objectives and policies in a concise "Statement of Investment Objectives" as well as in lengthy discussions of investment policies and risks. The funds investment adviser and its portfolio manager are also 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.

Despite this useful information, there is widespread agreement that until recently most prospectuses have been difficult to read and laden with legalese. In 1999, however, the SEC required firms to prepare easier-to-understand prospectuses using less jargon, simpler sentences, and more charts. The nearby box contains some illustrative changes from two prospectuses that illustrate the scope of the problem the SEC was attempting to address. Still, even with these improvements, there remains a question as to whether these plain-English prospectuses contain the information an investor should know when selecting a fund. The answer, unfortunately, is that they still do not. The nearby box also contains a discussion of the information one should look for, as well as what tends to be missing, from the usual prospectus.

I. Introduction 4. Mutual Funds and Other

Investment Companies

The McGraw−Hill

Companies, 2001

OMIT VITAL INVESTMENT INFORMATION

Nice, Light Read: The Prospectus

Old Language

Plain English

Dreyfus example

T. Rowe Price example

The Transfer Agent has adopted standards and procedures pursuant to which