investment companies outline

how to buy mutual funds

• broker/dealers sell shares to investors
• fund sells shares to investors, no-load mutual fund-no sales charge to investor
• investor pays public offering price
• prospectus at offer or time of sale  
• buy wish cash,check, electronic transfer, or sell existing owned mutual funds
• exchange, sell mutual fund and use $ from sale to buy a new mutual fund
• public offering price, POP, based on net asset value
• forward pricing, know cost of mutual fund after buying
• front end sales charge: POP=NAV + sales charge
• no load mutual fund: POP=NAV
• deferred sales charge fund: when shares of fund sold, NAV-sales charge

Maximum sales charges

• max sales charge: 8.5%
• if quality discounts must be available for large purchases
• if rights of accumulation, cumulative quality discounts must be available
• if 12b-1 fees must NOT charged
• when quality discounts, rights of accumulation, cumulative quality discounts, no 12b fees aren't present, can only charge 6.25%