What is a Mutual Fund Prospectus?

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  • Written By: Luke Arthur
  • Edited By: Heather Bailey
  • Last Modified Date: 22 January 2020
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A mutual fund prospectus is a collection of information that is provided to the investors and prospective investors of a mutual fund. The mutual fund prospectus includes a great deal of important information, such as the mutual fund holdings, expense ratio, and returns. The prospectus also includes general information such as the fund's overall investment objective and the investment strategy.

When an investor is thinking about investing in a mutual fund, he or she should get a copy of the mutual fund prospectus. This is a document that can be obtained from a broker or on the website of the mutual fund company. This document provides valuable information about the mutual fund that can aid the investor in making a decision about whether to invest. This document is also distributed to the shareholders of a mutual fund every year by the mutual fund management.

The mutual fund prospectus contains a great deal of information that can help investors determine if they want to put their money into the fund. At the beginning of the mutual fund prospectus, an investor can find information about the overall objective of the fund. For example, this is where someone could determine if the fund focused on growth investment or in the creation of passive income. In addition to providing information about the general objectives of the fund, this section will also cover the individual investment strategies used.


Another important section of the mutual fund prospectus is the holdings section. This will tell investors exactly what is being held by the mutual fund. An investor can see exactly what stocks or bonds are currently owned by the mutual fund to get an even more detailed look at the strategy being employed.

Information about the expense ratio can also be found in this document. The expense ratio is the amount of money charged by the mutual fund company to cover expenses for the fund. Part of the money goes to pay the salaries of mutual fund managers while another part goes to pay for administrative costs. The expense ratio can significantly cut into returns, so an investor should pay close attention to the section.

Another important part of the prospectus is the portion that covers the returns of the fund. There will most likely be graphs and charts that illustrate how the fund has performed over the long term. This information is necessary to determine if the fund is worth investing in.



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