Editing Mutual fund (section)

===United States===
In the United States, the principal laws governing mutual funds are:
* The [[Securities Act of 1933]] requires that all investments sold to the public, including mutual funds, be registered with the SEC and that they provide potential investors with a [[Prospectus (finance)|prospectus]] that discloses essential facts about the investment. 
* The [[Securities Exchange Act of 1934]] requires that issuers of securities, including mutual funds, report regularly to their investors; this act also created the Securities and Exchange Commission, which is the principal regulator of mutual funds. 
* The [[Revenue Act of 1936]] established guidelines for the taxation of mutual funds. Mutual funds are not taxed on their income and profits if they comply with certain requirements under the U.S. [[Internal Revenue Code]]; instead, the taxable income is passed through to the investors in the fund. Funds are required by the IRS to diversify their investments, limit ownership of voting securities, distribute most of their income (dividends, interest, and capital gains net of losses) to their investors annually, and earn most of the income by investing in securities and currencies.<ref>{{cite web | url=https://www.law.cornell.edu/uscode/text/26/851 | title=26 U.S. Code §& 851 – Definition of regulated investment company | website=Legal Information Institute | publisher=[[Cornell Law School]] | access-date=2015-03-09 | archive-date=2015-03-29 | archive-url=https://web.archive.org/web/20150329232241/https://www.law.cornell.edu/uscode/text/26/851 | url-status=live }}</ref> The characterization of a fund's income is unchanged when it is paid to shareholders. For example, when a mutual fund distributes dividend income to its shareholders, fund investors will report the distribution as dividend income on their tax return. As a result, mutual funds are often called [[Flow-through entity|flow-through or pass-through vehicles]], because they simply pass on income and related tax liabilities to their investors.{{Citation needed|date=July 2020}}
* The [[Investment Company Act of 1940]] establishes rules specifically governing mutual funds. The focus of this Act is on disclosure to the investing public of information about the fund and its investment objectives, as well as on investment company structure and operations.
* The [[Investment Advisers Act of 1940]] establishes rules governing the investment advisers. With certain exceptions, this Act requires that firms or sole practitioners compensated for advising others about securities investments must register with the SEC and conform to regulations designed to protect investors.<ref>{{Cite web | url=https://www.investor.gov/introduction-investing/investing-basics/role-sec/laws-govern-securities-industry | title=The Laws That Govern the Securities Industry | publisher=[[U.S. Securities and Exchange Commission]] | access-date=2021-10-03 | archive-date=2017-12-02 | archive-url=https://web.archive.org/web/20171202072557/https://www.sec.gov/about/laws/soa2002.pdf | url-status=live }}</ref>
* The [[National Securities Markets Improvement Act of 1996]] gave rulemaking authority to the federal government, preempting state regulators. However, states continue to have the authority to investigate and prosecute fraud involving mutual funds.

Mutual funds are overseen by a [[board of directors]] if organized as a corporation, or by a board of [[trustee]]s, if organized as a trust. The Board must ensure that the fund is managed in the interests of the fund's investors. The board hires the fund manager and other service providers to the fund.

The sponsor or fund management company often referred to as the fund manager, [[Trade (financial instrument)|trades]] (buys and sells) the fund's investments in accordance with the fund's investment objective. Funds that are managed by the same company under the same brand are known as a fund family or fund complex. A fund manager must be a [[registered investment adviser]].