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Funds 108: Introduction to Mutual Fund Prospectuses

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1.
To promote a mutual fund, a prospectus could legally include information about why you should invest in the fund.
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False. Prospectuses are forbidden to make any sales recommendations.
2.
Which of the following is an operating expense in a mutual fund?
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12b-1 fee. Taxes are not operating expenses, and the other two are transaction fees.
3.
The mutual fund prospectus explains the risk of the mutual fund.
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False. It explains the risks of the types of securities it holds, but it does not cover risks of the fund itself.
4.
If you want to read about your options for mutual fund investment plans, you can find them in the shareholder manual.
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True. Investment plans are part of a shareholder's privileges.
5.
An objective may include a statement of the level of share-price stability it seeks.
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True. Stability is often a strategy for achieving an objective.
6.
Which party hands out dividends to mutual fund investors?
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The transfer agent. If you chose "distributor," remember that this party distributes shares, not dividends.