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Chapter 11. Mutual Funds > History of Mutual Funds

History of Mutual Funds

Mutual funds are pooled investments working toward the goal of providing their owners with diversification and cost efficiencies. The idea for this concept of pooling investments began in Europe in the mid-1800s and took root in the United States in 1893 when a group of Harvard faculty and staff created a pooled fund. It wasn't until March 21, 1924, that three Boston securities executives pooled their money and created the Massachusetts Investors Trust—the first mutual fund born in the United States. That fund, part of the huge MFS family of mutual funds, is still around today, with assets in excess of $6.6 billion and a lifetime annual return in excess of 9 percent.

There are more than 8,300 mutual funds in the United States today, with a combined asset value of $7.1 trillion. The Investment Company Institute (ICI, www.ici.org) tracks the mutual fund industry and publishes an annual Mutual Fund Fact Book. According to the ICI, at yearend 2002, there was $2.7 trillion in equity funds, $327 billion in hybrid funds, $1.3 billion in bond funds, and $2.3 trillion in money market funds. Figure 11-1 shows how mutual fund assets grew from 1993to 2002.


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