prospectus

noun
pro·​spec·​tus | \ prə-ˈspek-təs How to pronounce prospectus (audio) , prä- \
plural prospectuses

Definition of prospectus

1 : a preliminary printed statement that describes an enterprise (such as a business or publication) and that is distributed to prospective buyers, investors, or participants
2 : something (such as a statement or situation) that forecasts the course or nature of something

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Prospectus Is a Word for the Forward-Thinking

Like prospect, prospectus looks forward. Thus, a prospectus originally outlined something that didn't yet exist, describing what it would become. This might even be a book; the great dictionary of Noah Webster, like that of Samuel Johnson, was first announced in the form of a prospectus, so that well-to-do people might actually subscribe to it—that is, pay for it in advance so that Webster would have money to live on while writing it. Soon, prospectus was being used to mean a description of a private school or college, intended to attract new students. Today the word very often means a description of a stock offering or mutual fund, whether new or not.

Examples of prospectus in a Sentence

Recent Examples on the Web Among those that highlighted Africa in their IPO prospectuses there was a heavy focus on biochemicals and biotechnology. Alexandria Williams, Quartz Africa, "A fresh crop of China’s most promising tech companies are looking to set up shop in Africa in 2020," 13 Jan. 2020 The sweeping layoffs capped off a remarkable comedown for the high-flying tech startup that ballooned to more than 12,000 employees as of June of this year, according to its IPO prospectus. Sara Ashley O'brien, CNN, "Inside WeWork's week from hell: How the mass layoffs went down," 22 Nov. 2019 The resignation of Mr Neumann, whose name appears 169 times in the company’s IPO prospectus, may be intended to signal a shift away from his quest for growth at all costs towards more responsible stewardship of capital. The Economist, "Would WeWork’s implosion pose a systemic risk?," 28 Sep. 2019 At the close on September 26, Peloton's valuation stood at $7.2 billion, almost 8 times its $915 million in sales for fiscal 2019, as reported in its offering prospectus, or S-1. Shawn Tully, Fortune, "To Reward Investors, Peloton Needs To Ride Like the Wind," 27 Sep. 2019 WeWork’s prospectus did reveal some $47bn in lease obligations globally; if WeWork went belly up tomorrow, its counterparties would be hit. The Economist, "Would WeWork’s implosion pose a systemic risk?," 28 Sep. 2019 For example, as of December 2011 and June 2012, respectively, Trump’s business told the lender that 99% and 98.7% of the tower’s commercial space was occupied, according to a prospectus for the loan. Heather Vogell, ProPublica, "Trump Tax Records Reveal New Inconsistencies — This Time for Trump Tower," 27 Nov. 2019 The same language appeared in its 2014 prospectus as a requirement only of Chinese law. Jane Li, Quartz, "Alibaba reminds investors China’s censorship regime is a business risk," 14 Nov. 2019 The iconoclastic Neumann, who helped propel WeWork to an eye-popping $47 billion valuation, was listed as a risk factor in the company's prospectus because his leadership and vision were considered essential to the company's success. oregonlive, "WeWork’s founder will exit with $1.7 billion as investors try to rescue company," 22 Oct. 2019

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'prospectus.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of prospectus

1765, in the meaning defined at sense 1

History and Etymology for prospectus

Latin, prospect

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Learn More about prospectus

Time Traveler for prospectus

Time Traveler

The first known use of prospectus was in 1765

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Statistics for prospectus

Last Updated

18 Feb 2020

Cite this Entry

“Prospectus.” Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriam-webster.com/dictionary/prospectus. Accessed 27 Feb. 2020.

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More Definitions for prospectus

prospectus

noun

Financial Definition of prospectus

What It Is

A prospectus is a legal document issued by companies that are offering securities for sale. Mutual funds also provide a prospectus to potential clients, which includes a description of the fund's strategies, the manager's background, the fund's fee structure and a fund's financials statements.

How It Works

To get an idea of the role of the prospectus, let's assume Company XYZ is pursuing an IPO. Before launching the IPO, Company XYZ must first file a registration statement, which discloses all material information about the company, with the SEC. Part of the registration statement is the prospectus, which must be provided to all purchasers of the new issue.

After Company XYZ files the registration statement with the SEC for review, a cooling-off period begins. During this 20-day period, securities brokers can discuss the new IPO with clients, but the only information that can be distributed is the preliminary prospectus.

When the registration statement becomes effective, Company XYZ will amend the preliminary prospectus to add such important information as the offering price and the underwriting spread. This final prospectus must contain:

Description of the offering
History of the business
Description of management
Price
Date
Selling discounts
Use of proceeds
Description of the underwriting
Financial information
Risks to buyers
Legal opinion regarding the formation of the company
SEC disclaimer

When the final prospectus is released, brokers can take orders from those clients who indicated an interest during the cooling-off period. A copy of the final prospectus must precede or accompany all sales confirmations.

Why It Matters

The role of the prospectus is the make investors aware of the risks of an investment. Without this information, they would essentially have to make investments "sight unseen." This disclosure also protects the company from claims that it did not fully disclose enough information about itself or the securities in question.

Source: Investing Answers

prospectus

noun
How to pronounce prospectus (audio)

English Language Learners Definition of prospectus

: a printed statement that describes something (such as a new business or investment) and that is sent to people who may want to be involved in it or invest in it
chiefly British : a book or document that provides information about a school, business, etc.

prospectus

noun
pro·​spec·​tus | \ prə-ˈspek-təs How to pronounce prospectus (audio) \
plural prospectuses\ -​tə-​səz \

Legal Definition of prospectus

: a preliminary printed statement describing a business or other enterprise and distributed to prospective buyers, investors, or participants specifically : a description of a new security issue supplied to prospective purchasers and providing a disclosure of detailed information concerning the company's business and financial standing

Note: Under the Securities Act of 1933, the prospectus is part of the registration statement that must be filed with the Securities and Exchange Commission before a security may be offered or sold to the public. The Securities Act defines prospectus broadly as “any prospectus, notice, circular, advertisement, letter, or communication, written or by radio or television, which offers any security for sale or confirms the sale of any security.”

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More from Merriam-Webster on prospectus

Thesaurus: All synonyms and antonyms for prospectus

Rhyming Dictionary: Words that rhyme with prospectus

Spanish Central: Translation of prospectus

Nglish: Translation of prospectus for Spanish Speakers

Comments on prospectus

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