MUTUAL FUNDS

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MUTUAL FUNDS
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SERVICES PROVIDED

• risk intermediation
• denomination intermediation
• marketability
• economies of scale in investment management
• low transaction costs
• continuous cash flow

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TYPES

• Open end
• Closed end
• Investment Trust
• Load or No-Load

Shares certificate
Shares certificate
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FUND CATEGORY

• Aggressive Growth
• Global Equity
• Growth and Income
• Growth
• Income-Equity
• International
• Precious Metals/Gold
• Taxable Money Market
• Tax-Exempt Money Market--National
• Tax-Exempt Money Market--State

• Corporate Bond
• Ginnie Mae
• Global Bond
• High-Yield Bond
• Income-Bond
• National Muni Bond
• State Muni Bond
• U.S. Government Income
• Balanced
• Flexible Portfolio
• Income-Mixed

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STRUCTURE

• Ownership by shareholders--mutual
• Board and Management
• Investment Advisor
• Management Fees
• Operating Expenses
• Custodian, Transfer Agent
• Principal Underwriter

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REGULATION TAXATION

• Securities Act of 1933
• Securities Exchange Act of 1934
• Investment Company Act of 1940
• SEC rule 12b-1
• DIDMCA of 1980
• Insider Trading and Securities Act of 1988
• Market Reform Act of 1990

• Subchapter M
• Conduit theory

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PROSPECTUS
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INVESTING IN A MUTUAL FUND

• Buy direct from fund
• Broker
• Payroll deduction
• Auto-pay from bank account
• Automatic re-investment plans
• Minimum requirements for investing

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INVESTING IN A MUTUAL FUND, cont.

• Withdrawals
• Receive interest, dividends, capital gains
• Write check against balance
• Sell shares back
• Switch funds

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INSTITUTIONAL INVESTORS

• Over 40 of owned shares
• Fiduciaries--banks, trustees, guardians, estate
  administrators
• Banks-MMMF
• Others--other types
• Business Organizations
• Not-for-Profit Organizations

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MMMFs

• Transactional convenience
• Competition with banking

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REITs
Equity Trust Short-Term Mortgage Trust Long-Term
Mortgage Trust
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EQUITY TRUST

• Fund owns property with a
  mortgage
• Rental and lease cash flows pay off loans
• Reduction of debt and value increase produce
  INCREASE IN EQUITY for investor
• Depreciation TAX DEDUCTION

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REIT Profits and Cash Flows
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SHORT-TERM MORTGAGE TRUST

• Construction and development loans
• Leverage used
• Income to owners is based on different between
  the cost of funds and the return on
  loans granted

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LONG-TERM MORTGAGE TRUST

• Trust borrows money
• Long-term mortgages granted
• Small earnings from difference between borrowing
  and lending rates
• Most of the benefits come from Shared
  Appreciation deals