How to Request a Prospectus
Responsible personal investing requires some work before making a purchase. A little preliminary research can help match the right investment vehicle with an individual's goals. An essential step is requesting and understanding a prospectus for the fund of interest; fortunately, it is also one of the easiest steps to accomplish. There is no guarantee for returns when investing, but smart research can make choices easier and set parameters for performance expectations.
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Instructions
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Determine the investment of interest. Though mutual funds are all typically long-term investments, different ones work in different markets and yield varying returns. Investors must find their comfort zone and which funds they are interested in before requesting a prospectus.
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Call the investment company. Funds are administered through specific investment companies. When a fund of interest is found, call the investment company and speak to a service representative to get more information. Find out the objective of the fund, how long the fund has been around and the average yield.
At this point, the investor may request a prospectus from the representative. The investment company will mail the prospectus to the investor for review free of charge.
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Know what to look for. A prospectus is a booklet that fully discloses information on the fund, including in what types of companies the fund is invested, the amount of risk involved and fees that may be administered.
Each fund is assigned a portfolio manager (the person who directs the investments within the fund), and the prospectus provides background information on that person, so investors can determine if they are comfortable putting their money into a fund driven by that manager.
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Research the fund online. Sometimes investment companies send a summary prospectus, which provides valuable information to the investor but is not a complete prospectus. A complete electronic copy of a fund's prospectus usually can be found on the investment company's website, as well as the Securities and Exchange Commission's EDGAR system. EDGAR is accessible through the SEC's website at www.sec.gov.
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Print a complete online prospectus for thorough review.
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Take notes. Use the printed prospectus to make notes or jot down questions. The prospectus contains an abundance of information and may potentially become overwhelming or confusing at times. This document, though lengthy, should be read and understood before investing.
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Get clarification. If there is any information that requires further explanation or questions that need answering, contact the investment company directly. The investor should be clear on the fund's objectives and functions, fees and risks before proceeding with investment in the fund.
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