Prospectus

Securities laws in most countries require a prospectus when shares, bonds or fund units are offered to the public, to ensure investors receive full and accurate information.

A company prospectus typically describes the business, its history, management, financial statements, how the money raised will be used, the risks involved, the terms of the securities and details of major shareholders. A fund prospectus explains the fund's objective, investment strategy, fees, risks and past performance.

For example, before a company's initial public offering, it publishes a prospectus that potential investors can read before deciding whether to buy shares.

Prospectuses are usually reviewed or approved by securities regulators, and companies can be held legally responsible for misleading statements in them.

They can be long and detailed, sometimes hundreds of pages. Many jurisdictions also require shorter summary documents, such as key information documents for funds, to help ordinary investors understand the most important points, especially costs and risks. Reading the risk factors and fees sections is often particularly valuable.