The Mutual Fund Prospectus and Shareholder Reports
To protect investors, all mutual funds are highly regulated by the federal government through the U.S.
Securities and Exchange Commission (SEC). Federal law requires that all funds provide two types of
documents to current and potential investors free of charge: a prospectus and a shareholder report.
A mutual fund’s prospectus describes in plain English the fund’s goals, fees and expenses, investment
strategies and risks, as well as information on how to buy and sell shares. You can get a copy of a fund’s
current prospectus from the fund or your broker or fi nancial planner. Many funds also make prospectuses
available on their websites. The SEC requires a fund to provide a full prospectus either before you invest or
together with the confi rmation statement for your initial investment.
Annual and semiannual shareholder reports document the fund’s recent performance and include other
important information. By examining these reports, you can learn if a fund has been effective in meeting the
goals and investment strategies described in the fund’s prospectus.
What to Look for in a Shareholder Report
Shareholder reports typically include two main
Publications and Websites
In addition to fund prospectuses and shareholder reports, there are many other sources of mutual fund
information available to you. However, none can substitute for reading the prospectus and shareholder reports.
Information found in newspapers, magazines, independent reports, websites, and other outside sources of
information can be valuable because they provide third-party views and comparisons of different funds.
To learn how to obtain information from many of these sources,
Newspapers and Magazines
Many newspapers, business magazines, and financial publications cover mutual funds. They can be a source
of information on industry trends, expense ratios, rankings, and profiles of various funds.
Newspapers can be a good way to track mutual fund performance. Most major dailies publish the latest
mutual fund share prices and performance.
In some papers, the share price (NAV) is identified as the sell, or bid price, which is the amount per share you
would receive if you sell a share (less any deferred sales charges or redemption fees). Also listed in the paper
is the offering price, sometimes called the buy, or asked, price which is the price investors pay to purchase
shares. The offering price is the share price plus any sales charges.
Many fund companies have Internet websites. You can usually access fund information and download
prospectuses and annual reports from these sites. Some companies use the Internet to provide educational
material and to allow shareholder transactions. Fund information can also be found on the SEC’s website.