What You Should Know About a Prospectus

What You Should Know About a Mutual Fund Prospectus

Before you invest in shares of a mutual fund, you should understand the nature of the investment you are making. The fund's prospectus describes the nature of the fund offering. Before investing in a mutual fund, you should review its prospectus to determine if the investment is appropriate for you.

Technically, a prospectus is a legal disclosure document filed with the Securities and Exchange Commission (SEC) that provides information that a person can use to make an informed investment decision.

A prospectus may run more than 100 pages in length, but some fund companies use a more concise 'summary prospectus,' which covers key information about the fund. Information may include the following:

  • Investment objective (its overall investment purpose)
  • Fees and expenses (such as sales charges, if any, management fees, 12b-1 distribution fees, etc.)
  • Principal investment strategies (how the fund intends to invest to attempt to satisfy its investment objective)
  • Principal risks, including a narrative description of the fund's risks and including an illustration of the fund's historical investment performance (including one-, five- and ten-year average annual returns)
  • Portfolio managers
  • Procedures regarding how to purchase and sell the fund's shares, including minimum investment amounts
  • Tax information, including information about payments to persons who sell the fund's shares, if applicable



Securities are not FDIC insured, are not bank guaranteed and are subject to investment risk, including possible loss of principal.

Securities distributed by State Farm VP Management Corp.

Neither State Farm® nor its agents provide tax or legal advice.