TITLE

Reading the Fine Print: Helping Clients Evaluate Mutual Fund Prospectuses

AUTHOR(S)
Robinson, Thomas; Schulte, David; Marmorstein, Howard; Trent, William; Gervais, Eric J.
PUB. DATE
April 2010
SOURCE
Journal of Financial Planning;Apr2010, Vol. 23 Issue 4, p54
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
Investors and their advisers need to be able to read, decipher, and evaluate offering documents, including prospectuses and statements of additional information (SAl), to assess the risks and potential opportunities involved in investments such as mutual funds. This article discusses how to evaluate the prospectus and SAl of an open-end investment company or mutual fund. Key points also apply to other investment company prospectuses, such as those for closed-end funds and unit investment trusts. The article provides examples of prospectuses and related documents required by the U.S. Securities and Exchange Commission (SEC). SEC regulations generally require that a prospectus be delivered to investors at the time of, or before, the purchase of a mutual fund. Some key points to consider in evaluating a prospectus are the funds investment objectives, risks, fees, management, legal proceedings, and redemption restrictions. These factors can then be compared to corresponding information for other potential investments. Required statements include a balance sheet, income statement, and statement of changes in shareholder equity for the fund itself, although others are required in certain circumstances. Advisers and their clients can find important information in the SAl and should augment their knowledge by reviewing investment companies' annual and periodic reports. The article concludes that advisers can provide valuable guidance for their clients by highlighting the key points regarding risks and opportunities that investors should consider before investing in mutual funds.
ACCESSION #
49115533

 

Related Articles

  • SEC wants mutual fund certification in writing. Anand, Vineeta // Pensions & Investments;11/1/2004, Vol. 32 Issue 22, p6 

    This article reports that the U.S. Securities and Exchange Commission (SEC) examiners want chief compliance officers of investment advisers affiliated with mutual funds to certify, in writing, the firm's compliance with its policies and procedures. And in a combined examination of an...

  • Hedge Funds Must Comply Now! Hintze, John // Traders Magazine;Mar2005, Vol. 18, p20 

    This article reports that next February's requirement for hedge fund managers to register with the U.S. Securities and Exchange Commission seems a long way off and, in the vein of Y2K and most other human endeavors, there almost certainly will be a mad rush late this year to meet the compliance...

  • SEC Rule 22c-2--Much More than Contractual Agreements. Miller, Chip // Money Management Executive;2/19/2007, Vol. 15 Issue 7, p6 

    The article focuses on the U.S. Securities and Exchange Commission (SEC) Rule 22c-2, which governs mutual fund redemption fees and mutual fund companies' relationships with intermediaries selling their funds. According to the article, there are three key areas of capability necessary for...

  • Despite Pressures, It's Business as Usual for Hedge Funds. Amend, James M. // Money Management Executive;1/9/2006, Vol. 14 Issue 1, p4 

    The article reports that the hedge fund industry is ignoring the growing transparency demands despite the U.S. Securities and Exchange Commission's (SEC) regulation. But for hedge funds, such transparency jeopardizes their business strategy. According to Boston-based research firm Cerulli...

  • Mutual fund flippers may pay.  // Medical Economics;4/22/2005, Vol. 82 Issue 8, p16 

    Reports that since 2004, mutual fund companies were allowed to levy a redemption fee on investors who sell their shares within seven days of purchase. U.S. Securities and Exchange Commission (SEC) rule limiting fees to two percent or less of the redeemed shares' value; Mandatory fee proposed by...

  • Small Funds Tough Out New Regulations. Pizzani, Lori // Money Management Executive;10/4/2004, Vol. 12 Issue 39, p1 

    The article discusses about the impact of new regulations on small-fund managers involved in the mutual funds in the U.S. Expectations that the stew of new strict and costly regulatory requirements will drive small-fund managers to bail out from the mutual fund business in droves have not...

  • Who's Minding the Gate? Sharkey, Edward E. // Strategic Finance;Dec2005, Vol. 87 Issue 6, p30 

    This article presents some aspects of pension planning. Research done by the U.S. Securities & Exchange Commission (SEC) attempted to determine how often consultants were taking money from money managers interested in doing business with the consultants' pension plan clients. The SEC found that...

  • Proxy Vote Disclosure.  // Practical Accountant;Mar2003, Vol. 36 Issue 3, p17 

    Reports that the U.S. Securities and Exchange Commission has voted to adopt rule changes that would require mutual funds and other registered management investment firms to disclose their proxy voting policies and procedures and their actual proxy votes cast. Proxy voting disclosures.

  • SEC Placement Agent Ban Draws Fire. Ackerman, Andrew // Investment Management Weekly;9/22/2009, p1 

    The article reports on the reaction of the investment market to the U.S. Securities and Exchange Commission's (SEC) proposal to ban investment advisors' use of third-party placement agents. The proposal could potentially place new and small firms at a disadvantage as well as create additional...

Share

Read the Article

Courtesy of VIRGINIA BEACH PUBLIC LIBRARY AND SYSTEM

Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics