Please write a prospectus for investment course, the information are submit as attached files

Stock-Trak Portfolio Simulation and Performance Report You have been hired by a major investment house to help manage one of their large mutual/hedge funds. As a trainee, you have been asked to come up with an investment strategy, codify it in a prospectus, and then act on it. To this end, you have been given an account with a beginning balance of $1,000,000 to manage. You can invest in any NYSE, Nasdaq-AMEX stock (with traded price over $5), a series of government and corporate bonds, and a selection of over 2000 mutual funds. To manage your risk exposures (or to speculate), you can also invest in various options and futures contracts. You should go to the course BBoard page and print out the Stock -Trak registration materials/trading rules. After having printed out the trading rules, students should register their assigned account number at the "Open Account" link on Stock-Trak home page at http://www.stocktrak.com. On this page the students will be asked for their STOCK-TRAK account number (link will be on BBoard), and they will select their passwords and provide their name and payment information (free with the purchase of a new text). Your account will be activated on September 15th with $1,000,000 After you have invested your initial portfolio, you are required to make at least five trades that are in alignment with your portfolios objectives AND you must have attempted at least one trade in each security types (Stock, Bond and one Option and Futures contract). If you have a portfolio that is singular in its scope of securities being traded, like a bond portfolio, then for any additional securities, like stock, you should make the trade in a very small amount of money and stay in the market for a minor amount of time, like a week, just so that you have experienced that type of trade. The requirements for this component of the grade are: 1. Fund Prospectus (5 points). This statement should be in the form of a brochure (see examples on Vista). It should describe the investment style, restrictions on certain asset classes, the name of the investment manager, benchmark index for performance assessment, expected turnover activity and anything else a potential investor might expect. Your grade for this section will be based on the information content of the prospectus, the reasoning for choosing the investment style you chose, and how closely your trades follow your prospectus. The prospectus is due on September 15th. For the mutual fund objectives and benchmarks, please see the suggestions/examples on BlackBoard. You may change your portfolio as often as you wish, but every transaction costs money. Changes must be made through Stock-Trak. Keep track of your portfolio's performance on a weekly basis. Don't know where to start? For example, look for ideas at morningstar.com or lipperweb.com for mutual funds and fool.com for stock ideas. 2. Portfolio Performance Report (15 points). Detailed instructions will be released on BBoard by the 3rd week of the semester. Summary Prospectus John Smith The Information here is designed to give the investor a summary of the fund including investing objective, strategy, details, risk, return, information on the fund manager, and tax information related to this fund. 1|Page Investment Objective: This fund will be designed to seek long term capital gains and steady cash flows from dividend payouts and bond interest. Strategies: The fund will be investing about 80% of its assets in common stock of companies listed on the S&P 500 index. I will choose companies from different sectors that I feel have a chance for growth. The fund will not consist of all sectors in the S&P 500 and will not carry the same weight of stock in the S&P 500 index. There are a number of different things that I will be looking at to determine the potential of the stock. I will look for stocks that have had consistent dividend payouts and dividend growth. I will also look at the company's P/E ratios and PEG ratios to determine the value of the stock and its growth. I will also look at free cash flows. I will look at the Beta of the stocks to determine its market volatility and choose stocks that have been relatively stable returns. The remaining 20% of the assets will be used to invest in high rated corporate bonds. The bonds must contain an A or higher rating according to Fitch's. This strategy of using 80% of its assets into stock follows the 100 - age strategy. Therefore, this strategy is suitable for young investors who are wishing to seek long term capital appreciation as well as a steady stream of income from dividend paying stocks and interest on bonds. This income will give the investor the chance to either reinvest for increased gains or use the income for personal use without having to sell any stocks or bonds. The investor is willing to wait out short term market fluctuations on the basis that in the long run, positive steady returns will come. Derivatives are not something that will be heavily utilized in this fund. However, if there is a strong indication that there is a chance for gain, derivatives will be utilized. The fund will not be margin trading but at certain market times, we will sell short if the market conditions are right and gains can be made. This fund is risk adverse and will minimize risk through diversification, well balanced securities in different industry sectors, and high rated bonds. The purpose of this fund is to provide a low cost investment to young investors setting up a long term portfolio for eventual retirement. 2|Page Investment Details: The fund will carry mostly equity as its assets. This equity can come from other mutual funds or just stocks we feel have potential to appreciate in value over time as well as pay dividends to provide a steady stream of income. Our purpose is to provide a low cost fund with stable growth. Our focus is going to be in U.S. securities to eliminate any foreign risk. With the addition of high rated, long term, investment grade bonds, steady income will be realized and produce a stable rate of return. Stocks in the fund will be all large companies that trade on the New York Stock Exchange as well as NASDAQ. Turnover: A large part of costs in a fund come from trading costs. Our hope is that by making smart initial portfolio decisions, capital gains will be realized without making an abundance of trades. Keeping costs low will yield a high rate of return for the investor. 3|Page Risk: Market Risk: Although this is not an index fund, it will consist of a diversified portfolio of large company stocks. When the S&P 500 index is falling, it is likely this fund will underperform. Economic goverment policy, inflation, political climate, and other non diversifiable factors play into how well thisi fund will do. Value Risk: We have selected these stocks because we feel they are undervalued and in time will see capital gains and steady returns. However, these stocks can lag behind the market if the market does not see the true value of these stocks. In the short run, economic value may not be evident. Default risk: Although we are investing in investmend grade bonds, there is always a risk of default, especially in these troubling economic times. Derivative Risk: Derivatives can be risky and prone to leverage risk. This can make the fun much more volatile. Short Selling Risk: The risk of short selling is obvious. There is no end to the potential loss. That is why this fund will choose to limit the amount of short selling it does in order to reduce the volatility of the fund. 4|Page Return The S&P 500 has seen sporadic, yet positive growth since the stock market crash in 2008. With the right portfolio, this fund will open with good market timeing and will see gains in the near future. Diversification will hopefully eliminate fluctuations in the market due to the fear that many investors currently have. Our firm is confident that the market rise and now is the opportunity to invest to seek long term growth. Benchmark: Historically the S&P 500 has had average returns around 11% since 1950. Long Term corporate bonds historically have yielded 6.5%. We will use Barclays Capital Corporate Bond index as a benchmark for our bonds. Since 80% of the assets will be invested in common stock that is included in the S&P 500 and 20% in bonds we can set a benchmark of: .80 x 11= 8.8 .20 x 6.5= 1.3 10.1% Annual Return Investment Advisor: The fund is being managed by John Smith. Investment Office: (800) 111-1111 Mailing Address: 123 Main Street City, State 00001 Tax Information: Federal, State, and local taxes may be required on any capital gains and income that are realized. Normal tax rates generally apply to income received in the form of cash as well as capital gains. This fund does not carry any municipal bonds or any other exempt security. This fund does not take into consideration tax exempt and tax deferred individuals. 5|Page