investment company outline

transfer agent

·        Work as bookkeeper

·        Clerks

·        Issue shares/certificates to show individuals own part of investment company

·        Maintain shareholder accounts-transactions, IRS, etc.

·        Send out dividend checks, capital gains distributions unless auto re-invest

·        Cancel redeemed shares

·        Send redemption checks to shareholders

Operating expenses

·        Salary/expenses for board of directors

·        Highest: management fees

·        Custodian fees

·        Service fees

·        Brokerage fees-to buy and sell in portfolio

·        Pay auditors for auditing

·        Legal fees

·        Printing and distribution costs to shareholders

Expense ratio

·        Expense ratio=operating expenses this year/total net asset value

Which of the following expenses are considered part of the costs of operation of a mutual fund?

·        Service fees

·        Brokerage fees

·        Management fees

·        Audit fees

·        Legal fees

·        YET printing prospectuses paid by sales charge

Securities Act of 1933

·        Mutual funds subject to 1933 rules

·        Advertising-oral/written/visual means to promote purchase

·        Prospectus before-or-with-ad

·        Ad can not have written application or tell customers to send fund

·        Ad must be given to FINRA within 10 days of use

·        Prospectus-must give to customer when you suggest they buy

No prospectus needed

·        Tombstone ad

·        Generic ad

Investment Company Act of 1940 says mutual funds can NOT have

·        Real estate

·        Commodities

·        Other mutual funds unless objectives met

·        Securities bought with margin

·        Securities if individual within investment company owns .5% (half of one percent) of issuer’s stock