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%

investment companies outline

ask price, offer price, public offering price

• net asset value + sales charges
• decide at NYSE closing, sold at that price+sales charge if sold

forward pricing

• investor pays an estimate price
• unsure of next NAV pricing

where are mutual funds bought/sold

• not on exchanges
• buy shares as new issues at p.o.p.
• new issues sold at specified price

closed end management investment companies

• managers invest $
• buy mostly stocks and bonds
• offer new shares at initial public offering
• do not redeem shares
• capitalization stable/closed
• traded OTC
• sold at market price
• NAV calculation-same as mutual fund NAV calculation

Which of the following are not considered to be registered investment companies under the Investment Company Act of 1940?

• investment clubs and holding companies
• NOT under SEC
• NOT under Investment Company Act of 1940
• mutual fund-not registered investment company
• open end management investment company, registed investment company

Which of the following are not considered to be management companies under the Investment Company Act of 1940?

• Unit Investment Trusts and Exchange traded funds
• UIT and ETF-no active managers
• open end and closed fund hire investment advisor to manage portolios and rei