What Is A Mutual Fund Prospectus?

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What Is a Mutual Fund Prospectus? A mutual fund prospectus is a document detailing the investment objectives and strategies of a particular fund or group of funds, as well as the finer points of the fund 's past performance, managers and financial information. 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. Knowing What to Look For A prospectus is a legally binding contract between the fund itself and the fundholder. It 's easy to get lost in all the legal jargon and miss the information that matters most to you, so here is an outline of sections to…show more content…
For example, although a small cap fund and a large cap equity fund are both aiming for long-term capital appreciation, they are both using very different strategies to reach this goal. Before choosing one type of fund over another, make sure you consider why investing in any one of these asset types is right for you. Otherwise, you might be in for some surprises! Risks of Investing in the Fund Because investors have varying degrees of risk tolerance, the risk section of a prospectus is very important. It details the risks associated with a particular fund, such as credit risk, interest rate risk, market risk, etc. To get the most out of this section, you should be familiar with what distinguishes the different kinds of risk, why they are associated with particular funds, and how they fit into the balance of risk in your overall portfolio. For example, if a fund invests a large portion of its assets into foreign securities, you need to understand that this may pose significant foreign-exchange and country risk - but you also need to determine whether this kind of risk works with other types of risk in your portfolio in satisfying your tolerance. Past Performance This section shows you the fund 's track record, but do remember the common disclaimer that "past performance is not an indication of future performance". Read the historical performance of the fund critically and make sure to take into account both long- and short-term performance. Also, make sure the
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