Fund Industry 3

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  1. To Sell a Security (3)
    • 1. Register offering with SEC
    • 2. Provide buyers with prospectus
    • 3. Report to investors periodically (annual report)
  2. Securities Act of 1933
    Mandated disclosure of material information through a prospectus
  3. Securities Exchange Act of 1934
    • 1. Annual & Quarterly reporting requirements
    • 2. Created the SEC
  4. Disclosure = Seller Protection
    • 1. Protection against lawsuits
    • 2. Buyer must prove material misstatement & demonstrate they relied on that misinformation and that directly led to a financial loss
  5. Stickers
    Intra-year amendments to the prospectus (in addition to more comprehensive annual review)
  6. Summary Prospectus (3)
    • 1. Content is mandated by the SEC (including order)
    • 2. Must be in 'plain English'
    • 3. Must include return for last 1,5 & 10 years
  7. Funds with names: Tax-exempt, Tax-free or Municipal
    Must have 80% or more holdings in tax-exempt securities / 80% of income must be exempt from taxes.
  8. Short Term Fixed Income Funds
    Should have avg weighted maturity of less than 3 years
  9. Balanced Funds
    Requirement: At least 25% of assets in equities & at least 25% of assets in bonds
  10. Portfolio Turnover
    Buying/selling securities within the fund
  11. Portfolio Turnover : Potential Costs (2)
    • 1. Some trades involve transaction costs (fund expense)
    • 2. Selling could create capital gains (tax burden to investor)
  12. Typical Investment Objective

    Money Market Fund
    Maintain $1 value of its share while providing income
  13. Typical Investment Objective

    Investment Grade bond
    Current Income
  14. Typical Investment Objective

    Tax-exempt / Muni Bond
    Current income exempt from federal income taxes
  15. Typical Investment Objective


    Equity Income
    LT Capital appreciation + Income
  16. Typical Investment Objective

    Aggressive Growth
    Long term capital appreciation
  17. Investment Risk (Academic)
    Measure of variability of returns (US Treasury has narrow range while biotech stock has wide range of potential returns)
  18. Return Calculations on Summary Prospectus (3)
    • 1.¬†After sales loads only
    • 2. After sales loads & taxes on distributions
    • 3. After sales loads, taxes on distributions & taxes on sale of fund shares
  19. Total Return (Prospectus calculation)
    Includes all elements of return (income + price appreciation)

    Interest | Dividend Income - Annual Operating Expenses + Realized Gains or Losses (securities that have been sold) + Unrealized gains or losses (securities still held in portfolio :: reflected in NAV)
  20. Interest / Dividend Income & Realized Capital gains must be distributed to shareholders annually.
    Interest / Dividend Income & Realized Capital gains must be distributed to shareholders annually.
  21. Fund Advertising
    Distributors must file all advertising material with FINRA. FINRA reviews to ensure materials are fair/balanced.
  22. SAI Includes (4)
    • 1. Board of Directors
    • 2. Porfolio Managers
    • 3. Contracts with service providers
    • 4. History (name changes, etc.)
  23. Fund Financial Statements
    • 1. Income Statement = Statement of Operations
    • 2. Balance Sheet = Statement of Assets & Liabilities
    • 3. Cash Flow = Statement of Changes in Net Assets

Card Set Information

Author:
jlm158
ID:
332768
Filename:
Fund Industry 3
Updated:
2017-07-08 01:24:48
Tags:
Fund Industry
Folders:
Fund Industry 3
Description:
Fund Industry 3
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