Mutual Fund Prospectus

Mutual funds must provide a copy of the fund’s prospectus to shareholders after they purchase shares, but investors can – and should – request and read the fund’s prospectus before making an investment decision. There are two kinds of prospectuses: (1) the statutory prospectus; and (2) the summary prospectus. The statutory prospectus is the traditional, long-form prospectus with which most mutual fund investors are familiar. The summary prospectus, which is used by many funds, is just a few pages long and contains key information about a fund. The SEC specifies the kinds of information that must be included in mutual fund prospectuses and requires mutual funds to present the information in a standard format so that investors can readily compare different mutual funds.

The same key information required in the summary prospectus is required to be in the beginning of the statutory prospectus.  It appears in the following standardized order:  (1) investment objectives/goals; (2) fee table; (3) investments, risks, and performance; (4) management - investment advisers and portfolio managers; (5) purchase and sale of fund shares; (6) tax information; and (7) financial intermediary compensation.  Investors can also find more detailed information in the statutory prospectus, including financial highlights information.

Investors can get a prospectus from the mutual fund company or from a broker, investment adviser or other financial professional.

Review a fund’s prospectus carefully and use tools such as FINRA’s Fund Analyzer when analyzing and comparing funds.

For more information on this topic, please read our publications, Investor Bulletin: How to Read Mutual Fund Prospectus (Part 1 of 3: Investment Objective, Strategies, and Risk), (Part 2 of 3: Fee Table and Performance), (Part 3 of 3: Management, Shareholder Information, and Statement of Additional Information).