1.2.4.1.2 Mutual Fund Prospectus
Because mutual fund shares are issued new for each shareholder, they too must be sold with a prospectus. The prospectus must be delivered no later than the time a confirmation of a shareholder’s initial purchase of fund shares is delivered. The prospectus must be up-to-date: the SEC does not permit prospectuses that are in use for more than 9 months to have financial information in them that is more than 16 months old.
The SEC requires that mutual fund prospectuses contain the following information:
- • Investment objectives
- • Investment strategies
- • Risks
- • Financial structure
- • Past performance
- • Pricing procedure
- • Distribution policy
- • Fees and expenses
- • Fund management
All of this information is required whether you are registering the company or a new issue.
If you are registering a new issue, the prospectus must include summary pages as well, which identify the fund’s investment objectives and risks, sales load, and fee schedules. If the registration is a renewal, it must also include performance data. This latter information constitutes a summa