Course Code and Title : FINE-4 –Mutual fund

Lesson Number : 10
Topic : Management of Equity Fund Portfolio
Professor : Romualdo S. Del Agua/Jovencio Jemenez

INTRODUCTION:
Portfoliomanagement involves building and overseeing a selectionof investments that
will meet the long-term financial goals and risktolerance of an investor.
Active portfoliomanagement requiresstrategically buying and selling stocks and other
assets tobeat the broader market.

LEARNING OBJECTIVES:
1. Describe the characteristics of Portfolio Management.
2. Construct Passive & Active Portfolio Management
3. Evaluate Key Elements of Portfolio Management

PRE-ASSESSMENT
Direction:(10 pts.)Give at least (Unfamiliar) 10 Finance terminology abbreviations under Mutual Fund
(ACRO Name) with the definition. (Write your answer on the yellow sheet of paper.

LESSON PRESENTATION:
Portfolio management involves building and overseeing a selection of investments that will meet
the long-term financial goals and risk tolerance of an investor
.Active portfolio management requires strategically buying and selling stocks and other assets to
beat the broader market
What Is Portfolio Management?
Portfolio management is the art and science of selecting and overseeing a group of investments that
meet the long-term financial objectives and risk tolerance of a client, a company, or an institution.
Understanding Portfolio Management
Professional licensed portfolio managers work on behalf of clients, while individuals may choose to
build and manage their portfolios. In either case, the portfolio manager's ultimate goal is to maximize
the investments' expected to return within an appropriate level of risk exposure.
Active management involves attempting to beat the performance of an index by actively buying and
selling individual stocks and other assets.
Portfolio management involves building and overseeing a selection of investments that will meet the
long-term financial goals and risk tolerance of an investor.
Active portfolio management requires strategically buying and selling stocks and other assets to beat
the broader market.
Passive portfolio management seeks to match the returns of the market by mimicking the makeup of
a particular index or indexes.

Key Elements of Portfolio Management

Asset Allocation
The key to effective portfolio management is the long-term mix of assets. Generally, that means
stocks, bonds, and "cash" such as certificates of deposit. There are others, often referred to as
alternative investments, such as real estate, commodities, and derivatives.

Rebalancing
captures gains and opens new opportunities while keeping the portfolio in line with its original
risk/return profile.

Diversification
The only certainty in investing is that it is impossible to consistently predict winners and losers. The
prudent approach is to create a basket of investments that provides broad exposure within an asset
class.
Real diversification is made across various classes of securities, sectors of the economy, and
geographical regions.

Active Portfolio Management

Investors who implement an active management approach use fund managers or brokers to buy and
sell stocks in an attempt to outperform a specific index, such as the Standard & Poor's 500 Index or
the Russell 1000 Index.
Passive Portfolio Management
Passive portfolio management also referred to as index fund management aims to duplicate the
return of a particular market index or benchmark. Managers buy the same stocks that are listed on
the index, using the same weighting that they represent in the index.

ABBREVIATIONS ADB – Asian Development Bank AIG – American International Group AISF – AIG
Indian Sectoral Fund APVL – Asia Pacific Ventures Limited ASEAN – Association of Southeast Asian
Nations CAGR – compound annual growth rate CalPERS – California Public Employees Retirement
System CAPE – country assistance program evaluation CAPM – capital asset pricing model CLASS
– comprehensive loan administration and servicing system CPS – country partnership strategy CSP –
country strategy and program CTL – Controller’s Department DMC – developing member country
EBRD – European Bank for Reconstruction and Development EMPEA – Emerging Markets Private
Equity Association ESHS – environmental, social, health, and safety FDI – foreign direct investment
FIRR – financial internal rate of return GDP – gross domestic product HQPV – H&Q Philippine
Ventures Incorporated ICICI – Industrial Credit and Investment Corporation of India ICT – information
and communication technology IFC – International Finance Corporation IL&FS – Infrastructure
Leasing & Financial Services Limited IVCL – IL&FS Venture Capital Limited LAPIC – Lombard Asian
Private Investment Company LNWCEI – Liberty New World China Enterprises Investments MDB –
multilateral development bank NPL – nonperforming loan OED – Operations Evaluation Department
OGC – Office of the General Counsel OIST – Office of Information Systems and Technology PAU –
Project Administration Unit PCR – project completion report PEF – private equity fund PPER – project
performance evaluation report PPP – public–private partnership PRC – People’s Republic of China
PRISMS – private investment securities management system PSCM – Capital Markets and Financial
Sectors Division PSDS – private sector development strategy PSIM – private sector investment
management PSOD – Private Sector Operations Department RMU – Risk Management Unit RRP –
report and recommendation of the President RSDD – Regional and Sustainable Development
Department SMEs – small and medium-sized enterprises SOE – state-owned enterprise

GENERALIZATION:

At this point, the students should have learned about the Portfolio managers may be constrained by
the style, values, and approach of the investment firm they work for. Understanding the
taxation, equity fund is a type of fund that uses investors' capital to invest in funds that are managed
by experienced professional portfolio managers.
ACTIVITY/EVALUATION: (10 pts.)

Direction: Write your answer on the yellow sheet of paper

1.(10 pts.)Give at least 10 acro name and define.

2.(10 pts.) For about 3 to 5 sentences, At this point in time of Pandemic which of the two
Portfolio, Passive or Active Portfolio Management attempt to outperform a specific index? Why?

REINFORCEMENT:

Direction:(5 pts.) Identification, Write your answer on a yellow sheet paper

_____________________1. Referred to as index fund management, aims to duplicate the return of a
particular market index or benchmark.

_____________________2. Captures gains and opens new opportunities while keeping the portfolio
in line with its original risk/return profile.
_____________________3. Work on behalf of clients, while individuals may choose to build and
manage their own portfolios.
____________________4. Involves building and overseeing a selection ofinvestments that will
meet the long-term financial goals and risk tolerance of an investor.
____________________5. Is made across various classes of securities, sectors of the economy, and
geographical regions.

 REFERENCES:(Chapter 10)

https://corporatefinanceinstitute.com/resources/knowledge/valuation/what-is-equity-value/(using the
formula) sample solution

https://www.investopedia.com/terms/p/portfoliomanagement.asp( mgt. of equity portfolio) advance

reading assignment
Course Code and Title : FINE-4 –Mutual Fund
Lesson Number : 11
Topic : What are Equity Share and the Value of Equity Shares(WEEK-11)

Professor : Romualdo S. Del Agua /Jovencio Jemenez

 INTRODUCTION:

Equity shares are the shares joint-stock companies issue to the public as the main source of
long-term financing.Equity share value is stated in terms of the face value of each share,
which is also called issue price, par value, book value, or market value.

 LEARNING OBJECTIVES:

1.Identify the FREE financial advice/education to ensure that you are not misguided
while buying any kind of shares of stock.
2. Demonstrate the components of shareholders' equity and explain.
3.Evaluate the State issued corporation charter and shares of stock.

PRE-ASSESSMENT:
 Direction: Write your answer on a yellow sheet of paper.
For about 3 to 5 sentences discuss the following
1. Asset Allocation
2. Rebalancing
3. Diversification

 LESSON PRESENTATION:

Equity shares represent the ownership of a company and capital raised by the issue of
such shares is known as ownership capital or owner's funds. They are the foundation for the
creation of a company. Equity shareholders are paid based onthe earnings of the company and do
not get a fixed dividend.

Equity basics: Understanding startup stock As the name implies, a share of stock entitles the
holder to a portion of the company. If a company has 10,000 shares outstanding, each share
entitles the owner 0.01% of the company’s acquisition price if there’s a successful exit, 0.01% of
shares if the company goes public, or…next to nothing if the startup fails, unfortunately.
Who gets shares in a startup? Shareholders in private startups typically fall into one of three
groups:

 Founders: In the beginning, the founders control 100% of the company’s shares. Over time,
they’ll likely control fewer of them as they dole out shares in exchange for money or labor.
 Investors: Venture capitalists take a certain number of shares in return for their investment. As
the company raises more money, it issues more shares to its investors, diluting the shares of
everyone who invested previously. (This isn’t necessarily a bad thing, though, since the
company will presumably use the money to grow the pie for everyone).
 Employees: That’s you! Typically, your shares will be vested – that is, rather than getting all
your shares immediately, they’ll be doled out over a while to incentivize you to stay with your
employer.

How much is a share worth?

If you held a share in a public company, you’d know pretty quickly what it’s worth: All you’d have to do
is look up the ticker symbol to see what a share trades for. For example, you can look up the value of
an individual Tesla stock by searching “TSLA”. With private companies, it’s a little more difficult (and
jargon-filled). To assess their value, private companies will do a 409A valuation, in which a third party
estimates what the company is worth. To determine the current value of a share (called the fair
market value, or FMV), you divide the valuation by the number of shares outstanding.

For example, if a company is valued at $1 million and it has 100,000 shares outstanding, the FMV of
a share is $10. If that same company had 50,000 shares outstanding, the FMV would be $20. As you
can see, it’s the relative number of shares that counts, not the absolute number. An offer of 10,000
shares with 100,000 outstanding is worth the same amount as 20,000 shares with 200,000
outstanding. Between the 409a valuation and the number of shares outstanding, you can determine
how much a share is worth.

Stock options (ISO and NSO/NQSO): Stock options are commonly divided into Incentive Stock
Options and Non-qualified Stock Options (more information on the difference between these). With
either of these, have the option to buy shares at a later date. You’ll have an exercise price upfront,
which is the amount you can pay for the stock. The thinking is that the company’s value will rise
during your tenure as an employee, so you’ll be able to buy shares for less than they’re worth.
Sometimes, your exercise price will be lower than the stock’s current value, increasing your options’
worth.

GENERALIZATION:The students should be able tolearnthat shareholder equity can represent the
book value of a company share capital and retained earnings less the value of treasury shares assets
minus its debt, ROE could be thought of as the return on net assets.

ACTIVITY/EVALUATION: (10 pts.)

Direction: For about 5 to 10 sentences discuss the types of Equity Shares Cycles.

REINFORCEMENT:

Direction: Write your answer on a yellow sheet of paper

Out of 10 commandments of mutual fund investment, Discuss the 3 major investment fund.

1.CORRECTLY EVALUATE FUND RETURNS

2. DIVERSIFY THE CLIENT'S PORTFOLIO

3. SCRUTINIZE FUND EXPENSES

REFERENCES:
https://corporatefinanceinstitute.com/resources/knowledge/valuation/what-is-equity-value/(using
the formula) sample solution
Course Code and Title : FINE-4 –Mutual Fund
Lesson Number : 12
Topic : Accounting and Valuation of Mutual Funds

Professor : Romualdo S. Del Agua/Jovencio Jemenez

INTRODUCTION:

Mutual funds accounting involves portfolio valuation, net asset value (NAV) calculation, and
client record keeping. It is a complex and vital process.

LEARNING OBJECTIVES:

1. Identify the Mutual funds accounting portfolio valuation

2. Illustrate the difference between amortized cost, fair value and the equity method for
reporting debt securities
3. Evaluate (NAV) Net Asset Value, and client record keeping.

PRE-ASSESSMENT:

Direction: Write your answer on the yellow sheet of paper

For about 2 to 3 sentences discuss the three groups typically under private shareholders.
1.Founders
2.Investors
3.Employees
LESSON PRESENTATION:

Mutual funds accounting involves portfolio valuation, net asset value (NAV) calculation, and
client record keeping. It is a complex and vital process fund accountant is kept on staff to
calculate the fund's NAV, the daily value of the portfolio that determines if share prices go up
or down.
Mutual funds accounting is a critical matter for the financial system, given the increasing
preference for mutual funds over direct holdings of securities such as stocks and bonds by the
investing public. In particular, many, if not most, individual investors and retail clients have the
majority of their savings in employer-sponsored 401(k) plans, which typically offer a selection
of mutual funds as the investment choices. The end product of mutual funds accounting is the
accurate pricing of these investment vehicles and the correct assignment of investment income
to holders thereof.
Aspects of Mutual Funds Accounting

Mutual fund accounting encompasses a variety of basic tasks, which may be performed by in-house
staff or outsourced to other providers, such as custodian banks. These processes include:

 Calculating the value of its investment portfolio daily—known as the net asset value (NAV).
 Anticipating and recording all income, such as dividends and interest.
 Recording accruing interest on bonds and other similar fixed income securities held in the
investment portfolio.
 Properly amortizing the discount or premium on bond purchases. See the detailed explanation
below.
 Recording all securities transactions, such as buys and sales of portfolio investments.
 Recording all realized capital gains, both short-term, and long-term, that result from securities
transactions in the fund.
 Recording all inflows and outflows of funds due to purchases and redemptions of shares by
investors.
  Maintaining records of the shares owned, and transactions made, by each shareholder in the
fund.
 Tracking distributions of income and capital gains made to shareholders in the fund.

In the best mutual funds accounting departments, these activities will be highly automated. However,
some manual input, reviews, and adjustments may still be necessary.
Net Asset Value

Often abbreviated NAV, it is the aggregate value of a mutual fund's investment portfolio divided by the
number of its shares outstanding. The standard convention is to calculate NAV at the end of each
trading day, based on the closing prices of all securities held therein. NAV also takes account of other
activities listed above.
Bond Amortization
When bonds are purchased at a discount or premium to their par value (that is, at a price lower or
higher than the principal value that will be returned to the investor holding it when the bond matures),
the difference between the purchase price and par value is recorded over time as an adjustment to
the interest income generated by the bond.
The interest income recognized on a bond bought at a discount will be higher than the actual interest
payments received.

GENERALIZATION:

The students should be able to learn Mutual funds accounting involves portfolio valuation, net
asset value (NAV) calculation, and client record keeping. It is a complex and vital process. Like
any business, mutual funds incur routine costs that encompass administrative, investment
management, legal, accounting, and marketing aspects of the operations.

ACTIVITY/EVALUATION: (5 pts.)True or False

Direction: Write your answer on the yellow sheet of paper

1.The difference between the purchase price and par value is recorded over time as an adjustment to
the interest income generated by the bond.
2. Mutual funds accounting involves portfolio valuation, net asset value (NAV) calculation, and client
record keeping.

3. The standard convention is to calculate NAV at the end of each trading day, based on the closing
prices of all securities held therein.

4. Mutual funds accounting is a critical matter for the financial system, given the increasing
preference for mutual funds over direct holdings of securities such as stocks and bonds by the
investing public.

5. When bonds are purchased at a discount or premium to their par value (that is, at a price lower or
higher than the principal value that will be returned to the investor holding it when the bond matures)

REINFORCEMENT:

Direction: Write your answer on the yellow sheet paper.

For about 3 to 5 sentences discuss the following:

1. Paid-in Capital (also referred to as Contributed Capital)

2. Retained Earnings

3. Treasury Stock

4. Accumulated Other Comprehensive Income

REFERENCES:(Chapter 12)

https://www.thebalancecareers.com/mutual-funds-accounting-12872839acctg.

https://www.studocu.com/en-us/document/st-johns-university/public-finance/lecture-notes/mutual-
funds-lecture-notes-6/6028010/viewaCCTG. 7 valuations of mutual funds lecture (advance reading &
assignment)

https://www.slideshare.net/BabasabPatil/mutual-fund-valuation-and-accounting-notes-bec-doms
(access.and valuation of mutual funds ppt)

https://www.accountingcoach.com/evaluating-business-investments/quiz (Acctg. and valuation of

mutual funds quiz ( answer question 1 to 5 items only, use yellow pad)
Course Code and Title : FINE-4 –Mutual fund
Lesson Number : 13
Topic : To study what is NAV and its importance and calculating value
net asset
Professor : Romualdo S. Del Agua/Jovencio Jemenez

INTRODUCTION:

Equity shares are the shares joint-stock companies issue to the public as the main source of
long-term financing. ... Equity share value is stated in terms of the face value of each share,
which is also called issue price, par value, book value, or market value.

LEARNING OBJECTIVES:

1. Identify NAV is used to measure the value of one share of a mutual fund.
2. Demonstrate the value of a fund's assets, cash held, liabilities, and the number of
shares outstanding constantly fluctuating
3. Evaluate Mutual funds are often offered by banks or investment companies.
PRE-ASSESSMENT: (7 pts.)

Direction: Write your answer on the yellow sheet of paper

Enumerate the 7 Aspects of Mutual Funds Accounting

LESSON PRESENTATION:

Net asset value (NAV) is simply the value of a mutual fund's assets held in a portfolio. NAV is used to
measure the value of one share of a mutual fund. Net asset value is calculated daily.The term "net
asset value" is commonly used with mutual funds and is used to ... According to the SEC,
mutual funds and Unit Investment Trusts (UITs) are required to calculate their NAV.
... Learn 100% online from anywhere in the world. ... As far as determining which fund is better,
it is important to look at the ...

Accounting For Stockholders' Equity

A corporation's balance sheet reports its assets, liabilities, and stockholders' equity. Stockholders'
equity is the difference (or residual) of assets minus liabilities.

Below are the items that a corporation is required to report on its balance sheet in the stockholder's
equity section. We will discuss them in the order they would appear on a balance sheet:

1. Paid-in Capital (also referred to as Contributed Capital)

2. Retained Earnings

3. Treasury Stock

4. Accumulated Other Comprehensive Income

In finance,

equity is ownership of assets that may have debts or other liabilities attached to them. Equity is
measured for accounting purposes by subtracting liabilities from the value of an asset. For example, if
someone owns a car worth $9,000 and owes $3,000 on the loan used to buy the car, then the
difference of $6,000 is equity. Equity can apply to a single asset, such as a car or house, or an entire
business. A business that needs to start up or expand its operations can sell its equity to raise cash
that does not have to be repaid on a set schedule.

Accounting

Financial accounting defines the equity of a business as the net balance of its assets is reduced by its
liabilities.

accounting equation requires that the total of liabilities and equity is equal to the total of all assets at
the close of each accounting period. To satisfy this requirement, all events that affect total assets and
total liabilities unequally must eventually be reported as changes in equity. Businesses summarize
their equity in a financial statement known as the balance sheet (or statement of net position) which
shows the total assets, the specific equity balances, and the total liabilities and equity (or deficit).

Various types of equity can appear on a balance sheet, depending on the form and purpose of the
business entity. Preferred stock, share capital (or capital stock), and capital surplus (or additional
paid-in capital) reflect original contributions to the business from its investors or organizers. Treasury
stock appears as a contra-equity balance (an offset to equity) that reflects the amount that the
business has paid to repurchase stock from shareholders. Retained earnings (or accumulated deficit)
is the running total of the business's net income and losses, excluding any dividends. In the United
Kingdom and other countries that use its accounting methods, equity includes
various reserve accounts that are used for particular reconciliations of the balance sheet.

Another financial statement, the statement of changes in equity, details the changes in these equity
accounts from one accounting period to the next. Several events can produce changes in a firm's
equity.

 Capital investments: Contributions of cash from outside the firm increase its base capital and
capital surplus by the amount contributed.

 Accumulated results: Income or losses may be accumulated in an equity account called

"retained earnings" or "accumulated deficit", depending on its net balance.

 Unrealized investment results: Changes in the value of securities that the firm owns, or foreign
currency holdings, are accumulated in its equity.

 Dividends: The firm reduces its retained earnings by the amount of cash payable to
shareholders.

 Stock repurchases: When the firm purchases share into its treasury, the amount paid for the
stock is reflected in the treasury stock account.
 Liquidation: A firm that liquidates with positive equity can distribute it to owners in one or several
cash payments.

What is Stockholders Equity?

Stockholders Equity (also known as Shareholders Equity) is an account on a company’s balance
sheet that consists of share capital plus retained earnings. It also represents the residual value of
assets minus liabilities. By rearranging the original accounting equation, Assets = Liabilities +
Stockholders Equity, it can also be expressed as Stockholders Equity = Assets – Liabilities.

Components of Stockholders Equity

Stockholders Equity is influenced by several components:

1. Share Capital – amounts received by the reporting entity from transactions with its owners are
referred to as share capital.
2. Retained Earnings – amounts earned through income, referred to as Retained Earnings and
Accumulated Other Comprehensive Income (for IFRS only). For more on Retained Earnings,
please click the link above.
3. Net Income & Dividends – Net income increases retained earnings while dividend payments
reduce retained earnings.

Contributed Capital

Contributed Capital (share capital) refers to amounts received by the reporting company from
transactions with shareholders. Companies can generally issue either common shares or preferred
shares. Common shares represent residual ownership in a company and the event of liquidation or
dividend payments, common shares can only receive payments after preferred shareholders have
been paid first.
If a company were to issue 10,000 common shares for $50 each, the contributed capital would be
equal to $500,000. The journal entry would be:

DR Cash 500,000

CR Common Shares 500,000

In addition to shares being sold for cash as in the previous example, it is also common to see
companies selling shares on a subscription basis. In these situations, the buyer usually makes a
down payment on purchasing a certain number of shares and agrees to pay the remaining amount at
a later date. For example, if XYZ Company sells 10,000 common shares for $10 each on a
subscription basis that requires the buyer to pay $3 per share when the contract is signed and the
remaining balance 2 months later, the journal entry would appear as follows:

DR Cash 30,000

DR Share Subscriptions Receivable 70,000

CR Common shares subscribed 100,000

The share subscriptions receivable functions were similar to the accounts receivable (A/R) account.
Once the receivable payment is paid in full, the common shares subscribed account is closed and the
shares are issued to the purchaser.

DR Cash 70,000

CR Share Subscriptions Receivable 70,000

DR Common shares subscribed 100,000

CR Common Shares 100,000

GENERALIZATION:

The students should be able to learn NAV (Net Asset Value) refers to the total equity of a
business. While NAV can be applied to any entity, it is mostly used to reference investment
funds,Net asset value is calculated by taking the assets held in a portfolio, including cash, less
all liabilities, divided by the total number of shares outstanding. The market value of assets is
simply the price that an asset is currently worth in the market.

ACTIVITY/EVALUATION:

Direction: 15 pts. (Identify the missing words ) Write your answer on the yellow sheet of paper

. __________________1.defines the equity of a business as the net balance of its assets is reduced
by its liabilities.

_________________ 2.requires that the total of liabilities and equity is equal to the total of all assets
at the close of each accounting period. To satisfy this requirement, all events that affect total assets
and total liabilities unequally must eventually be reported as changes in equity. Businesses
summarize their equity in a _____________3. known as the ________________4. (or statement of
net position) which shows the total assets, the specific equity balances, and the total liabilities and
equity (or deficit).

Various types of equity can appear on a balance sheet, depending on the form and purpose of the
business entity._______________5. share capital (or capital stock), and ____________6. (or
additional paid-in capital) reflect original contributions to the business from its investors or
organizers. _____________7. appears as a ____________8. balance (an offset to equity) that
reflects the amount that the business has paid to _____________9. stock from
shareholders. ________________10. (or accumulated deficit) is the running total of the business's
net income and losses, excluding any ____________11. In the _____________12. and other
countries that use its accounting methods, equity includes various ___________13. accounts that are
used for particular reconciliations of the balance sheet.

Another financial statement, the statement of _________________14., details the changes in these
equity accounts from one accounting period to the next. Several events can produce changes in a
________________15.
REINFORCEMENT:

( 10 pts.) Define the following:

Direction: Write your answer on the yellow sheet paper

1.Capital investments

2.Accumulated results

3.Unrealized investment results

4.Dividends

5.Stock repurchases

REFERENCES:(Chapter- 13)

https://www.slideshare.net/SaraCooper161/net-asset-value-nav ppt
Course Code and Title : FINE-4 –Mutual fund

Lesson Number : 14

Topic : Prospectus and Annual Reports of Mutual Fund

Professor : Prof. Romualdo S. Del Agua

INTRODUCTION:

A mutual fund annual report, along with a fund's prospectus and statement of
additional information, is a source of multi-year fund data and performance, which is
made available to fund shareholders as well as to prospective fund investors. ...
The report shows how well the fund fared over the fiscal year

LEARNING OBJECTIVES:

1.To identify the performance of the funds that uniquely distinguishes them from
other funds.
2. To Illustrate asset portfolios more readily and with less timely public
knowledge than most other firms.
3.)To evaluate the characteristics of mutual fund investment fund, and other
information in the prospectus and annual reports.
 PRE-ASSESSMENT:

Direction: Write your answer on the yellow sheet of paper (Define the following)

1.Capital investments

2.Accumulated results

3.Unrealized investment results

4.Dividends

5.Stock repurchases

6Liquidation

LESSON PRESENTATION:

A mutual fund annual report, along with a fund's prospectus and statement of
additional information, is a source of multi-year fund data and performance, which is
made available to fund shareholders as well as to prospective fund investors.
Before you invest in any registered investment company you should read its prospectus
and any other available information about the investment. Below you’ll find descriptions
of the different types of information these funds and variable contracts provide to
investors.

Registered investment companies include:

 mutual funds,
 exchange-traded funds (ETFs),
 registered closed-end funds,
 unit investment trusts (UITs),
 variable annuity contracts, and
 variable life insurance contracts.
Prospectus
What funds or variable contracts have prospectuses?
All funds and variable contracts must provide investors with a prospectus.
What information is included in a prospectus?
A prospectus contains important information about a fund’s fees and expenses,
investment objectives, investment strategies, risks, performance, pricing, and more.
When will I get a prospectus?
When you purchase shares of a mutual fund, ETF, or UIT:
The fund must provide you with a prospectus. Depending on your preferences and the
fund’s practices, this could mean delivery of a paper copy of the prospectus or e-
delivery of the prospectus. If you receive a summary prospectus, the fund’s full
prospectus will be available on its website. You can also always request a paper copy
free of charge.
Statement Of Additional Information (SAI)
What funds or variable contracts have SAIs?
Mutual funds, ETFs, registered closed-end funds, and some variable contracts generally
will have statements of additional information (SAIs).
What information is included in an SAI?
The SAI conveys additional information about the fund or variable contract that some
investors find useful. The SAI may contain expanded discussions of the matters
described in the prospectus.
When will I get an SAI?
Funds and variable contracts are not required to deliver SAIs to investors unless
investors request it. Some funds and variable contracts may not have separate SAIs
because they are allowed to include in the prospectus the information required to be
disclosed in the SAI.
Shareholder Reports
What funds or variable contracts have shareholder reports?
A mutual fund, an ETF, and a registered closed-end fund must provide shareholders
with annual and semi-annual reports.
When will I get shareholder reports?
Beginning on January 1, 2021, funds may no longer have to mail paper copies of
shareholder reports to investors, unless investors specifically request them. Instead,
some funds can elect to post shareholder reports on their website.
Other Reports
Mutual funds, ETFs, registered closed-end funds, and some variable contracts must file
Form N-PORT and Form N-PX on the SEC’s EDGAR database.
What is Form N-PORT?
Funds file Form N-PORT with the Commission each month. This form includes detailed
portfolio holdings data but only information contained in the report for the last month of
each fund’s fiscal quarter is available to the public.
What is Form N-PX?
Form N-PX is an annual report that funds file no later than August 31 each year. It
identifies specific proposals on which the fund has voted portfolio securities and
discloses how the fund voted.
What is a currency forward? A currency forward is a direct agreement between the
Fund and a counterparty to buy or sell a foreign currency in exchange for another
currency at a specific exchange rate on a future date.
What is a future? A future is an agreement between the Fund and a counterparty made
through a U.S. or foreign futures exchange to buy or sell an underlying instrument or
asset at a specific price on a future date.
What is meant by hedge? To hedge an investment is to take a position intended to
offset potential losses that may be incurred by a companion financial instrument.
Hedging an investment may also offset potential gain

GENERALIZATION:
The students should be able to learn that prospectus provides you an annual report,
Mutual funds that are registered with the SEC must send reports to their investor
bulletin focuses primarily on the annual report; however, many of the review the
portfolio holdings, risks disclosed in the fund’s prospectus. review of fund
shareholder reports .
ACTIVITY/EVALUATION:

Direction: Write your answer on the yellow sheet of paper.

Under Mutual funds, ETFs, registered closed-end funds

Differentiate the variable contracts between the ff:
1.File Form N-PORT
2. Form N-PX on the SEC’s EDGAR database.
3. What is Form N-PORT?

REINFORCEMENT:

Direction:Write your answer on the yellow sheet paper (for about 5 to 10 sentences
only)
1..How do you evaluate a prospectus?
2. How do you read a mutual fund prospectus?

REFERENCES: (Chapter 14)

https://www.slideserve.com/holland/how-to-read-a-mutual-fund-prospectus ppt
COURSE CODE AND TITLE: FINE-4 –Mutual fund

Lesson Number: 15

Topic: The importance of mutual fund prospectus

Professor: Mr. Romualdo S. del agua

INTRODUCTION:

A mutual fund prospectus is a document detailing the investment objectives and

strategies of a particular fund or group of funds, as well as the finer points of
the fund's past performance, managers and financial information. ...
Many fund companies also provide PDF versions of their prospectuses on their
websites.

LEARNING OBJECTIVES:

1.To identify the performance and details of prospectus fund, including

both recent quarterly results and those from previous calendar years.
2. To demonstrate the description gives investors opportunity to review
a fund's objectives to make sure that they match the investors' own goals.
3. Evaluate mutual funds for investment purposes.
 PRE-ASSESSMENT:

Direction: Write your answer on the yellow sheet of paper.

For about 5 to 10 from the following registration invest companies below choice one
company and discuss the other importance information under prospectus.

Registered investment companies include:

 mutual funds,
 exchange-traded funds (ETFs),
 registered closed-end funds,
 unit investment trusts (UITs),
 variable annuity contracts, and
 variable life insurance contracts.

LESSON PRESENTATION:

Mutual funds must provide a copy of the fund's prospectus to shareholders after they
purchase ... long-form prospectus with which most mutual fund investors are familiar

As a mutual fund investor, you've probably heard it said more than once that you should
always consult a mutual fund's prospectus before handing over your money. However,
the terminology in a mutual fund prospectus can be daunting. It's no secret that the size
of this document and the type of information inside can be hard to tackle. But don't get
overwhelmed. Here is a guide to what a prospectus is, why it is important and what
items should be central to your considerations.

Understanding Mutual Fund Prospectuses

A prospectus is a legally binding contract between the fund and the fundholder. It's easy
to get lost in all the legal jargon and miss the information that matters most to you, so
we're sharing an outline of sections to which special attention should be paid.

Investment Objectives

These are the fund's financial goals, which are reflected in the types of securities
chosen to achieve those goals. Types of investment objectives include long-term capital
growth, stable income, high total return, etc.

Investment Strategies

This part of the prospectus explains the way in which a fund allocates and manages its
resources to achieve its investment objectives. Aspects considered when designing
such a strategy include setting goals for net asset value, determining asset allocation,
investment restrictions (such as only investing in certain industries) and deciding
whether (and how) derivatives may be used.

A fund's investment strategy, like its goals, should be in sync with your investment style.
For example, although a small-cap fund and a large-cap equity fund are both aiming for
long-term capital appreciation, they are both using very different strategies to reach this
goal. Before choosing one type of fund over another, make sure you consider why
investing in any one of these asset types is right for you. Otherwise, you might be in for
some surprises!

Risks of Investing in the Fund

Because investors have varying degrees of risk tolerance, the risk section of a
prospectus is very important. It details the risks associated with a particular fund, such
as credit risk, interest rate risk, market risk and so on.
Past Performance

This section shows you the fund's track record, but do remember the common
disclaimer that "past performance is not an indication of future performance." 2 Read the
historical performance of the fund critically and make sure to take into account both
long- and short-term performance.

Distribution Policy

A fund pays its investors income from realized capital gains, dividends, interest, or other
income stemming from the securities and investing activities of the fund. The distribution
policy tells you how these payments are made.

Past Performance

This section is extremely important to consider because fees and expenses will eat into
your total investment return from the fund.

GENERALIZATION:

The students should be able to learn prospectuses contain important information,

including the fund's investment objectives or goals, its strategies for achieving these
instruments entirely risk free , Diversification is an important concept in investment of
mutual funds.
ACTIVITY/EVALUATION:

Direction: Write your answer on the yellow sheet of paper.

Define the following:

1.Risks of Investing in the Fund

2. Past Performance

3. Distribution Policy

REINFORCEMENT:

Direction: Write your answer on the yellow sheet of paper.

A prospectus is a legally binding contract between the fund and the fund holder almost
of the two concept have special attention:

So how do we apply the concepts under Mutual Fund (for about 5 to 10 sentences)

1.Investment Objectives

2.Investment Strategies

REFERENCES: (Chapter 15)

https://finance.zacks.com/importance-prospectus-1022.html

https://www.slideshare.net/kartikganga/the-growing
COURSE CODE AND TITLE: FINE-4 –Mutual fund

Lesson Number: 16

Topic: Evaluation of performance of mutual funds

Professor: Mr. Romualdo del agua

INTRODUCTION:

Many of the financial instruments mutual fund is one of the most attractive
financial investment instrument that plays a vital role in the economy of a country.
Mutual fund schemes provides new opportunities for investors. Mutual fund
Industry during the last few years many extraordinary and rapid changes have
been seen in the Mutual fund industry. Therefore, due to the changed
environment it becomes important to investigate the mutual fund performance.

LEARNING OBJECTIVES::
1.Identify the primary objective and the present project is to know about
 which mutual funds gave highest performance
2.To illustrate and know about types of in a short-term period mutual funds
3.To evaluate the growth oriented detail Mutual Fund are earning higher returns
than market Portfolio.

PRE-ASSESSMENT:

Direction:Write your answer on the yellow sheet paper ( Ture or False)

1. Both small-cap fund and a large-cap equity fund are both aiming for long-term capital
appreciation, different strategies and goal and objectives.

2. The risks is associated with a particular fund, such as credit risk, interest rate
risk, market risk and so on.

3. A part of prospectus explains the way in which a fund allocates and manages its
resources to achieve its investment objectives.

4. Mutual funds must provide a copy of the fund's prospectus to shareholders after
they purchase for investor familiarity.

5. A prospectus is a legally binding contract between the fund and the fund holder.

LESSON PRESENTATION:
Introduction of different species of mutual funds and their performance. The.
success of this sector depends on the performance and the role of regulatory
bodies A mutual fund will state its own investment objective and investors as
a part of their own investment. Evaluating the performance of a mutual fund was
primarily the idea of Security Exchange. Commission ...

5 keys to evaluate performance of your Mutual Funds

Investing in mutual funds has an inherent risk assumed upon the ownership. However,
performance of the mutual funds can be quantified with the mathematical calculation of
the historical returns. The correlation of the potential risk and the potential returns
constantly put forth the opportunities to invest in mutual funds and drive maximum
potential returns with minimum underlying risk.

Risk adjusted returns

Risk adjusted returns are the calculative returns your funds make compared to the risk
indicated over the period of time. If compared, a couple of mutual funds which drive the
same percentage of returns over the same period of time, the lesser risk funds have a
higher Risk Adjusted Returns.

Benchmark
Benchmarking is the measurement of quality of the funds against the standard
measurements. It is a point of reference compared to the funds peer markets.
Irrespective of the objectives of investment in mutual funds, benchmark helps you
gauge the performance of your investment against the market competition. Considering
historical returns against the market conditions will help you determine the relevance of
the performance benchmark for your investments. However, historical return is not a
reliable indicator of future results.

Relative Performance with peers

Relative performance with peers is a yardstick of the effectiveness of your mutual fund
of the same category. Mutual Funds actively try to top the ranking of the fund universe.
Intended towards a higher return for the determined period of value learning, the relative
peer performance is recommended.

How to Evaluate the Performance of a Mutual Fund ?

Mutual fund investments call for some level of financial knowledge and market
awareness. Here, investors have two choices. Either buy a regular fund from any
intermediary or conduct prolific research to invest directly. But an investor’s
responsibilities do not end after that. It would help if you also kept an eye on how the
fund performs in the market. We have covered the following in this article:

1. How to evaluate mutual fund performance?

 2. Why should you track the investment performance?
3. How often should you evaluate the fund performance?
4. What are the traits of a good mutual fund?
5. Evaluating fund performance using financial ratios?

1. How to Evaluate Mutual Fund Performance

a. Define the Investment Goals

What is the purpose of my investment? Answer to this should be the foundation of your
mutual fund choices. For instance, if you want a regular income with capital protection,
you can choose to invest in a debt fund. However, if you have a higher risk appetite and
an aim to build your wealth, equities will suit your purpose. So it is crucial to define your
financial goal first and then decide your investment. This also has a pivotal role in fund
evaluation.

b. Shortlist a few peer Funds to compare

It is difficult to assess a mutual fund in isolation. So, you should always make a small list
of comparable funds and continuously compare them. There are many FinTech firms
and third party websites that offer free mutual fund screener tools.

c. Check the historical Performance Data

Now every mutual fund handbook comes with a disclaimer stating that past
performance is no indicator of future performance. However, this data can help you
check how the fund has fared across different market cycles. Consistency can also
shed light on the skill of the fund manager. In short, it will be easier for you to find a fund
with lower risks but higher returns.
d. Fee Structure of the Fund

A mutual fund company charges you for its services and expertise. Some funds require
deft management and quick decisions on whether to buy, sell or hold on to an asset.
Please remember that a fund with a higher fee is automatically better. Do check out
other parameters too before choosing.

e. Risk-Adjusted Returns

Every fund expects certain risks related to the market and the industry. When fund
strategies in such a way that they make more returns against anticipated risks, we call
them risk-adjusted returns.

f. Performance against Index

Indexes like Nifty, BSE Sensex and BSE 200 set benchmarks, and all fund
performances are evaluated on this basis. Comparing different timelines against the
benchmark as well as peers, can be insightful. A well-managed fund won’t fall too hard
during a market low.

2. Why track the Investment Performance

You might have seen the disclaimer that past performance does not indicate the future
performance of a fund’. It means that you cannot expect guaranteed returns on
investment. Therefore, you need to look beyond the previous years’ returns to assess a
mutual fund. Primarily, you should monitor your investments so that you can make
informed decisions that can lead to higher returns.

You know that the capital market keeps fluctuating with changes in the overall economic
conditions. Such a change disturbs the asset allocation of the portfolio. For instance, an
original allocation of 50:50 in equity and debt may change to 60:40 owing to a market
rally. It may increase the risk profile of the fund beyond your requirements. Fund
evaluation also helps you to compare the performance of your investment against other
similar funds. Additionally, a change in fund manager or fundamental attributes of your
fund may also trigger an evaluation. Hence, a review and rebalancing might be required
to keep the risk profile of the portfolio intact.

3. How often to Evaluate Fund Performance

The market is subject to fluctuations. However, that doesn’t mean you need to assess
the fund performance daily. Ideally, you should evaluate your fund every six months to a
year, depending on the tenure of the investment. Evaluating the funds in a shorter
period does not give an accurate insight into the performance of your investments. If all
this sounds too much, you may invest in regular funds. As qualified intermediaries, they
advise you to invest in funds based on your financial goals and risk profile.

4. Financial Ratios & Fund Performance

While you may have taken due diligence and advice before investing, you still need to
track the performance of your funds. The easiest way to do it is by using the fund fact
sheet. In simple terms, the fund fact sheet shows the performance of all the schemes
managed by your fund house, including your investment. You must compare these
financial ratios with the mutual fund schemes in the same category to understand where
your fund stands.

a. Alpha

The fund’s Alpha gives an overview of the fund manager’s skills and strategies and how
they fared in the past. It should always be higher than the expense ratio of the fund.
Additionally, your fund’s Alpha needs to be higher than the peers, which are at a similar
level of beta.

b. Expense Ratio

This is essentially the fee for the fund house for managing your mutual fund. Expense
ratios reflects the value-for-money aspect of a fund. It consists of fund management
charges and all the other costs related to that of fund management. It impacts your
ultimate take-home returns.

c. Benchmark

It is always advisable to compare the fund performance against the benchmark.

The benchmark acts as a standard for funds’ performance. If your fund is outperforming
the benchmark consistently, it is a sign that the fund is doing well. You can also
compare the average return during a specific time frame with its peer funds in the same
category.

d. Portfolio Holdings

Look for considerable changes and probable overlapping in the portfolio holdings. The
fund needs to hold good quality stocks which have a lower Price to Earnings-per-share
(P/E) Ratio vis-a-vis Price to Book Value (P/B) ratio. Additionally, ensure that the fund is
investing as per its investment objective. For instance, fund having a high portfolio
turnover ratio vis-a-vis lower returns is a bad indicator.

e. Sharpe Ratio

This ratio shows how much extra return you receive for the additional risks you
undertake. It is a rule of thumb that higher risks must be compensated more. Moreover,
you deserve a reward (excess returns) for the added volatility. Sharpe Ratio tells you
how much exactly that reward should be.

In short, consistency says a lot about performance. If you think that doing all this
research and analytics is beyond you, you can always invest with ClearTax Save. With
hand-picked funds from the top fund houses in the country, you are in safe hands.
Generalization: The students should be able to learn the Evaluating mutual
funds requires skill. Investing in mutual funds has an inherent risk assumed upon the
ownership. In order to match your investment patterns with mutual funds there are some
parameters to consider. Evaluate the past performance.

ACTIVITY/EVALUATION:

Direction: Write your answer on the yellow sheet paper.

REINFORCEMENT:

Direction: Write your answer on the yellow sheet paper. (for about 5 to 10
sentences only)

1.Who regulates the mutual fund industry?

2. What are the three basic structures of mutual funds?

REFERENCES: (Chapter 16)

https://www.coursera.org/lecture/investments-applications/4-1-1-overview-of-
performance-of-mutual-funds-XFWdR

https://quizizz.com/admin/quiz/5acc87d33f082e001becee2d/ portfolio-performance-
evaluation (quiz) from 1 to 5 items only
COURSE CODE AND TITLE: FINE-4 –Mutual fund

Lesson Number: 17

Topic: Regulations of Mutual Fund Industry

Professor: Mr. Romualdo S. del agua

INTRODUCTION:

Mutual funds must comply with a strict set of rules that are monitored by the Securities
and Exchange Commission (SEC). The SEC keeps a close eye on a fund's compliance
with the Investment Company Act of 1940, as well as its adherence to other federal
rules and regulations.

LEARNING OBJECTIVE:

1.Identify workings of Exchange Traded Funds on asset portfolios.

2.Illustrate the performance of mutual fund schemes (equity schemes)
3.Evaluate the different types of mutual fund.
PRE-ASSESSMENT:

Direction: Write your answer on the yellow sheet paper. (FOR ABOUT 5 TO 10
SENTENCES ANSWER THE FOLLOWING QUESTION)

1.What are the traits of a good mutual fund?

2.Evaluating fund performance using financial ratios?

LESSON PRESENTATION:

This act also created the Securities and Exchange Commission, which is the
principal regulator of mutual funds. The Revenue Act of 1936
established guidelines for the taxation of mutual funds. ...
The Investment Company Act of 1940 established rules specifically
governing mutual funds.

A Successful Regulatory Regime

Investment companies are one of America's primary savings and investment vehicles. A
recent survey found that mutual fund ownership has increased to a record 50.6 million
U.S. households - nearly half of the households in the nation. A strong stock market and
robust American economy provided a favorable environment for continued investment
company growth during 1999, as assets increased by more than $1.3 trillion. As of
March 31, 2000, over $7.6 trillion was invested in investment companies in the United
States. At the end of 1999, a total of 30,455 investment company portfolios were
managed or sponsored by 1,080 investment company complexes. The $7.6 trillion in
assets managed by investment companies today is more than double the $3 trillion on
deposit at commercial banks in the United States. As you know, the explosive growth of
mutual funds in the U.S. has not gone unnoticed by European companies and investors.
This past year has seen a record pace of acquisitions of U.S. asset-management firms
by non-U.S. buyers - primarily European companies.
II. Background on Investment Company Regulation

One source of the Investment Company Act's highly regulatory nature is the unique
structure of the typical investment company in the U.S. Unlike a regular operating
company, investment company employees do not operate investment companies.
Instead, funds typically rely on external service providers, like the fund's investment
adviser, to conduct the fund's day-to-day business, including managing the fund's
portfolio and providing administrative services. Additionally, the officers of funds are
usually affiliated with the fund's adviser, or the other outside service providers, such as
the fund's administrator or underwriter. Consequently, the interests of fund management
and shareholders of a fund may diverge in important ways.

III. Provisions of the Investment Company Act

The Investment Company Act imposes significant requirements on the organization and
operation of investment companies, reflecting Congress' view that disclosure alone
would not cure the abuses it found in the industry in the 1930's. The heart of the
Investment Company Act is Section 17, which prohibits a wide array of investment
company insiders from using the investment company to benefit themselves to the
detriment of the company and its shareholders. Section 10(f), which prohibits an
investment company from purchasing securities that are underwritten by a syndicate
containing an investment company affiliate, is also important.

IV. Adaption to Change

Since 1940, the Investment Company Act has proved to be remarkably resilient. Indeed,
the true genius of the Act was its drafters' understanding that markets and
circumstances change, and that industries evolve. For example, the Investment
Company Act gives the SEC express authority to exempt any person, security, or
transaction from any section of the Act - consistent with the protection of investors. This
authority makes the Act flexible and allows it to accommodate change and innovation in
ways that preserve its underlying principles. This flexibility has permitted the
development of money market funds, variable insurance products, expanded
international investing, securities lending programs, and unique exchange-traded
products that serve particular investor needs.

V. Role of SEC Offices and Divisions

My Division of the SEC, the Division of Investment Management, is responsible for

administering and interpreting the provisions of the Investment Company Act. However,
we are greatly assisted in efforts to protect investment company investors through the
efforts of other Offices and Divisions of the SEC, particularly our Office of Compliance,
Inspections and Examinations, the Office of Investor Education and Assistance, and the
Division of Enforcement.

A. Office of Compliance, Inspections and Examinations

Our Office of Compliance, Inspections and Examinations conducts the SEC's

examination program of investment companies and investment advisers. They conduct
inspections to foster compliance with the securities laws, to detect violations of those
laws, and to keep the SEC informed of developments in the investment management
industry. One of the most important objectives of this program is the quick and informal
correction of compliance problems. Violations that appear too serious for informal
correction are referred to our Division of Enforcement.

B. Division of Enforcement

Our Division of Enforcement investigates possible violations of the securities laws and,
when appropriate, recommends that the SEC file enforcement actions, either in a U.S.
federal court or in an administrative proceeding. While the SEC has civil enforcement
authority only, we work closely with various criminal law enforcement agencies
throughout the country to develop and bring criminal cases when the violations warrant.
SEC enforcement actions serve as a significant deterrent to those who would consider
violating the securities laws, since the SEC can seek injunctions, cease and desist
orders, suspension or revocation of licenses, bars from association with the industry,
and monetary penalties.
 C. Office of Investor Education and Assistance

Our Chairman, Arthur Levitt, firmly believes that the best defense against fraud and
abusive practices is educated investors. Therefore, educational initiatives have been
hallmarks of his tenure. To help educate investors about the securities markets
generally, the SEC has established the Office of Investor Education and Assistance
whose mission includes developing educational programs that will enable investors to
better protect themselves and make wiser investment decisions. This office has
produced brochures on a variety of topics and posted material on the SEC's website
including materials designed to educate mutual fund investors. The SEC has also
organized investor and small business town meetings where the public can address
questions to the Commissioners and SEC staff.

VI. Role of the Investment Company Industry

While I have described the SEC's role in protecting investment company shareholders, I
would be remiss if I did not mention the important role the U.S. investment management
industry plays in maintaining the confidence that U.S. investors have in the industry.
The SEC working with the industry has helped keep mutual funds in the U.S. free from
major scandal and contributed to the confidence that investors have in the industry. The
U.S. mutual fund industry has for at least 60 years supported laws and regulations
designed to protect fund investors. The industry has also supported and developed
tough voluntary standards that go beyond the requirements of the law, such as the
Investment Company Institute's recommended best practices on personal investing and
the role of mutual fund directors.

VII. Current Initiatives and Concerns

While the basic structure of the Investment Company Act has served investors well, we
at the SEC are currently in the midst of several significant initiatives designed to further
its goal of investor protection, while keeping it apace with the rapid evolution of the
financial products and services that the statute regulates.
 A. Fund Governance

One of the most significant initiatives we have undertaken is in the area of fund
governance. Last year the SEC issued a comprehensive package of fund governance
reforms and a staff interpretive release providing guidance on specific issues relating to
independent fund directors.

B. Disclosure Initiatives

In addition to the protections that will be afforded to shareholders as a result of the

independent director proposals, the SEC has issued a number of rule proposals, and is
considering a number of other proposals, that further our continuing effort to improve
the quality of mutual fund disclosure in order to help investors make better-informed
decisions.

C. Fund Advertizing

In addition to enhancing disclosures to shareholders, the SEC also is faced with the
regulatory challenges of industry competitiveness, brought about by rapid technological
advances and consolidation of the financial services industry. As funds face increased
competition, one fear we have is that funds will respond to the competitive environment
with overly aggressive advertising.

D. New Products

The industry has responded to competitive pressures and rapid technological changes
by creating and marketing new types of funds. We need to ensure that the rush to
develop attractive products does not come at the expense of products and services that
offer investors real financial benefits and value. An area that presents a unique
regulatory challenge is the evolution of exchange-traded funds. Assets in exchange
traded funds listed on the American Stock Exchange, where almost all of these funds
are traded, have risen from $2.4 billion three years ago to over $38 billion. These funds,
with names like SPDRs, WEBs, Diamonds, and Cubes, have obtained exemptive relief
from the SEC to facilitate secondary market trading in their shares. They are bought and
sold throughout the day and are priced continuously, rather than once a day at 4 p.m.,
which is the pattern for conventional funds. Unlike mutual funds, they can be sold short.
Additionally, their expense ratios are a fraction of those charged by an actively
managed mutual fund.

Electronic Media

Another area where there is increasing competition is in the use of electronic media.
The SEC recently issued an interpretive release in an effort to clarify the application of
the U.S. securities laws to electronic media. The increased use of the Internet by
issuers as a means of widespread information dissemination has resulted in uncertainty
about the application of the U.S. securities laws to these communications. The release
builds on previous SEC interpretations and seeks to remove interpretively some of the
barriers to the use of electronic media, while preserving important investor protections.
The release provides guidance on the use of electronic media to deliver documents
under the U.S. securities laws, addresses an issuer's liability for website content and
hyperlinks and outlines basic legal principles that issuers and market intermediaries
should consider in conducting online offerings. We recognize, however, that continuing
guidance will be necessary in this area as use of electronic media continues to evolve.

VIII. Market Access

Finally, I would like to discuss briefly access that non-U.S. money managers have to the
U.S. mutual fund market. I do not need to tell you that investors are looking increasingly
beyond national borders to diversify their investment portfolios. This trend has prompted
investment management firms that traditionally served investors in a single country to
explore asset management opportunities in the world markets. U.S. firms are interested
in selling mutual funds in Europe and European firms are interested in entering the U.S.
market. The Investment Company Act imposes the same regulatory standards on all
funds, regardless of whether they are managed by a U.S. or non-U.S. manager.
GENERALIZATION:

The student should be able to learn In the United States, the principal laws
governing mutual funds. The Securities Act of 1933 requires that all investments sold
to the public, including mutual funds, be registered with the SEC and that they provide
potential investors with a prospectus that discloses essential facts about the investment.

ACTIVITY/EVALUATION:

Direction:Write your answer on the yellow sheet paper (for about 5 to 10 sentences
only)
Discuss the Role of SEC Offices and Divisions

REINFORCEMENT:

With the rapid evolution of the financial products and services that the statute regulates
under mutual which of the following Current Initiatives and Concerns can contribute
more for the development of our economy? Why ?(Choice one only)
1.fund governance
2.New Product
3.Fund advertising
4.Disclosure initiative
5.Electronic media

REFERENCES: (Chapter 17)

https://link.springer.com/chapter/10.1007/978-94-009-2185-6_3

https://www.vskills.in/practice/mutual-fund-regulations-questions (quiz) from 1 to 5 items

only