into this same category. Not responding to any requests for personal information is a good idea. If you have the phone number of the caller, plug it into the 800notes website mentioned in last month's newsletter. This may give you an idea about who is behind the phone number. I have an answering machine tied to my phone, and I keep it on all day, every day. Yes, I'm on the Do-Not-Call lists, but that does not seem to stop all unwanted calls. My answering machine does not solve the entire problem, but it lets me get to the phone in time to pick up when I hear the call is from someone I know or want to talk with or to avoid calls designed to collect my information or money.

Internet fraud often is financial in nature and related to hacking into personal financial accounts. These cybercriminals are involved in identity theft and attempt to access our Social Security numbers, along with other personal data, so they are able to obtain credit cards or loans in our name.

Computer trespassing is another form of cybercrime. Criminals attempt to gain access to our computer to view our files, access our passwords, and/or view our website browsing history. They also may save files on our computer. Computer trespassing generally is accomplished by convincing us to click on attachments or to download files.

Where should you report cybercrime? The government wants to know about these crimes. The Internet Crime Complaint Center (IC3) maintains a website where you can make a complaint or file a report. The IC3 is a partnership between the FBI and the National White Collar Crime Center (NW3). In addition to giving victims a way to report cybercrime, it provides law enforcement and regulatory agencies at all levels (local through international) with a referral mechanism. A goal of the IC3 and its partners is to identify and develop aggressive, proactive measures to combat cybercrimes.



Sandy is an InvestEd Inc. director and serves as vice president for education. She is lead editor and prepares the general program brochure for the conference. Sandy has helped form investment clubs, presented introductory investing programs, and taught stock study and mutual fund classes at local, regional, and national events. In her leisure time she participates in a line dance group, plays handbells, bridge, and golf, and enjoys a variety of other activities, including investing. Sandy is professor emeritus of kinesiology, Georgia Southern University.



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