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Zorluk: Çok zorInvestment Companies and Managed Funds

An investor places an order at 2:15 PM EST on Tuesday to purchase Class A shares of an open-end growth mutual fund that carries a maximum front-end sales charge of 5.00%5.00\%. At the previous business day's close, the fund's published Net Asset Value (NAV) was $24.00\$24.00 per share. Prior to the 4:00 PM EST valuation on Tuesday, the fund records the following portfolio adjustments: asset values appreciate by $3,000,000\$3,000,000, dividend income of $1,200,000\$1,200,000 is received, and $200,000\$200,000 in advisory fees is accrued as a liability. If the fund began Tuesday with total assets of $50,000,000\$50,000,000, total liabilities of $2,000,000\$2,000,000, and 2,000,0002,000,000 shares outstanding, at what Public Offering Price (POP) per share will the investor's Tuesday purchase order be executed?

  1. A
    $25.26\$25.26
  2. $27.37\$27.37Cevap
  3. C
    $27.30\$27.30
  4. D
    $26.00\$26.00

Cevap

The investor's order will be executed at a Public Offering Price (POP) of $27.37\$27.37 per share.
Under SEC Rule 22c-1 (forward pricing), open-end mutual fund orders submitted prior to 4:00 PM EST are executed at the next computed price determined at that day's market close. To find Tuesday's NAV, update total assets ($50,000,000+$3,000,000+$1,200,000=$54,200,000\$50,000,000 + \$3,000,000 + \$1,200,000 = \$54,200,000) and total liabilities ($2,000,000+$200,000=$2,200,000\$2,000,000 + \$200,000 = \$2,200,000). Net Assets equal $52,000,000\$52,000,000, resulting in an end-of-day NAV of $26.00\$26.00 per share ($52,000,000/2,000,000\$52,000,000 / 2,000,000). Because Class A shares are sold at the Public Offering Price (POP), the sales load must be incorporated using the formula POP=NAV1−Sales Load %=$26.000.95=$27.37\text{POP} = \frac{\text{NAV}}{1 - \text{Sales Load \%}} = \frac{\$26.00}{0.95} = \$27.37 per share.

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1
Determine applicable pricing rule for open-end mutual fund orders
Orders placed before 4:00 PM EST receive Tuesday's end-of-day valuation (forward pricing).
Under SEC Rule 22c-1, mutual fund purchases are executed at the next calculated NAV/POP after order receipt.
2
Calculate Tuesday's total portfolio assets at close
$50,000,000+$3,000,000 (appreciation)+$1,200,000 (dividends)=$54,200,000\$50,000,000 + \$3,000,000 \text{ (appreciation)} + \$1,200,000 \text{ (dividends)} = \$54,200,000
Portfolio appreciation and received investment income increase total fund assets.
3
Calculate Tuesday's total portfolio liabilities at close
$2,000,000+$200,000 (accrued fees)=$2,200,000\$2,000,000 + \$200,000 \text{ (accrued fees)} = \$2,200,000
Accrued operating expenses increase total fund liabilities.
4
Calculate Tuesday's Net Asset Value (NAV) per share
\text{Net Assets} = \$54,200,000 - \$2,200,000 = \$52,000,000; \quad \text{NAV} = \frac{\$52,000,000}{2,000,000 \text{ shares}} = \$26.00
NAV equals Net Assets divided by total shares outstanding.
5
Calculate Public Offering Price (POP) including front-end sales charge
\text{POP} = \frac{\text{NAV}}{1 - \text{Sales Load \%}} = \frac{\$26.00}{1 - 0.05} = \frac{\$26.00}{0.95} \approx \$27.3684 \rightarrow \$27.37
Class A mutual fund shares are purchased at POP, which incorporates the load into the offering price formula.

Anahtar Kavram

Forward Pricing Rule and Public Offering Price (POP) Calculation for Open-End Mutual Funds
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Investment Companies and Managed Funds

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