Chapter 4(8) - IEB Wir efr ame 4.8 INFORMATION ON MUTUAL...

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7/28/13 IEB Wireframe textflow.mcgraw-hill.com//parser.php?secload=4.8&fake&print 1/4 4.8 INFORMATION ON MUTUAL FUNDS The first place to find information on a mutual fund is in its prospectus. The Securities and Exchange Commission requires that the prospectus describe the fund's investment objectives and policies in a concise “Statement of Investment Objectives” as well as in lengthy discussions of investment policies and risks. The fund's investment adviser and its portfolio manager also are described. The prospectus also presents the costs associated with purchasing shares in the fund in a fee table. Sales charges such as front-end and back-end loads as well as annual operating expenses such as management fees and 12b-1 fees are detailed in the fee table. Funds provide information about themselves in two other sources. The Statement of Additional Information, or SAI, also known as Part B of the prospectus, includes a list of the securities in the portfolio at the end of the fiscal year, audited financial statements, a list of the directors and officers of the fund as well as their personal investments in the fund, and data on brokerage commissions paid by the fund. Unlike the fund prospectus, however, investors do not receive the SAI unless they specifically request it; one industry joke is that SAI stands for “something always ignored.” The fund's annual report also includes portfolio composition and financial statements, as well as a discussion of the factors that influenced fund performance over the last reporting period. With more than 8,000 mutual funds to choose from, it can be difficult to find and select the fund that is best suited for a particular need. Several publications now offer “encyclopedias” of mutual fund information to help in the search process. One prominent source is Morningstar's Mutual Fund Sourcebook. Morningstar's website, www.morningstar.com , is another excellent source of information, as is Yahoo!'s site, finance.yahoo.com/funds . The Investment Company Institute—the national association of mutual funds, closed-end funds, and unit investment trusts—publishes an annual
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