You've probably heard it said more than once that you should always consult a mutual fund's prospectus before handing over your money. The same advice applies to unit investment trusts (UITs), exchange-traded funds (ETFs) and REITS.

While mutual funds and UITs are legally required to provide a prospectus to prospective investors, it's no secret that the size of this document and the type of information inside can be hard to tackle, but don't be too overwhelmed. Here is a guide to what a prospectus is, why it is important and what items should be central to your considerations.

What Is a Prospectus?
A prospectus is a formal legal document, which is required by and filed with the
Securities and Exchange Commission. It provides details about an investment offering for sale to the public, including fees, investment objectives and strategies, as well as the finer points of the past performance, risks, performance, distribution policy, fees and expenses, and fund management.

You can obtain these documents directly from fund companies through mail, email or phone. You can also get them from a financial planner or advisor. Many fund companies also provide PDF versions of their prospectuses on their websites.

Related Reading:





Investment Objectives And Strategies

Related Articles
  1. Investing

    What's a Prospectus?

    The Security and Exchange Commission (SEC) requires that any company raising money from potential investors through the sale of securities must file a prospectus with the SEC and then provide ...
  2. Investing

    Interpreting A Company's IPO Prospectus Report

    Learn to decipher the secret language of the IPO prospectus report - it can tell you a lot about a company's future.
  3. Investing

    Digging Deeper: The Mutual Fund Prospectus

    The legal jargon of this document can be daunting. Find out how to get to the important stuff.
  4. Investing

    An Insight on the Prospectus of Corporate Bonds

    Making a well-informed decision with respect to buying a corporate bond involves reading the significant facts and details of the prospectus document.
  5. Investing

    Digging Deeper Into Mutual Fund Names

    Go beyond the name and find out if that fund fits into your portfolio.
  6. Investing

    Mutual Funds: Management Fees Vs. MER

    Having a clear understanding of the fees charged by a mutual fund is a significant component to making an informed investment decision. Often the management fee is used interchangeably with the ...
  7. Investing

    Investing In A Unit Investment Trust

    UITs offer professional portfolio selection and a definitive investment objective. Are they right for you?
  8. Financial Advisor

    A Mutual Funds Guide for Young Investors

    Learn how mutual funds work, why they are so popular and how younger investors can get started by putting mutual funds in their IRAs or 401(k)s.
  9. Investing

    5 Tips For Investing In IPOs

    Thinking of investing in IPOs? Here are five things to remember before jumping into these murky waters.
  10. Investing

    Mutual Fund Fact Sheets: What You Need to Know

    Novice or experienced investors should read mutual fund sheets. Fees and explanations will be discussed providing valuable information to the investor.
Trading Center