When you purchase shares of a mutual fund, the fund must provide you with a prospectus. But you can-and should-request and read a fund's prospectus before you invest. The prospectus 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, fees and expenses, and past performance. The prospectus also identifies the fund's managers and advisers and describes its organization and how to purchase and redeem shares.
While they may seem daunting at first, mutual fund prospectuses contain a valuable information. Key Elements of a Mutual Fund Prospectus
To simplify the process of reviewing mutual fund prospectuses, certain information is required to appear in the same place each time. For example, the fee table and performance table must appear at the beginning of the prospectus.
While the rest of the material can appear in any order, you’ll generally have no trouble finding the information you need. Prospectuses generally range from 10 to 20 pages and include a table of contents. And after reviewing a few prospectuses, you’ll become accustomed to the language and be able to reduce the time it takes to find the information you need to make a sound investment decision.
You can receive prospectuses free from mutual fund companies, a broker, or a registered representative. Be sure to read the prospectus and ask questions about items that you are not sure about before investing. Your financial professional should be able to answer any questions.
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