Investment Basics
An ongoing series to help employees plan for retirement.
Focus On: Mutual Funds
A mutual fund is a pool of money managed by a professional investment manager based on the objective of the fund.
- By spreading the expenses across thousands of investors, a mutual fund allows people to (1) participate in the market with a small amount of money and (2) build a diversified portfolio that they might not be able to do on their own (and couldn’t do with a small investment).
- The proceeds of the fund (earnings and losses) are passed along to each shareholder according to the number of shares they own, after expenses and management fees are deducted.
- Fund objective, fees, and expenses can be found in the fund prospectus.
The most commonly used mutual funds in employer-sponsored retirement plans are open-ended mutual funds.
- Open ended mutual funds allow shares to be bought and sold at any time, and the share price is calculated each trading day after the close of the market.
- There is no set number of shares available for trading, thus shares can be bought or sold at any time, and the share price will fluctuate each trading day based on the ups and downs of the stocks or bonds owned by the fund.
- Each fund has a ticker symbol used to look up the daily value of the fund.
- Up-to-date information about mutual funds is found on the investment company’s web site.
Important Notice Required by Federal Law
Medicare Prescription Drug Coverage
Employers, like Indiana University, are required to provide notice to employees about Medicare prescription drug coverage each year. Medicare prescription drug coverage is now available to everyone with Medicare. This coverage is referred to as Medicare Part D.
The prescription drug coverage in IU-sponsored employee medical plans is, on average for all plan participants, expected to pay out as much as the standard Medicare prescription drug coverage. For this reason, IU plan participants will not pay a penalty to enroll in Medicare coverage later—as long as their Medicare prescription plan enrollment takes place within 63 days of ceasing IU-sponsored coverage. (This rule is similar to the current rule about enrolling without penalty in Medicare Part B.)
Go to www.indiana.edu/~uhrs/benefits/needknow.html to learn more about Medicare Part D coverage.
Pandemic Emergency Policy
Indiana University has developed plans for a potential influenza pandemic crisis, including the development of a University-wide personnel policy for Staff and Hourly employees. This policy addresses issues such as work assignments, work locations, use of time off, and compensation for various scenarios that are likely to involve combinations of the following elements:
- High rates of absenteeism affecting the ability of departments to function
- The cancellation of either all or a significant number of classes on a campus which otherwise remains open
- The closing of University housing on a campus which otherwise remains open
- The closing of a campus for a period of time
This University personnel policy for Staff and Hourly employees is applicable when the Indiana University president or his designee declares a pandemic emergency for the University on one or more of its campuses.
To view the policy, visit www.indiana.edu/~uhrs/policies/uwide/pandemic.html.
In addition, a list of Frequently Asked Questions regarding the H1N1 virus has been developed with a focus on work-related questions and concerns. Visit it at: www.indiana.edu/~uhrs/relations/H1N1flu-FAQ.html.
