About This Chapter
Understanding Funds, Trusts & Investment Companies - Chapter Summary
This chapter is a simplified way to elevate your knowledge of funds, trusts, and investment companies. Professional instructors discuss how unit investment trusts work as well as different types of investment funds and their objectives. You'll also find helpful lessons that cover the structure of a closed-end fund, investment fund redemption, and capital gains distributions. After completing the chapter, you should be able to:
- Recount advantages of mutual funds
- List fees, expenses, and charges associated with mutual funds
- Outline the types of investment opportunities created by ETFs
- Recall different characteristics of an open-end fund
- Explain the differences between retail and institutional money markets
- Provide an overview of dollar cost averaging
- Summarize the Investment Company Act of 1940
- Discuss FINRA Rule 2341
Our instructors make your study time easier, and you'll quickly grasp the concepts presented on funds, trusts, and investment companies. A short quiz is available to gauge your understanding of what you've learned, and the quizzes can be printed in worksheet form. If you don't need to review all of the topics, you can skip lessons for a more strategic approach to learning.
1. What is a Mutual Fund? - Definition, Types, Advantages & Examples
This lesson will define a mutual fund, a type of investment vehicle. Also in this lesson, various types of mutual funds will be explained, and advantages and examples of mutual funds will be explored.
2. Mutual Funds: Fees, Charges & Expenses
Where can an investor look to determine a specific fund's costs? This lesson overviews the various fees, charges and expenses associated with mutual fund investing.
3. What is an ETF? - Definition & Arbitrage
Exchange Traded Funds, or ETFs, have become a popular alternative to mutual funds for investors. Let's dig deeper into ETFs and the investment opportunities they create.
4. Unit Investment Trust (UIT): Definition & Example
The investment community has invented many different investment packages to give investors wide choices. One that will be discussed in this lesson is unit investment trusts.
5. What is an Open-End Fund? - Definition & Characteristics
Mutual funds allow people to pool their resources in a portfolio of assets. In this lesson, we'll look closer at open-end funds, including how they're different from closed-end funds and their major characteristics.
6. Open-End Funds: Fees & Expenses
Open-end funds are some of the most common investments. This lesson will examine the common fees and expenses that come with open-end mutual funds, including expense ratios and loads.
7. What is a Closed-End Fund? - Definition & Examples
In this lesson we will look at what a closed-end fund is and how it is structured. We all also review how it combines elements of both mutual funds and stocks.
8. Types of Investment Fund Objectives
Why does the U.S. alone have nearly 10,000 mutual funds? The answer lies in their underlying objectives and sub-objectives. In this lesson we will break down and examine the two major objective categories and some specific fund objectives.
9. Sales Practices for Investment Funds: Types & Characteristics
This lesson deals with different sales practices in the investment industry such as dollar-cost averaging (DCA) and sales charges. Learn about breakpoints, market timing, and late trading.
10. Investment Fund Redemption: Definition & Overview
This lesson discusses ways of receiving funds from investments before they reach maturity, including fund redemption, redemption price, conversion privilege, contingent deferred sales charge, and tenders.
11. Reinvestment of Dividend Income & Capital Gains Distributions
In this lesson you will learn about the dividend income and capital gains distributions, how they can be reinvested back into the investments that pay them, and the power of reinvesting.
12. Investment Company Act of 1940: Summary, Rules & Exemptions
The Investment Company Act of 1940 was created through an act of Congress to require investment company registration and regulate the product offerings issued by investment companies in the public market. In this lesson we discuss the purpose, background, and scope of the Investment Company Act
13. FINRA Rule 2341: Investment Company Securities
All kinds of deals are made when public offerings are being marketed. FINRA develops rules to ensure that everyone including the investor has all the information about the offering and everyone is treated fairly.
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Other chapters within the Series 6 Exam: Study Guide & Practice course
- Financial Advertising & Communications With the Public
- Describing Investment Products & Services
- Disclosing Financial Account Types & Restrictions
- Understanding Retirement Plans & Tax Advantaged Accounts
- Obtaining Basic Customer Information & Documentation
- Obtaining Customer Investment Profile Information
- Obtaining Supervisory Approvals for Investment Accounts
- Analyzing Investment Portfolios & Financial Statements
- Types of Underlying Securities
- Understanding Municipal Fund Securities
- Variable Life Insurance & Annuity Contracts
- Tax Treatment of Investment Profiles
- Disclosing Investment Product Information
- Updating Investment Customers & Retaining Customer Records
- Processing & Confirming Financial Transactions
- Resolving Investment Disputes & Customer Complaints