What is a 'Final Prospectus'

A final prospectus is the final version of a prospectus for a public offering of securities. This document is complete in all details concerning the offering and is referred to as a "statutory prospectus" or "offering circular."

BREAKING DOWN 'Final Prospectus'

A final prospectus is the primary source for investors when seeking information on a publicly offered investment. Companies are required to file prospectus documents with the Securities and Exchange Commission (SEC) in order to raise capital for the product being offered. A prospectus can be either preliminary or final as the filing process progresses.

The Securities Act of 1933 mandates that all companies seeking to raise capital for new publicly offered products in the U.S. must file a prospectus with the Securities and Exchange Commission. New prospectus filings can be monitored and viewed on the SEC’s website. Management investment companies offering a range of managed investment funds comprise the majority of prospectus filings. A broad range of companies offering various types of alternative investments must file prospectuses also. Some companies and products may be exempt from prospectus fillings, including private offerings to a limited number of persons or institutions; offerings of limited size; intrastate offerings; and securities of municipal, state, and federal governments.

Prospectus Filing Process

With public offerings of securities, investors first receive what is called a preliminary prospectus, commonly called a "red herring" because of the pinkish color of the paper on which it is printed. Subsequently, the final prospectus is made available to investors who are considering a purchase of the security in question. A key difference between a final prospectus and a preliminary prospectus is that the final prospectus contains the security's price.

Management Investment Company Filings

Management investment companies typically do not file preliminary prospectus documents. Thus, most fund prospectuses filed with the SEC by management companies will provide the final details on the fund being offered.

Mutual fund companies can file both a statutory prospectus and a summary prospectus. Both documents will be available for investors with the summary prospectus providing only a brief summary of the fund’s details.

Mutual fund companies are required to include certain information in a mutual fund prospectus. Common details include the fund’s investment objective, investment strategy, risks, fees and expenses, performance, information about the fund’s investment advisers and portfolio managers, and procedures for purchasing and redeeming shares.

Transparency and investor awareness are two key aspects mandated by prospectus legislation. Information in a prospectus must be presented in a standard format for fund comparison. Investors must also receive a copy of a fund’s prospectus after they purchase shares.

  1. Prospectus

    A prospectus is a document delivered to potential investors that ...
  2. Going Public

    Going public is the process of selling shares that were formerly ...
  3. Red Herring

    A red herring is a preliminary prospectus filed by a company ...
  4. Style

    Style refers to the investment approach or objective that a fund ...
  5. Preliminary Prospectus

    A preliminary prospectus is a first draft registration statement ...
  6. SEC Form 424B1

    SEC Form 424B1 is the prospectus form that a company must file ...
Related Articles
  1. Investing

    Interpreting a Company's IPO Prospectus Report

    Learn to decipher the secret language of the IPO prospectus report. It can tell you a lot.
  2. Investing

    Prepping for Canada Goose's First Public Earnings Report

    The first earnings report after an IPO provides lots of insight into newly public companies.
  3. Investing

    Digging Deeper Into Mutual Fund Names

    Go beyond the name and find out if that fund fits into your portfolio.
  4. Investing

    The Issuance Procedure of High-Yield Bonds

    The issuance of corporate high-yield bonds can have several advantages over equity. A closer look.
  5. Investing

    The Advantages and Disadvantages of Mutual Funds

    As with most investments, mutual funds have both advantages and disadvantages.
  6. Investing

    A Guide To ETF Liquidation

    There are a lot of ETF options, but not all have staying power. Learn what happens when an ETF fails.
  7. Investing

    How To Start A Hedge Fund In Canada

    Would-be hedge fund managers in Canada need to understand the laws and regulations that must be followed in order to start a fund in the country.
  8. Investing

    Separately managed accounts: A mutual fund alternative

    It takes a hefty minimum investment to get in on an SMA, but these offer some distinct advantages.
  9. Investing

    Is Incyte For Sale?

    Speculation has been surfacing that Incyte is for sale and Gilead maybe the suitor.
  10. Investing

    ETF Fees and Waivers: The Devil Is in the Details

    ETFs are popular because of their low costs. But just how cheap they really are depends on whether there is a fee waiver and how often it is renewed.
  1. Can I Find Out a Manager's Stake in a Mutual Fund?

    Sometimes mutual fund investors want to know how much a fund's management has invested in it. Read Answer >>
Hot Definitions
  1. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
  2. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
  3. Current Assets

    Current assets is a balance sheet item that represents the value of all assets that can reasonably expected to be converted ...
  4. Volatility

    Volatility measures how much the price of a security, derivative, or index fluctuates.
  5. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
  6. Cost of Debt

    Cost of debt is the effective rate that a company pays on its current debt as part of its capital structure.
Trading Center