What is a fund prospectus and why is it important?

A prospectus is a statutory document that must be delivered in advance when soliciting investors to buy securities for which a securities registration statement has become effective, and its contents must match the registration statement.

It contains the information needed to make an investment decision, such as the fund's investment objective and strategy, risks, fees and charges, and redemption terms. Because strict liability for damages and penalties apply if its contents are untrue, read it carefully before investing.