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Funds 108: Introduction to Mutual Fund Prospectuses

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1.
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.
2.
Which of the following is not a transaction fee?
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Management fee. This fee is an operating expense. It is not related to trading.
3.
What does the section on the fund's objectives tell the investor?
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All of the above. The "Objectives" section includes strategies, philosophy, and objectives.
4.
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.
5.
A mutual fund shareholder manual does all of the following except explain how _______.
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Taxes apply. The shareholder manual explains share price, redemption, and adding to your account.
6.
One reason prospectuses use technical and precise language is to protect the consumer.
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True. This language makes it harder to misinterpret what is in a document.