Reading 45, Exmple 3

What are “Exchange Fund” and “Private Exchange” in example 3? (V6,P78.) Looks like Public Exchange Fund and Private Exchange Fund. Thanks.

You may not have book at hand…so post pieces here. 1, Exchange fund. Fund into which several investors place their different share holdings in exchange for shares in the diversified fund itself. At the end of a period of time (often seven years), the fund distributes assets to shareholders pro rata. 2, Private exchange. Shares that are a component of an index are exchanged for shares of an index mutual fund in a privately arranged transaction with the fund.

U talking to yourself again deriv?

Nope, I need help. I only know Public Exchange Fund and Private Exchange Fund in SS04. What are “Exchange Fund” and “Private Exchange” in example 3?

it is confusing here . In IPS they say private exchange is borrowing against your holding to costruct a diversified portfolio , no need 20% illiquidity investment or have higher right to choose stocks in portfolio. seems inconsistent with reading45

It also says that the shares in Private Exchange usually must be part of an index…this is very different from what I got from SS04.

SkipE99 Wrote: ------------------------------------------------------- > U talking to yourself again deriv? LMFAO

I can see plenty of mix-ups here. Private exchange fund: investors pool private equity/private ownership interests for a period of 7 years to create some form of diversification. After the end of the period the whole fund is distributed on a pro-rata basis to all investors. Cost basis remains. Public exchange fund: An investor with a huge ownership of a publicly listed stock will give up the ownership for an index. Not sure about the tax issue. Prepaid forward variable: Place a collar on asset and then use it as a collateral to take a loan and use the loan to purchase a diversified portfolio. At the end of the contract, the asset is sold to pay the loan, which at the same time giving up part of the upside to the lender.