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Custodian

The Management Company hires the Custodian to handle the custody and record keeping of the stock certificates and other assets of a Mutual Fund. The Custodian must account for all the activity of the Mutual Fund. This involves processing trades, collecting dividend and interest income, paying expenses and substantiating all account balances. The custodian is responsible for reporting the Net Asset Value(NAV)of the Mutual Fund each day.

As investors buy in or sell out of a Mutual Fund, the Transfer Agent tracks and reports the activity to the Custodian. This enables the Custodian to keep accurate accounting and custody records of the Mutual Fund. It is important to note that the Investor and the custodian typically do not interact.

Investment Advisor / Investment Manager

The Management Company hires the Investment Advisor / Investment Manager to make all the investment decisions on behalf of the fund. Their job is to determine which securities to buy and sell based on the funds investment objective. Once they make that determination, they would then contract the services of a broker to execute the buy or sell trade. The date is which the Investment Advisor / Investment Manager and the Broker execute a transaction is referred to as trade date. For their services, the Investment Advisor / Investment Manager receives a fee of usually one half of one percent of the fund's total net assets.

The Investment Advisor / Investment Manager will always execute trades based on the investment objectives stated in the fund's prospectus. Once they execute and confirm the trade with the Broker, they inform the custodian of the transaction. This is done to ensure that the Custodian can account for the activity and ensure the movement of money and shares. The date in which the transaction is processed with the Custodian occurs on trade date +1.

Transfer Agent

The Management Company hires the Transfer Agent to sell shares of the Mutual Fund to individual investors. The Transfer Agent is usually a commercial bank or financial institution that is primarily responsible for maintaining records of individual investors within a mutual fund.

The investor will contact the Transfer Agent to buy or sell shares of the mutual fund. For example, lets say our investor wishes to purchase 100 shares of XYZ Mutual Fund. The investor would send his money into the Transfer Agent(See money arrow) and in return get the shares of the mutual fund in return from the Transfer Agent.

Management Company

The Management Company is the party responsible for the overall operation of a Mutual Fund. Often times, the Management Company hires or "contracts" individual parties to handle the day-to-day operation of the Mutual Fund. These parties include: • Transfer Agent • Custodian • Underwriter • Investment Advisor

Underwriter

The Management Company hires the Underwriter to distribute fund shares to the investing public. The Underwriter ( referred to as a Distributor) only gets involved with the operation of a Load Fund. The Underwriter is rewarded for their services based on the number of shares that are distributed to individual investors.

The Underwriter interacts with the Investor, since the Underwriter will solicit & advertise to the Investor. The Investor will purchase the shares from the Underwriter. Once shares are purchased, the Underwriter then informs the Transfer Agent of the transaction in order to maintain individual shareholder records of the fund.

Broker

The Investment Advisor contracts the Broker to execute all buy and sell trades on behalf of the Mutual Fund. The Broker acts as the middleman in the buying and selling of securities by becoming the communication link between the buyer and the seller. For their services, the Broker/Dealer receives a fee or commission equal to a predetermined percentage of the net amount of the trade being executed.

The Broker works closely with the Custodian to ensure that the exchange of money and shares will happen on time and on the contractual date.

Investor

The investor in the ultimate customer. It is these individuals who are buying and selling shares of the mutual fund. Their investment dollars are typically spent to the transfer agent for processing.

Roles

Your role in the Mutual Fund Party flow focuses around the Custodian. You will see how the role of the custodian plays a critical role in the entire workflow. Let's take a look at some of these responsibilities now. Put your mouse over any one of the individuals to gain a better understanding of each responsibility.

Cash Availability, Process and Settle Trades, Monitor and Collect Income, Pay Expenses, Monitor and Process Corporate Actions, and Accounting

Report Cash Availability	Process and settle portfolio trades	Monitor and Collect income	Pay Expenses Upon Authorization

Monitor Corporate Actions	Accounting

Aggessive growth funds seek maximum capital growth. These funds invest in stocks out of the mainstream, such as new companies, companies fallen on hard times or industries temporarily out of favor. They may use investment techniques involving greater than average risk. Source:Investment Company Institute Close this window

Global equity funds seek growth in the value of their investments. They invest in stocks traded worldwide, including the U.S. Source:Investment Company Institute Close this window Income-bond funds seek a high level of current income. These funds invest in a mix of corporate and government bonds. Source: Investment Company Institute Close this window High-yield bond funds seek a very high yield, but carry a greater degree of risk than corpoate bond funds. the majority of their portfolios is invested in lower rated corporate bonds. Source: Investment Company Institute Close this window Growth funds seek capital growth; dividend income is not a significant factor. They invest in the common stock of well-established companies. Source:Investment Company Institute Close this window Income-equity funds seek a high level of income by investing primarily in stocks of companies with good dividend-paying records. Source:Investment Company Institute Close this window U.S. Government income funds seek current income. They invest in a variety of government securities, including Treasury bonds, federally guaranteed mortgage-backed securities, and other government notes. Source: Investment Company Institute Close this window National municipal bond funds seek income that is not taxed by the federal government. They invest in bonds issued by states and municipalities to finance schools, highways, hospitals, bridges, and other municipal works. Source: Investment Company Institute Close this window Growth and income funds seek to combine long-term capital growth and current income. These funds invest in the common stock of companies whose share value has increased and that have displayed a solid record of paying dividends. Source:Investment Company Institute Close this window Flexible porfolio funds allow their money managers to anticipate or respond to changing market conditions by investing in stocks or bonds or money market instruments, depending on economic changes. Source: Investment Company Institute Close this window GNMA (Ginnie Mae) funds seek a high level of income. The majority of their portfolios is invested in mortgage securities backed by the Government National mortgage Association(GNMA). Source: Investment Company Institute Close this window State municipal bond funds seek income that is exempt from both federal tax and state tax for residents of that state. They invest in bonds issued by a single state. Source: Investment Company Institute Close this window International funds seek growth in the value of their investments. Their portfolios are invested primarily in stocks of companies located outside the U.S. Source:Investment Company Institute Close this window Balanced funds generally seek to conserve investors'principal, pay current income, and achieve long-term growth of principal and income. Their portfolios are a mix of bonds, preferred stocks, and common stocks. Source: Investment Company Institute Close this window Corporate bond funds seek a high level of income. The majority of their portfolios is invested in corporate bonds, with the balance in U.S. Treasury bonds or bonds issued by a federal agency. Source: Investment Company Institute Close this window Money Market funds seek income that is exempt from federal and in some instances local taxes. The average maturity of their portfolios is limited to 90 days or less. Source: Investment Company Institute Close this window Precious metals/gold funds seek capital growth. Their portfolios are invested primarily in securities associated with gold and other precious metals. Source:Investment Company Institute Close this window Income-mixed funds seek a high level of income. These funds invest in income-producing securities, including both stocks and bonds. Source: Investment Company Institute Close this window Global bond funds seek a high level of income. These funds invest in debt securities of companies and countries worldwide, including the U.S. Source: Investment Company Institute Close this window