What is a mutual fund prospectus and how do I read it?
A mutual fund prospectus is a pamphlet or brochure that provides information about a mutual fund. Mutual fund companies must give potential investors a prospectus, free of charge, before they invest. You can get a prospectus by calling the mutual fund company directly or by visiting the fund's website. Before investing in a mutual fund, read the prospectus thoroughly so you can carefully consider the fund's investment objectives, risks, fees, and expenses.
The prospectus will include information about the fund manager's objectives and practices. When reviewing a prospectus, you'll want to look at the kind of securities the fund holds and the kind of transactions it makes and how often. Make sure the fund operates in a way that's consistent with your own needs, investment goals, and tolerance for risk. For instance, if you need to invest for income and preservation of capital, and the prospectus describes the fund's investment policy as aggressive and growth oriented, then you haven't found a good match.
The prospectus will also tell you about expenses and fees, as well as any sales charges, management fees, distribution (12b-1 fees), and any fees for redemption, reinvestment, and exchange transactions that may be charged to you as a shareholder. It will also disclose the minimum required investment amounts. Before you invest, gather this information from the prospectus so that you understand the costs of investing in the fund.
Please be advised that this materials is not intended as legal or tax advice. Accordingly, any tax information provided in this material is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. The tax information was written to support the promotion or marketing of the transactions(s) or matter(s) addressed and you should seek advice based on your particular circumstances from an independent advisor.
Equitable Financial Life Insurance Company (NY, NY). Securities are offered through Equitable Advisors, LLC, NY, NY 212-314-4600 (member FINRA / SIPC). Equitable and Equitable Advisors are affiliated companies, do not provide legal or tax advice and are not affiliated with Broadridge Investor Communication Solutions, Inc.