Problem Number One: Fidelity Mutual Fund Exercise

Log onto www.fidelity.com

In the upper right, next to the magnifying glass type in the ticker symbol. This is where it says "Search or get a quote." Type in FXAIX. The "ticker symbol" is the unique identifier of the security.

The fund we are looking at is the Fidelity 500 Index Fund (FXAIX). Its ticker symbol is FXAIX.

Question 1: If you invested $10,000 in FXAIX ten years ago [2/29/2012], how much was it worth on [2/28/2018]? [HINT: Hover over the date until you get to 2/28/2018.]

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Question 2: If you invested $10,000 in FXAIX ten years ago [2/29/2012], how much was it worth on 2/28/2022? [HINT: Hover over the date until you get to 2/28/2022.].

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Question 3: What was average annual return for the last four years? That is, what was its geometric average return for the four years ending 2/28/2022? That is, from [2/28/2018 to 2/28/2022].

SHOW WORK ... either keystrokes for a calculator, or an equation, or formula on Excel.

YOU MUST SHOW YOUR WORK ... NO WORK ... NO POINTS.

Show your work here:

Question 4: What was its 10-year average annual return? That is, what was its geometric average return for the ten years ending 2/28/2022? That is, from [2/29/2012 to 2/28/2022]. [Hint: You should be able to verify this number.]

SHOW WORK ... either keystrokes for a calculator, or an equation, or formula on Excel.

YOU MUST SHOW YOUR WORK ... NO WORK ... NO POINTS.

Show your work here:

Question 5: What is the benchmark for FXAIX? [Hint: It's not a number.]

Question 6: What are the management fees? Express your answer in dollars for a hypothetical $10,000 account. Stated differently, if I invested $10,000 in FXAIX, I would pay Fidelity $________________ per year to manage the account.

[Hint: Look at the "Net fees".]

YOU MUST SHOW YOUR WORK ... NO WORK ... NO POINTS.

Show your work here:

Question 7: Benchmarks are also known as passive portfolios [shown in blue]; that is, they typically buy all of the holdings in the sector. Active portfolios [shown in brown] hold fewer stocks and hope to do better than the benchmark. They always charge higher fees.

If you invested $10,000 in the benchmark on February 29, 2012, how much would it have been worth on 1/31/2022?

If you invested $10,000 in active managers on February 29, 2012, how much would it have been worth on 1/31/2022?

Question 8: Have these active managers did better than the benchmark over the last ten years?

Question 9: Active funds typically trade more [that is, buy and sell more securities] than passive. This is shown in the Turnover Rate, which is shown on the summary page. For FXAIX, what was the Turnover Rate?

Question 10: What is the most important thing that you have learned about the mutual fund exercises?