Re: Questions of mutual funds
- From: "Hugh Candlin" <No@xxxxxxxx>
- Date: Sun, 08 Jan 2006 05:50:05 GMT
--
"newhand" <newhand@xxxxxxx> wrote in message
news:7p1wf.235414$qk4.81111@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
> There're one kind of mutual fund, for example, "FDRXX FIDELITY CASH
> RESERVES", it has following info like:
>
> NAV 1.00
> 7-Day Yield 3.96%
>
> And I noticed that the NAV always 1.00.
It usually stays there, but it could rise or drop
under unusual circumstances, but it is highly unlikely.
> Why doesn't its NAV change like many
> other mutual funds?
Because an event which would cause this to happen
is comparatively rare.
> Does this mean that no matter how long the money deposit
> in such a fund, its value will not change at all?
No. You earn interest.
>
> What's "7-Day Yield"?
The annual interest rate averaged over the last 7 days.
Let's say you wanted to buy in the middle of June, 2005.
You wouldn't want to know or care that for
the calendar year 2004, the fund paid 3.5%.
You would want to know how the fund is doing right now.
So what they do is reflect the current yield,
by calculating the annual yield each day
for the past 365 days, and then taking the average
of the last 7 business days.
So, if over the last 7 days, the calculated yield figures
were 3.5, 3.5, 3.5, 3.6, 3,7, 3.7, 3.7,
then the published 7-day yield would be 3.6.
>
> Thanks in advance!
.
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- From: newhand
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