[...]... sales charge or load of 8.5% is shown as a percentage of the offering price Open-end investment companies are referred to as mutual funds Mutual funds are long-term investments because of the sales charge levied on the purchase It is a violation of NASD rules to encourage investors to trade load funds on a shortterm basis Short-term trading of load funds would result in excessive sales loads paid by... growth fund The two main types of growth funds are conservative growth funds and aggressive growth funds Conservative growth funds are also referred to as large capitalization funds or blue-chip funds Securities held in the portfolio of large capitalization funds are large capitalization companies such as General Electric, Coca Cola, General Motors, Exxon Corporation, and Home Depot Aggressive growth funds... 8.5% of the offering price, but 9.3% of the net amount invested in the fund If the XYZ Growth Fund instead was a no-load fund, the bid price and ask price would both be $14 The customer would have purchased 1071.429 shares $15,000 $14 ask price = 1071.429 shares Introduction 5 With a no-load fund the entire amount invested by the customer ($15,000) would be invested in the fund for the benefit of the... investment company because it has a managed portfolio of securities Assume Mr Lynch invests $20,000 in the ABC Growth Fund, an open-end investment company He will purchase a certain number of shares and is therefore called a shareholder in the fund The major assets of the ABC Growth Fund are the cash and securities in its portfolio The portfolio of the ABC Growth Fund fluctuates on a daily basis On certain business... settlement date, number of shares, and purchase price The management decisions relating to the portfolio will be made by the investor who owns the portfolio However, many investors do not feel comfortable managing their own portfolio and decide to invest in a mutual fund The managers of the mutual fund will decide what securities to buy and sell The investor must choose the type of fund to invest in The... The investment in the mutual fund is an investment in a security that fluctuates in value The mutual fund could decrease in value as well as increase in value To obtain a higher rate of return, the investor must assume a higher risk than he would assume from the CD The investment in the mutual fund is an investment in a security that fluctuates on a daily basis A mutual fund is also an investment company... aggressive growth funds take more risk in the hope of receiving higher returns Normally, younger investors seek growth of capital and invest in large capitalization funds or aggressive growth funds Assume our investor decided to invest her $50,000 in the Fidelity Large Capitalization Growth Fund instead of purchasing her own portfolio The bid price and the ask prices are stated as follows for the fund: Bid... by the board of directors Preferred stock comes ahead of common stock in the payment of dividends and has a claim on the assets prior to common stockholders (See Exhibit 1.1.) In a liquidation, creditors are always paid off ahead of owners Secured creditors are paid off prior to general creditors, and preferred stockholders are paid off prior to common stockholders Exhibit 1.1: Order of payment in... investment companies must be sold to customers by means of a prospectus, which is a written communication used to offer shares of an investment company to the public The prospectus contains information of interest to the ordinary investor Sales literature relating to mutual funds includes research reports, form letters, market letters, and reprints of previously published articles Sales literature must... Securities; Exempt Securities and Exempt Transactions Fraudulent and Other Prohibited Practices Regulatory Oversight, Criminal Penalties, Civil Liabilities, Scope of the Act, and General Provisions Boston Institute s Mutual Fund Advisor Course s Series 63 Test Preparation is designed to prepare a candidate for the Series 63 Examination The text should be thoroughly studied by the candidate All practice . Inc. Boston Institute of Finance Mutual Fund Advisor Course Boston Institute of Finance Mutual Fund Advisor Course Series. www.wiley.com. Library of Congress Cataloging-in-Publication Data: Boston Institute of Finance Boston Institute of Finance mutual fund advisor course: series