Skip to Main Content

Start Of Main Content

What you should know about a prospectus

Before you invest in shares, make sure you know what you're getting into with this legal disclosure document.

Woman at desk writing with pencil

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.

Get a Quote

Select a product to start a quote.

Contact Us

844-373-0003 844-373-0003

Also Important

What are Bond Funds?

What are Bond Funds?

What bond funds are, their risks, and why some include them in their portfolios.

Build Your Emergency Savings

Build Your Emergency Savings

How to build emergency savings to help with unexpected expenses and lay the foundation on your path towards financial well-being.

Related Articles

What is Survivorship Universal Life Insurance?

What is Survivorship Universal Life Insurance?

Survivorship Universal Life Insurance provides money for others after you and your partner pass away.

Disability Insurance: What You Need to Know

Disability Insurance: What You Need to Know

Understand your coverage options before the unexpected happens.

Potential Benefits of Stock Funds

Potential Benefits of Stock Funds

Learn about the types of returns and benefits for investors and about kinds of stock funds.