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52 Cards in this Set

  • Front
  • Back
Unlike a corporation who sells securities for the operation of the company, a _________ ______ raises capital to invest on behalf of its shareholders.
Mutual Fund
A mutual fund whos stated purpose is long term growth is a _________ _________.
Growth Fund
A fund whose stated objective is to provide a higher than average current investment return would be know as an _________ ______.
Income Fund
Mutal funds that seek to concentrate their investments (at least 25%) within a single industry or group of related industries or even with a geographical area are know as __________ ___________.
Specialized funds
An investor who seeks primarily to preserve his original principal while at the same time make some modest gain would do well with a ___________ _____.
Balanced Fund
Those who want absolute safety can invest in ____ ___________ bonds or _________ _______funds.
U.S. government bonds

Municipal bond funds
A mutual fund is a company who has a governing board of directors. Who makes the day to day investment decisions?
The Money Manager/Management company is contracted to manage the fund.
What Form is sent to each investor identifying the tax status of distributions.
Form 1099
The management company is hired to make sure the fund fullfills its objective. Who is hired to keep the actual funds?
A Custodian
T/F
The custodian sometimes performs the role of transfer agent. They transfer monies and shares to the correct person's account.
True
Three methods by which an investor may buy shaes of a mutual fund.
Fund to underwriter to dealer to investor (NAV plus dealer and underwriter concessions.)

Fund to underwriter to investor (NAV plus sales charge)

Fund to investor (No Load funds)
Three basic areas of comparison of various mutual funds.
Analyze growth and income mutual funds.

Compare funds on the basis of their statistical performance.

Compare funds non-statistical features such as conversion priv, systematic withdrawal plans. etc...
According to the Securities Act of 1933 a new issue must have a ________ prepared and delivered prior to or at the time of the sale.
Prospectus
What is the name of the document that provides investors with additional information not found in a mutual fund prospectus?
Statement of Additional Information. (SAI)
The SEC no-approval clause is found where in the prospectus?
Bottom of Front cover
The value upon which all mutual fund purchses and redeptions are based is the _____ ______ value.
Net Asset Value
The price at which the shares are offered to the public is called the _______ ______ price
or the _______ ________ price.
public offering price

retail asking price
When a public investor purchases a mutual fund there is a charge called a _______ charge or a ______ ______.
Sales charge

sales load
The larger the investment the lower the sales charge. This is known as.
Breakpoints
Another way to qualify for the beakpoint is by signing a _____ ___ _______. (LOI)
Letter of Intent
By Signing a _________ ___ _____ an investor is stating his intention to invest an amount equal to or greater than one of the breakpoint levels in the next 13 months.
Letter of Intent
A way of qualifying for a breakpoint that allows an investor to invest over a long period of time to reach a breakpoint. This includes amount invested or current value.
Right of Accumulation
T/F
The investor cannot defer taxes on his distributions from a mutual fund by reinvestinging them into additional shares.
True
Why reinvest dividends and interest back into your mutual fund? Two reasons...
Compounding effect

saving sales charges on new shares
Mutual funds are given special tax treatment if they comply with certain conditions. One of the most important of these conditions is that they distribute at least ___% of their income to shareholders.
90%
What section of the IRS code deals with mutual fund tax treatment?
Subchapter M
the Last part of the prospectus in made up of the.
Finacial statements
A program where an investor enters into a contractual plan where he is required to make periodic payments to benefit from dollar cost averaging is organized as a ______ ________ _______.
Unit investment trust
Two types of contactual plans go the names ________ ____ _______ and ______ _______.
Front-end load

Spread-load
In a front-end load contractual plan, typically ____% of the first year's investments are deducted as sales charges. then the charges are reduced to a max of ____%
50%

9%
In a spread-load contractual plan the load may be spread over a 4 year period with a max of ___% each year.Then a max __% for the remainder of the contract.
20%

9%
A fund that acts as the distributor of its own shares is called a ______-_______ fund.
No-Load
Share classes are:
Class ___
and
Class ___
A and B
A share that always has a load on the purchase, but no redeption fee is known as a Class ____ share.
Class A
A share that never has a load on the purchase, but have a Conditional Deferred Sales Load/charge (CDSL/CDSC)or back-end load. Declining redemption charge.
Class B
T/F
A class B share will eventually become a class A share. Explain
True

The redemtion charge declines over a period of years(6-8) to eventually to 0 charge. It then becomes a class A share.
A class of share that has no acquisiton load and higher expenses, but the redemtion charge usually rund for only one year. is a class __.
Class "C"
Of all the share classes, class ___ shares have the lowest operating costs over thge long run.
Class "A"
The investment company act of 1940 created three types of investment companies:
Face Amount Certificate Companies

Unit Investment Trusts

Managment Companies
- Closed-end
- Open-end (Mutual Fund)
The Unit Investment Trust invests in a _____ portfolio and offer _________ securities.
Fixed

Redeemable
An investment company which professionally manages a portfolio of securities for its shareholders is a _________ _______.
Management Company
Two types of managment companies.

A Mutual Fund is what type?
Open-end / Closed End

Mutual fund is an Open-end
An investment company that offer a limited number of shares outstanding is a ______-____ company.
Closed-end
In reading a mutual fund quotation, the letters following the company name, "p", "t" and "r" mean what?
They indicate the fee types.
p = 12b-1 fee
r = redemption fee/backend load
t = indicates both a 12b1 fee and redemption fee.
The column Headed "NAV Chg." indicates what point?
The change +/- of the NAV for that fund from the previous day.
The investment Compnay Act 1940 defines the follow person as an ________ person. Anyone directly or indirectly owning, controlling, or holding with power to vote, 5% or more of the outstanding voting securities of a company.
Affiliated Person
-
According to the ICA of 1940.
Any certificate, investment contract, or other security that represents an obligation on the part of the issuer to pay a stated sum in return for payment installments is refered to as a.
Face amount certificate
According to the ICA of 1940, In repect to an investment company,investment adviser or principal underwriter. All affiliate persons, their family members and business contacts within the past 2 years are considered ______ persons.
Interested
Any certificate, investment contract, or other security providing for a series of periodic payments by the holder and representing an individual interest is called a.
Periodic Payment Plan Certificate.
Any security under the terms of which the holder,upon presentation to the issuer, is entitled to receive his proportionate share of the issuer's current net assets.
Redeemable Security
The difference between the price of a security to the public and the net portion of the proceeds from its sale less deductions for various fees and expenses.
Sales Load
What rule is defined by "Payment of asset-based sales loads by registered open-end management investment companies."
Rule 12b-1