Loads Of Funds

Anyone who has ever considered investing in a mutual fund has probably been barraged by admonitions to read the prospectus before you invest or send money. Why, you may ask, when it's so boring?

Because this much-maligned document discloses valuable information, including, but not limited to, how the fund invests, how the money will be managed, how performance is calculated, and how investors can buy and sell shares. Best of all, the prospectus tells you everything you need to know about fees and sales charges, expenses and redemption fees.

Additional information can be found in the fund's proxy statements, annual reports and other sales literature. Other information sources include Lipper Analytical Services Inc. in Summit, New Jersey, and Morningstar Inc. in Chicago. All in all, reams of information on funds are available, but investors must remember that past performance is just that and it is no indication of future returns.

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This article was originally published in the January 1997 print edition of Entrepreneur with the headline: Loads Of Funds.