The statement of additional information document elaborates on the prospectus. The investment objectives section is more in-depth, with a list and description of investment restrictions. The management section gives brief biographies of directors and officers, and provides the number of fund shares owned beneficially by the officers and directors named. The investment adviser section, while reiterating the major points made in the prospectus, gives all the expense items and contract provisions of the agreement between the adviser and the fund. If the fund has a 12b-1 plan, further details will likely be in the statement of additional information.
Many times, the statement of additional information will include much more information on the tax consequences of mutual fund distributions and investment. Conditions under which withholding for federal income tax will take place are also provided. The fund's financial statements are incorporated by reference to the annual report to shareholders and generally do not appear in the statement of additional information. Finally, the independent auditors give their opinion on the accuracy of the fund's financial statements.
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