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Rules

At the beginning, each family member had to choose a mutual fund from the six Invesco mutual funds offered. (See history). First come, first choice. No two family members could own the same mutual fund at the same time. Effective September, 2001, an exception was made for Vanguard Inflation Protected Securities (VIPSX). At the fmf meeting on December 25, 2001, this rule was repealed. More than one family member may now own the same fund.
Contribution of $50/month initially was to be made "for a long time." Later raised to $75/month and then to $100/month. (See contributions).
Although the money belongs to each individual family member, it cannot be spent without agreement of parent. Spending all funds ends the gift. See exception for Roth IRA contributions in No. 9 below.
A savings account (belonging to parents) will be started and equal monthly contributions will be made to compare savings' performance with mutual funds' performance. An effort will be made to earn the maximum interest possible on the savings account.
Individuals are free to switch funds at any time. As the values of individual mutual funds grow to amounts greater than the minimum investment required for other mutual fund families, individuals can switch fund families. However, the new mutual fund cannot have a minimum monthly reinvestment greater than amount of monthly contribution gift (presently $100/month).
Family members are to do their own research on mutual funds and are solely responsible for the final investment decision.
Funds are owned in name of family member with his/her social security number. When a child reaches age 18, that child is responsible for paying federal income tax on her family mutual fund holdings. A portion of fund holdings can be held in participant's Roth IRA. See No. 9 below.
Original rules required all funds to be 100% invested at all times. Effective 1/1/01, a family member can go to cash and remain there indefinitely. Interest earned is credited to the individual. Also effective 1/1/01, a family member may own shares of stock instead of a mutual fund.
Effective summer 2003, any participant who wishes to fund a Roth IRA for present year may transfer up to the annual limit from family mutual funds cash account into the Roth IRA, where it will stay segregated from other Roth IRA funds in order to track growth. However, those funds will be part of the Roth IRA (nontaxable) subject to Roth IRA tax and withdrawal rules.
Effective 1/1/05, annual contributions of $1200 each will be paid in a lump sum in January with monthly purchases to be made by automatic investment as directed by owner. Includes contributions to savings account.

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