What is a prospectus? A plain-English guide for investors

• A prospectus is the official document that describes a securities offering, such as an IPO, and the company behind it.
• A prospectus is meant to be read in full, because its parts work together to give a complete picture of the offering.
• Companies file a preliminary prospectus with the SEC before an IPO and a final prospectus after pricing.
• IPO participation, if you are qualified, happens through E*TRADE’s New Issue Centerlock.
• A prospectus helps you understand an offering, but it doesn’t predict results or guarantee an IPO allocation.

IPO headlines get the buzz. The prospectus has the facts.

Before deciding whether to invest, it helps to know what’s behind the headlines. A prospectus lays out the company, the offering, the risks, and other information investors can use to make a more informed decision.

Read on to find out what a prospectus is, where to find one, and why it deserves your time before you invest.

A prospectus is a formal document that describes a securities offering to the public, such as an IPO, and the company behind it. In an IPO, it's part of the registration statement a company files with the U.S. Securities and Exchange Commission (SEC). Prospectuses aren't just for IPOs. Mutual funds, exchange-traded funds (ETFs), and bonds have them too.

For registered public offerings, the prospectus provides investors with information required by the federal securities laws about the issuer and the offering. The SEC reviews registration statements for compliance with disclosure requirements, but it doesn't approve or endorse a security or judge whether it's a good investment.

Reading the prospectus helps you understand exactly what you'd be buying before you make a decision, because it's the official source for the details of an offering. It should be read in full. A prospectus is written to work as a whole, and information in one place can add context to, or qualify, information in another. Skimming or focusing on a single part can leave out something important. It takes time, but a complete read gives you a fuller picture than any summary or headline can. If something is unclear, consider speaking with a financial or tax professional.

A prospectus can be long, but a few sections help you see what you'd be buying. Think of them as a starting point, not a substitute for reading the whole document:

• Risk factors: What the company says could hurt its business or the value of its shares.
• Business and financials: What the company does, how it makes money, and how its revenue, profits, and cash flow have trended.
• Use of proceeds: How the company plans to spend the money it raises.
• Ownership and lock-ups: Who holds significant stakes, and when insiders and early investors may be able to sell their shares.

A preliminary prospectus is issued while a company is marketing an IPO and may not include the final price or number of shares, while a final prospectus is issued after the offering is priced and includes the final terms.

You can find a prospectus on the SEC's EDGAR database, from the issuer and its underwriters, or through the E*TRADE New Issue Center.

• SEC EDGAR: Registration statements and prospectuses are publicly available, free of charge, at sec.gov.
• The issuer and underwriters: The company and the banks managing an offering may also make prospectuses available.
• E*TRADE New Issue Center: E*TRADE customers can review offering materials, including the prospectus, for available IPOs and other new issues. (Login required.)

Yes. Eligible E*TRADE customers must review and acknowledge the preliminary prospectus in the New Issue Center before they can submit a conditional offer to buy (COB). A COB doesn't guarantee shares. IPO shares are often limited, and allocation isn't guaranteed. Learn more in How to participate in an IPO.

A prospectus is the official document behind an offering, and it's designed to be read in full. Reading it won't remove risk. IPO shares can be volatile, access is limited, and investing involves the possible loss of principal. But it can help you understand an offering and decide whether it fits your goals, time horizon, and risk tolerance.

Visit E*TRADE's New Issue Center to see available offerings, access prospectuses, and sign up for alerts about upcoming deals offered by E*TRADE from Morgan Stanley.

CRC# 6081928 (11/2026)