| Mutual Fund Prospectus
"Mutual funds must provide a copy of the fund’s prospectus to shareholders after they purchase shares, but investors can – and should – request and read the fund’s prospectus before making an investment decision. There are two kinds of prospectuses: (1) the statutory prospectus; and (2) the Summary Prospectus. The statutory prospectus is the traditional, long-form prospectus with which most mutual fund investors are familiar. The Summary Prospectus, which is used by many funds, is just a few pages long and contains key information about a fund.
"Both kinds of prospectuses contain important information, including the fund's investment objectives or goals, its strategies for achieving those goals, the principal risks of investing in the fund, the fund’s fees and expenses, and its past performance. Investors can find more detailed information in the statutory prospectus, including information relating to the fund’s investment advisers and portfolio managers and details on how to purchase and redeem shares.
"The SEC specifies the kinds of information that must be included in fund prospectuses and requires funds to present key data, such as fees and past performance, in a standard format so that investors can readily compare different funds. Review a fund’s prospectus carefully and use tools such as a mutual fund cost calculator when analyzing and comparing funds."
How to download the prospectus for a Vanguard fund from Vanguard's website (as of August, 2010):
1) Go to Vanguard mutual funds
3) Click on the desired fund, in this case "Vanguard Total World Stock Index Fund." The fund's summary page will appear.
4) On the first page of the fund description, you will see a link: "View Prospectus and Reports." Click on it.
You will see a list of choices. Two suggested documents are the "statutory prospectus" and whichever report, annual or semiannual, is more recent.
The "statutory prospectus" tells you the fund's rules ("Under normal circumstances, the Fund will invest at least 80% of its assets in the stocks that make up its target index," "The Fund, in most cases, will... [invest] directly in common stocks. However, the Fund reserves the right to obtain economic exposure to component securities indirectly by purchasing depositary receipts of the component securities," "The Fund may invest in ... stock futures and options contracts, warrants, convertible securities, and swap agreements, all of which are types of derivatives.... The Fund will not use derivatives for speculation or ... leveraging").
The annual/semiannual reports include a list of what it actually did invest in.
The files are PDF files. You may need to install Adobe's free "Acrobat Reader" to read them. How your browser downloads them may vary.