AMFI Exam series -12

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Several special programs have been developed which make investing with mutual funds easy and convenient.

This chapter contains the following topics:

Purchase and Redemption Programs
Wrap Programs
Merrill Lynch Discretionary Wrap Programs
Merrill Lynch Non-Discretionary Wrap Programs

Automatic Investment Programs (known as AIPs) are programs in which a predetermined amount is debited from a client account monthly, and used to purchase shares in one or more mutual funds. These types of purchases are often exempt from standard fund minimum purchase amounts
Letters of Intent (known as LOIs) are agreements by mutual fund buyers to purchase sufficient shares within a specified period of time to qualify for a sales load breakpoint. The period is usually 13 months, during which time the shareholder is given the intended breakpoint for each purchase. If the letter is not fulfilled within the specified time, the shareholder becomes liable for the normal sales load applicable to the purchases made.
Rights of Accumulation (known as ROA) refers to the practice of allowing a shareholder to link several accounts and/or multiple fund holdings within a FUND Family to qualify for breakpoint sales loads
Systematic Withdrawal Plans (known as SWPs, pronounced “swips”) are programs through which enough shares are liquidated each month to generate a specified dollar amount. Funds usually establish a minimum account balance requirement for participation in SWPs.
Wrap programs are asset-based-fee investment programs, which present an alternative to the traditional, transaction-based fee investment process
There are several wrap programs involving mutual funds available to Merrill Lynch clients. Some of these are:

Discretionary
· Mutual Fund Advisor (MFA)
· Global Funds Advisor (GFA)

Non-discretionary
· MFA Selects
· Asset PowerMerrill Lynch Financial Advantage Service (MLFA)

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