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WORK & MONEY ADDENDUM: CLOSED FUNDS VS. OPEN END Published October 7, 1996 Other Columns by Ken Kurson

In my column, I mentioned a mutual fund called Morgan Funshares, which buys the stocks of companies in the "sin" industries (tobacconeers, liquor companies, condom makers, gambling operations). Morgan is an example of a type of fund called a "closed-end fund" and the difference between it and most funds sheds some light on how mutual funds operate. Most funds (like Fidelity's Magellan or the Berger 100) are "open-end" funds. That means that when you put your money in, you essentially own a fraction of all the securities that the fund owns. In other words, if you put $1 million into a fund that previously had $9 million, you'd then own 1/10 of everything the fund owns. If the fund has 20,000 shares of Motorola, you'd have 2,000. Buying into the fund gets you a certain number of shares, which have a net asset value calculated by dividing the total value of everything the fund holds by the number of shares outstanding. As the companies held by the fund rise and fall, the NAV goes up or down, and your shares are worth more or less. But the Morgan -- and thousands of other funds -- are "closed-end." They resemble stocks in that there's a fixed number of shares and a fixed amount of money in the fund. Closed-end funds also tend to pay higher dividends than open-end funds. To own a piece of the fund, you buy the shares from a broker, just as you would if you wanted shares of Apple Computer. Like an open-end fund, its value is affected by the share price of the companies it holds. But unlike an open-end fund, it also becomes more or less valuable based on the perception of others. That is, your shares might raise in value if the public finds them desirable (say if the manager gets "hot"). Since you're buying shares not from the company but from other investors, closed-end funds don't need the 800-numbers that open-end funds always have. OK, now that the world-shattering differences between closed and open funds have been revealed, here's how to buy Morgan Funshares, if you so desire. Call a broker. Tell her you want Morgan Funshares (ticker symbol: MFUN), which were trading at $8.875 at close on Sept. 3. (Morgan also pays a relatively generous yearly dividend of 2.3 percent). Ken Kurson, 27, writes the "Advocate" column for Worth magazine and appears weekly on CNNfn. His money 'zine, "GREEN: PERSONAL FINANCE FOR THE UNASHAMED," is published quarterly and is available for $3 an issue or $10 for a year's subscription. For more information or to subscribe, write GREEN at 245 8th Avenue, Suite 286, New York, NY, 10011. © 1996 Ken Kurson, All Rights Reserved