dictionary of finance and investment terms 5th edition phần 5 docx

< previous page page_294 next page > Page 294 (LIFO). Financial statements normally indicate the basis of inventory valuation, generally the lower figure of either cost price or current market price, which precludes potentially overstated earnings and assets as the result of sharp increases in the price of raw materials. Personal finance: list of all assets owned by an individual and the value of each, based on cost, market value, or both. Such inventories are usually required for property insurance purposes and are sometimes required with applications for credit. Securities: net long or short position of a dealer or specialist. Also, securities bought and held by a dealer for later resale. INVENTORY FINANCING Factoring: sometimes used as a synonym for over-advances in FACTORING, where loans in excess of accounts receivable are made against inventory in anticipation of future sales. Finance companies: financing by a bank or sales finance company of the inventory of a dealer in consumer or capital goods. Such loans, also called wholesale financing or floor planning, are secured by the inventory and are usually made as part of a relationship in which retail installment paper generated by sales to the public is also financed by the lender. See also FINANCE COMPANY. INVENTORY TURNOVER ratio of annual sales to inventory, which shows how many times the inventory of a firm is sold and replaced during an accounting period; sometimes called inventory utilization ratio. Compared with industry averages, a low turnover might indicate a company is carrying excess stocks of inventory, an unhealthy sign because excess inventory represents an investment with a low or zero rate of return and because it makes the company more vulnerable to falling prices. A steady drop in inventory turnover, in comparison with prior periods, can reveal lack of a sufficiently aggressive sales policy or ineffective buying. Two points about the way inventory turnover may be calculated: (1) Because sales are recorded at market value and inventories are normally carried at cost, it is more realistic to obtain the turnover ratio by dividing inventory into cost of goods sold rather than into sales. However, it is conventional to use sales as the numerator because that is the practice of Dun & Bradstreet and other compilers of published financial ratios, and comparability is of overriding importance. (2) To minimize the seasonal factor affecting inventory levels, it is better to use an average inventory figure, obtained by adding yearly beginning and ending inventory figures and dividing by 2. INVERSE FLOATER derivative instrument whose coupon rate is inversely related to some multiple of a specified market rate of interest. Typically a cap and floor are placed on the coupon. As interest rates go down, the amount of interest the inverse floater pays goes up. For example, if the inverse floater rate is 32% and the multiple is four times the London Interbank Offered Rate (LIBOR) of 7%, the coupon is valued < previous page page_294 next page > < previous page page_295 next page > Page 295 at 4%. If the LIBOR goes to 6%, the new coupon is 8%. Many inverse floaters are based on pieces of mortgage- backed securities such as COLLATERALIZED MORTGAGE OBLIGATIONS which react inversely to movements in interest rates. INVERTED SCALE serial bond offering where earlier maturities have higher yields than later maturities. See also SERIAL BOND. INVERTED YIELD CURVE unusual situation where short-term interest rates are higher than long-term rates. Normally, lenders receive a higher yield when committing their money for a longer period of time; this situation is called a POSITIVE YIELD CURVE. An inverted YIELD CURVE occurs when a surge in demand for short-term credit drives up short-term rates on instruments like Treasury bills and money-market funds, while long-term rates move up more slowly, since borrowers are not willing to commit themselves to paying high interest rates for many years. This situation happened in the early 1980s, when short-term interest rates were around 20%, while long-term rates went up to only 16% or 17%. The existence of an inverted yield curve can be a sign of an unhealthy economy, marked by high inflation and low levels of confidence. Also called negative yield curve. INVESTMENT use of capital to create more money, either through income-producing vehicles or through more risk- oriented ventures designed to result in capital gains. Investment can refer to a financial investment (where an investor puts money into a vehicle) or to an investment of effort and time on the part of an individual who wants < previous page page_295 next page > < previous page page_296 next page > Page 296 to reap profits from the success of his labor. Investment connotes the idea that safety of principal is important. SPECULATION, on the other hand, is far riskier. INVESTMENT ADVISERS ACT legislation passed by Congress in 1940 that requires all investment advisers to register with the Securities and Exchange Commission. The Act is designed to protect the public from fraud or misrepresentation by investment advisers. One requirement, for example, is that advisers must disclose all potential conflicts of interest with any recommendations they make to those they advise. A potential conflict of interest might exist where the adviser had a position in a security he was recommending. See also INVESTMENT ADVISORY SERVICE. INVESTMENT ADVISORY SERVICE service providing investment advice for a fee. Investment advisers must register with the Securities and Exchange Commission and abide by the rules of the INVESTMENT ADVISERS ACT. Investment advisory services usually specialize in a particular kind of investmentfor example, emerging growth stocks, international stocks, mutual funds, or commodities. Some services only offer advice through a newsletter; others will manage a client's money. The performance of many investment advisory services is ranked by the Hulbert Financial Digest. See HULBERT RATING. INVESTMENT BANKER firm, acting as underwriter or agent, that serves as intermediary between an issuer of securities and the investing public. In what is termed FIRM COMMITMENT underwriting, the investment banker, either as manager or participating member of an investment banking syndicate, makes outright purchases of new securities from the issuer and distributes them to dealers and investors, profiting on the spread between the purchase price and the selling (public offering) price. Under a conditional arrangement called BEST EFFORT, the investment banker markets a new issue without underwriting it, acting as agent rather than principal and taking a commission for whatever amount of securities the banker succeeds in marketing. Under another conditional arrangement, called STANDBY COMMITMENT, the investment banker serves clients issuing new securities by agreeing to purchase for resale any securities not taken by existing holders of RIGHTS. Where a client relationship exists, the investment banker's role begins with pre-underwriting counseling and continues after the distribution of securities is completed, in the form of ongoing expert advice and guidance, often including a seat on the board of directors. The direct underwriting responsibilities include preparing the Securities and Exchange Commission registration statement; consulting on pricing of the securities; forming and managing the syndicate; establishing a selling group if desired; and PEGGING (stabilizing) the price of the issue during the offering and distribution period. In addition to new securities offerings, investment bankers handle the distribution of blocks of previously issued securities, either < previous page page_296 next page > < previous page page_297 next page > Page 297 through secondary offerings or through negotiations; maintain markets for securities already distributed; and act as finders in the private placement of securities. Along with their investment banking functions, the majority of investment bankers also maintain broker-dealer operations, serving both wholesale and retail clients in brokerage and advisory capacities and offering a growing number of related financial services. See also FLOTATION COST; SECONDARY DISTRIBUTION; UNDERWRITE. INVESTMENT CERTIFICATE certificate evidencing investment in a savings and loan association and showing the amount of money invested. Investment certificates do not have voting rights and do not involve stockholder responsibility. Also called mutual capital certificate. See also MUTUAL ASSOCIATION. INVESTMENT CLIMATE economic, monetary, and other conditions affecting the performance of investments. INVESTMENT CLUB group of people who pool their assets in order to make joint investment decisions. Each member of the club contributes a certain amount of capital, with additional money to be invested every month or quarter. Decisions on which stocks or bonds to buy are made by a vote of members. Besides helping each member become more knowledgeable about investing, these clubs allow people with small amounts of money to participate in larger investments, own part of a more diversified portfolio, and pay lower commission rates than would be possible for individual members on their own. The trade group for investment clubs is the National Association of Investors Corporation (NAIC) in Madison Heights, Michigan. The NAIC helps clubs get started and offers several programs, such as the Low-Cost Investment Plan allowing clubs to purchase an initial share of individual stocks at low commissions and reinvest dividends automatically at no charge. INVESTMENT COMPANY firm that, for a management fee, invests the pooled funds of small investors in securities appropriate for its stated investment objectives. It offers participants more diversification, liquidity, and professional management service than would normally be available to them as individuals. There are two basic types of investment companies: (1) open-end, better known as a MUTUAL FUND, which has a floating number of outstanding shares (hence the name open-end) and stands prepared to sell or redeem shares at their current NET ASSET VALUE; and (2) closed end, also known as an investment trust, which, like a corporation, has a fixed number of outstanding shares that are traded like a stock, often on the New York and American Stock Exchanges. Open-end management companies are basically divided into two categories, based on the way they distribute their funds to customers. The first category is load funds, which are sold in the over-the-counter < previous page page_297 next page > < previous page page_298 next page > Page 298 market by broker-dealers, who do not receive a sales commission; instead a "loading charge" is added to the net asset value at time of purchase. For many years the charge was 8 1 Ú2%, but more recently it has been reduced to 4.5%5%. Many load funds do not charge an upfront load, but instead impose a BACK-END LOAD which customers must pay if they sell fund shares within a certain number of years, usually five. The second category is no-load funds, which are bought directly from sponsoring fund companies. Such companies do not charge a loading fee, although some funds levy a redemption fee if shares are sold within a specified number of years. Some funds, both load and no-load, are called 12b-1 MUTUAL FUNDS because they levy an annual 12b-1 charge of up to 0.75% of assets to pay for promotional and marketing expenses. Dealers in closed-end investment companies obtain their revenue from regular brokerage commissions, just as they do in selling any individual stock. Both open-end and closed-end investment companies charge annual management fees, typically ranging from 0.25% to 2% of the value of the assets in the fund. Under the INVESTMENT COMPANY ACT OF 1940, the registration statement and prospectus of every investment company must state its specific investment objectives. Investment companies fall into many categories, including: diversified common stock funds (with growth of capital as the principal objective); balanced funds (mixing common and preferred stocks, bonds, and cash); bond and preferred stock funds (emphasizing current income); specialized funds (by industry, groups of industries, geography, or size of company); income funds buying high-yield stocks and bonds; dual-purpose funds (a form of closed-end investment company offering a choice of income shares or capital gains shares); and money market funds which invest in money market instruments. INVESTMENT COMPANY ACT OF 1940 legislation passed by Congress requiring registration and regulation of investment companies by the Securities and Exchange Commission. The Act sets the standards by which mutual funds and other investment vehicles of investment companies operate, in such areas as promotion, reporting requirements, pricing of securities for sale to the public, and allocation of investments within a fund portfolio. See also INVESTMENT COMPANY. INVESTMENT COUNSEL person with the responsibility for providing investment advice to clients and executing investment decisions. See also PORTFOLIO MANAGER. INVESTMENT CREDIT reduction in income tax liability granted by the federal government over the years to firms making new investments in certain asset categories, primarily equipment; also called investment tax credit. The investment credit, designed to stimulate the economy by encouraging capital expenditure, has been a feature of tax legislation on < previous page page_298 next page > < previous page page_299 next page > Page 299 and off, and in varying percentage amounts, since 1962; in 1985 it was 6% or 10% of the purchase price, depending on the life of the asset. As a credit, it has been deducted from the tax bill, not from pretax income, and it has been independent of DEPRECIATION. The TAX REFORM ACT OF 1986 generally repealed the investment credit retroactively for any property placed in service after January 1, 1986. The 1986 Act also provided for a 35% reduction of the value of credits carried over from previous years, which was later changed to 50%. INVESTMENT GRADE bond with a RATING of AAA to BBB. See also JUNK BOND. INVESTMENT HISTORY body of prior experience establishing "normal investment practice" with respect to the account relationship between a member firm and its customer. For example, the Rules of Fair Practice of the National Association of Securities Dealers (NASD) prohibit the sale of a new issue to members of a distributing dealer's immediate family, but if there was sufficient precedent in the investment history of this particular dealer- customer relationship, the sale would not be a violation. INVESTMENT INCOME income from securities and other nonbusiness investments; such as DIVIDENDS, INTEREST, OPTION PREMIUMS, and income from a ROYALTY or ANNUITY. Under the TAX REFORM ACT OF 1986, interest on MARGIN ACCOUNTS may be used to offset investment income without limitation. Investment income earned by passive activities must be treated separately from other PASSIVE income. The REVENUE RECONCILIATION ACT OF 1993 eliminated net gains from selling investment property from the definition of investment income. Expenses incurred to generate investment income can reduce investment income to the extent they exceed 2% of adjusted gross income. By excluding capital gains from the calculation, the 1993 Act, in effect, prevents a taxpayer from claiming an ordinary deduction for margin interest incurred to carry an investment that is taxable at the favorable capital gains rate. Also called UNEARNED INCOME and portfolio income. INVESTMENT LETTER in the private placement of new securities, a letter of intent between the issuer of securities and the buyer establishing that the securities are being bought as an investment and are not for resale. This is necessary to avoid having to register the securities with the Securities and Exchange Commission. (Under provisions of SEC Rule 144, a purchaser of such securities may eventually resell them to the public if certain specific conditions are met, including a minimum holding period of at least two years.) Use of the investment letter gave rise to the terms letter stock and letter bond in referring to unregistered issues. See also LETTER SECURITY. INVESTMENT MANAGEMENT in general, the activities of a portfolio manager. More specifically, it distinguishes between managed and < previous page page_299 next page > < previous page page_300 next page > Page 300 unmanaged portfolios, examples of the latter being UNIT INVESTMENT TRUSTS and INDEX FUNDS, which are fixed portfolios not requiring ongoing decisions. INVESTMENT OBJECTIVE financial objective that an investor uses to determine which kind of investment is appropriate. For example, if the investor's objective is growth of capital, he may opt for growth-oriented mutual funds or individual stocks. If he is more interested in income, he might purchase income-oriented mutual funds or individual bonds instead. Consideration of investment objectives, combined with the risk tolerance of investors, helps an investor narrow his search to an investment vehicle designed for his needs at a particular time. INVESTMENT PHILOSOPHY style of investment practiced by an individual investor or money manager. For example, some investors follow the growth philosophy, concentrating on stocks with steadily rising earnings. Others are value investors, searching for stocks that have fallen out of favor, and are therefore cheap relative to the true value of their assets. Some managers favor small-capitalization stocks, while others stick with large blue-chip companies. Some managers have a philosophy of remaining fully invested at all times, while others believe in market timing, so that their portfolios can accumulate cash if the managers think stock or bond prices are about to fall. INVESTMENT SOFTWARE software designed to aid investors' decision-making. Some software packages allow investors to perform TECHNICAL ANALYSIS, charting stock prices, volume, and other indicators. Other programs allow FUNDAMENTAL ANALYSIS, permitting investors to SCREEN STOCKS based on financial criteria such as earnings, price/earnings ratios, book value, and dividend yields. Some software offers recordkeeping, so that an investor can keep track of the value of his portfolio and the prices at which he bought or sold securities. Many software packages allow investors to tap into databases to update securities prices, scan news items, and execute trades. Specialty programs allow investors to value options, calculate yield analysis on bonds, and screen mutual funds. INVESTMENT STRATEGY plan to allocate assets among such choices as stocks, bonds, CASH EQUIVALENTS, commodities, and real estate. An investment strategy should be formulated based on an investor's outlook on interest rates, inflation, and economic growth, among other factors, and also taking into account the investor's age, tolerance for risk, amount of capital available to invest, and future needs for capital, such as for financing children's college educations or buying a house. An investment adviser will help to devise such a strategy. See also INVESTMENT ADVISORY SERVICE. INVESTMENT STRATEGY COMMITTEE committee in the research department of a brokerage firm that sets the overall investment strategy the firm recommends to clients. The director of research, < previous page page_300 next page > < previous page page_301 next page > Page 301 the chief economist, and several top analysts typically sit on this committee. The group advises clients on the amount of money that should be placed into stocks, bonds, or CASH EQUIVALENTS, as well as the industry groups or individual stocks or bonds that look particularly attractive. INVESTMENT TAX CREDIT see INVESTMENT CREDIT. INVESTMENT TRUST see INVESTMENT COMPANY. INVESTMENT VALUE OF A CONVERTIBLE SECURITY estimated price at which a CONVERTIBLE security (CV) would be valued by the marketplace if it had no stock conversion feature. The investment value for CVs of major companies is determined by investment advisory services and, theoretically, should never fall lower than the price of the related stock. It is arrived at by estimating the price at which a nonconvertible (''straight") bond or preferred share of the same issuing company would sell. The investment value reflects the interest rate; therefore, the market price of the security will go up when rates are down and vice versa. See also PREMIUM OVER BOND VALUE. INVESTOR party who puts money at risk; may be an individual or an institutional investor. INVESTOR RELATIONS DEPARTMENT in major listed companies, a staff position responsible for investor relations, reporting either to the chief financial officer or to the director of public relations. The actual duties will vary, depending on whether the company retains an outside financial public relations firm, but the general responsibilities are as follows: to see that the company is understood, in terms of its activities and objectives, and is favorably regarded in the financial and capital markets and the investment community; this means having input into the annual report and other published materials, coordinating senior management speeches and public statements with the FINANCIAL PUBLIC RELATIONS effort, and generally fostering a consistent and positive corporate image. to ensure full and timely public DISCLOSURE of material information, and to work with the legal staff in complying with the rules of the SEC, the securities exchanges, and other regulatory authorities. to respond to requests for reports and information from shareholders, professional investors, brokers, and the financial media. to maintain productive relations with the firm's investment bankers, the specialists in its stock, major broker-dealers, and institutional investors who follow the company or hold sizeable positions in its securities. to take direct measures, where necessary, to see that the company's shares are properly valued. This involves identifying the firm's particular investment audience and the professionals controlling its stock float, arranging analysts' meetings and other presentations, and generating appropriate publicity. < previous page page_301 next page > < previous page page_302 next page > Page 302 The most successful investor relations professionals have been those who follow a policy of full and open dissemination of relevant information, favorable and unfavorable, on a consistent basis. The least successful, over the long run, have been the "touts"those who emphasize promotion at the expense of credibility. INVESTORS SERVICE BUREAU New York Stock Exchange public service that responds to written inquiries of all types concerning securities investments. INVOICE bill prepared by a seller of goods or services and submitted to the purchaser. The invoice lists all the items bought, together with amounts. INVOLUNTARY BANKRUPTCY see BANKRUPTCY. IRA see INDIVIDUAL RETIREMENT ACCOUNT. IRA ROLLOVER see INDIVIDUAL RETIREMENT ACCOUNT ROLLOVER. IRREDEEMABLE BOND 1. bond without a CALL FEATURE (issuer's right to redeem the bond before maturity) or a REDEMPTION privilege (holder's right to sell the bond back to the issuer before maturity). 2. PERPETUAL BOND. IRREVOCABLE something done that cannot legally be undone, such as an IRREVOCABLE TRUST. IRREVOCABLE LIVING TRUST trust usually created to achieve some tax benefit, or to provide a vehicle for managing assets of a person the creator believes cannot or should not be managing his or her own property. This trust cannot be changed or reversed by the creator of the trust. IRREVOCABLE TRUST trust that cannot be changed or terminated by the one who created it without the agreement of the BENEFICIARY. IRS see INTERNAL REVENUE SERVICE. IRS PRIVATE LETTER RULING see PRIVATE LETTER RULING. ISIS see INTERMARKET SURVEILLANCE INFORMATION SYSTEM (ISIS). INTERNATIONAL SECURITIES REGULATORY ORGANIZATION (ISRO) see INTERNATIONAL STOCK EXCHANGE OF THE UNITED KINGDOM AND THE REPUBLIC OF IRELAND (ISE). ISSUE 1. stock or bonds sold by a corporation or a government entity at a particular time. 2. selling new securities by a corporation or government entity, either through an underwriter or by a private placement. < previous page page_302 next page > < previous page page_303 next page > Page 303 3. descendants, such as children and grandchildren. For instance, "This man's estate will be passed, at his death, to his issue." ISSUED AND OUTSTANDING shares of a corporation, authorized in the corporate charter, which have been issued and are outstanding. These shares represent capital invested by the firm's shareholders and owners, and may be all or only a portion of the number of shares authorized. Shares that have been issued and subsequently repurchased by the company are called treasury stock, because they are held in the corporate treasury pending reissue or retirement. Treasury shares are legally issued but are not considered outstanding for purposes of voting, dividends, or earnings per share calculations. Shares authorized but not yet issued are called unissued shares. Most companies show the amount of authorized, issued and outstanding, and treasury shares in the capital section of their annual reports. See also TREASURY STOCK. ISSUER legal entity that has the power to issue and distribute a security. Issuers include corporations, municipalities, foreign and domestic governments and their agencies, and investment trusts. Issuers of stock are responsible for reporting on corporate developments to shareholders and paying dividends once declared. Issuers of bonds are committed to making timely payments of interest and principal to bondholders. ITALIAN DERIVATIVES MARKET (IDEM) operated by the Italian Stock Exchange Council, the IDEM trades on a national computerized system based on the Swedish OM system. The exchange began operations in November 1994. It trades futures and options on the MIB 30 Index and individual stock options. ITALIAN STOCK EXCHANGE (ISE) based in Milan, ISE is the national computerized, order-driven trading system, resulting from a major reform program that united Italy's 10 national exchanges in 1991. Three institutions are responsible for market regulation and management: the Consiglio di Borsa (Consob), the market watchdog; the Bank of Italy; and the Italian Stock Exchange Council, which instituted computerized trading. Since 1994, all listed securities have been traded electronically. The electronic trading system is managed by the ISE Council and operated by CED Borsa, a private company. A network connects all authorized securities firms throughout Italy, enabling real- time trading in all securities. The main indices are the MIB and the MIBTEL, based on the prices of all listed shares, and the MIB 30, based on a sample of the 30 most liquid and highly capitalized shares. The Comit Index is calculated daily by the Banca Commerciale Italiana, and includes all ISE listed shares. Trading is conducted Monday through Friday. The main market offers an opening auction from 8 A.M. to 9:30 A.M., with continuous trading from 10 A.M. to 5 P.M. An electronic auction in the second market runs from < previous page page_303 next page > [...]... method of ensuring economic growth and stability He held essentially that insufficient demand causes unemployment and that excessive demand results in inflation; government should therefore manipulate the level of aggregate demand by adjusting levels of government expenditure and taxation For example, to avoid depression Keynes advocated increased government spending and EASY MONEY, resulting in more investment, ... including medical and dental expenses, investment interest, casualty and theft losses and gambling losses < previous page page_304 next page > < previous page page_3 05 next page > Page 3 05 J JANUARY BAROMETER market forecasting tool popularized by The Stock Traders Almanac, whose statistics show that with 88% consistency since 1 950 , the market has risen in years when the STANDARD & POOR'S INDEX of 50 0 stocks... behind the overall pace of economic activity The Conference Board publishes the Index of Lagging Indicators monthly along with the index of LEADING INDICATORS and the index of COINCIDENT INDICATORS The six components of the lagging indicators are the unemployment rate, business spending, unit labor costs, bank loans outstanding, bank interest rates, and the book value of manufacturing and trade inventories... doctrine that interference of government in business and economic affairs should be minimal Adam Smith's The Wealth Of Nations (1776) described laissez-faire economics in terms of an "invisible hand" that would provide for the maximum good for all, if businessmen were free to pursue profitable opportunities as they saw them The growth of industry in England in the early 19th century and American industrial... day-to-day management, and usually cannot lose more than their capital contribution Usually limited partners receive income, capital gains, and tax benefits; the general partner collects fees and a percentage of capital gains and income Typical limited partnerships are in real estate, oil and gas, and equipment leasing, but they also finance movies, research and development, and other projects Typically,... individual's progression from cradle to grave and the assumption that the choice of appropriate investments changes Term also applies to the life of a product or of a business, consisting of inception, development, growth, expansion, maturity, and decline (or change) Recently, the term has entered into the vocabulary of the family-owned business, referring to generations of management The post-World War II baby... public borrowings It is part of the official statement, the municipal equivalent of a PROSPECTUS Unless the legality of an issue is established, an investor's contract is invalid at the time of issue and he cannot sue under it The legal opinion is therefore required by a SYNDICATE MANAGER and customarily accompanies the transfer of municipal securities as long as they are outstanding LEGAL TRANSFER transaction... the testamentary instructions of a husband and wife The use of joint wills is not common in the United States, and it may create tax and other problems JONESTOWN DEFENSE tactics taken by management to ward off a hostile TAKEOVER that are so extreme that they appear suicidal for the company For example, the company may try to sell its CROWN JEWELS or take on a huge amount of debt to make the company undesirable... the expectation of being repaid, usually with interest Lenders create debt in the form of loans, and in the event of LIQUIDATION they are paid off before stockholders receive distributions But the investor deals in both debt (bonds) and equity (stocks) It is useful to remember that investors in commercial paper, bonds, and other debt instruments are in fact lenders with the same rights and powers enjoyed... equity Because leverage also means required interest and principal payments and thus ultimately the risk of default, how much leverage is desirable is largely a question of stability of earnings As a rule of thumb, an industrial company with a debt to equity ratio of more than 30% is highly leveraged, exceptions being firms with dependable earnings and cash flow, such as electric utilities Since long-term . desired; and PEGGING (stabilizing) the price of the issue during the offering and distribution period. In addition to new securities offerings, investment bankers handle the distribution of blocks of. 0. 25% to 2% of the value of the assets in the fund. Under the INVESTMENT COMPANY ACT OF 1940, the registration statement and prospectus of every investment company must state its specific investment. funds and other investment vehicles of investment companies operate, in such areas as promotion, reporting requirements, pricing of securities for sale to the public, and allocation of investments