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This article is from the What Every Investor Should Know.

Investment Company Prospectuses

If you are considering an investment in an open-end investment company, unit investment trust, or variable annuity, or in a primary offering of a closed-end investment company, you should obtain and read a current prospectus before making a purchase. Do not hesitate to ask questions from your broker-dealer, the investment company or the underwriter if there is anything in the prospectus you do not understand. You may also request a Statement of Additional Information from a mutual fund. This Statement provides information about the investment company that is not included in the prospectus. If you do buy shares in a company, save the prospectus to refer to in the future. Among other things, the prospectus will tell you:

• The company's investment objectives--in other words, whether the investment strategy is designed to provide income, protect capital, minimize taxes, etc.
• The amount of any sales charges and other expenses and the procedures for redeeming shares.
• What risks may be involved in placing your money in that particular company.

 

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