Before you buy a mutual fund, ask to see its prospectus. The mutual fund prospectus. is a legal document required by the SEC that explains to you exactly what you're getting yourself into by sending money to a management investment company, also known as buying into a mutual fund. The information most useful to you immediately will be the list of fees, i.e., exactly what you will be charged for having your money managed by that mutual fund.
The mutual fund prospectus is the fund's selling document and contains valuable information, such as the fund's investment objectives or goals, principal strategies for achieving those goals, principal risks of investing in the fund, and past performance. The prospectus also identifies the fund's managers and advisers and describes how to purchase and redeem fund shares.
Your mutual fund prospectus will also contain:
Risk/Return bar chart and table
Mutual funds fee table
Financial highlights of previous five years
Shareholder information on how to purchase and redeem shares of a fund.
File Number to look up other documents with the SEC
You can get a mutual fund prospectus from the mutual fund company (through its website or by phone or mail). Your financial professional or broker can also provide you with a copy.
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Related Resources
Wachovia: Mutual Fund Prospectus
About.com: Mutual Fund Prospectus
SEC.gov: Mutual Fund Prospectus
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