Institutional Finance December 8, 2008 - Princeton University

Institutional Finance December 8, 2008

Sujay Davuluri Aaron Katz Dan Moraru

Dennis Walsh

ICI Mutual Fund Brochure

 Low Risk Mutual Funds Investments in highly liquid

securities Govt. Securities, CDs, CPs etc. Pay regular dividends Typically monthly Maintain a Net Asset Value of $1/share Yield varies Breaking the buck

 First Money Market Fund in the US Bruce R. Bent & Henry B. R. Brown 1971/72 Bank rates much lower than T-Bills T-Bills required a minimum of $10,000

Center of recent crisis Three of its funds broke the buck Hurt by Lehman's bankruptcy Closed majority of their funds

Investment Company Act of 1940 ? Rule 2a-7

Quality Minimal Credit Risk, highest rated 5% limit on A2 type securities

Weighted Average Maturity (WAM) 90 days or less for the portfolio Individual securities 13 months or less

Diversification 5% limit on individual issuer holding Limit doesn't apply to Govt. Holdings

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