Understanding a Fund's Prospectus
Having some knowledge about the funds you invest in is crucial to creating a portfolio that's right for you. In a prospectus, you'll find all the important facts relating to the fund.
On this page:
Parts of a Fund Prospectus
Fund goal and strategy Goals vary from fund to fund, and they're important to understand so you can decide if they match your personal investment objectives. Some funds attempt to generate income for their shareholders, while others concentrate on capital appreciation. Some focus on a combination of the two, and others are geared toward tax benefits or preservation of capital.
Funds implement differing strategies to help accomplish their goals. The Goals and Strategies section of a prospectus details the types of securities in which fund managers can invest and explains how managers analyze them.
Risks As with all investments, each fund, whether domestic, sector specific or international, carries different risks. The Main Risks section of a prospectus explains the primary types of risks associated with the securities in a particular fund. This information may help you decide what level of risk you're comfortable having in your investment portfolio.
Fund performance While historical performance doesn't predict how a fund will do in the future, you may be interested to know how it performed in past market environments. Depending on the age of the fund, a prospectus will provide its one-, five- and 10-year average annual returns, including a comparison with its benchmark index over the same period. Year-over-year annual total returns for up to 10 years are also provided.
Fund expenses Operating a fund entails costs you should be aware of. The Fees and Expenses section breaks out these costs and explains who pays them. In addition, an example of a hypothetical investment amount in a fund and the correlating fund expenses is provided to help you compare the cost of investing in one fund versus another.
Fund managers The Management section provides a brief biography of the fund's managers, including how long they’ve managed the fund.
Dividends The Distributions and Taxes section outlines the types of distributions the fund may make and tells when distributions are paid out. Moreover, it provides a summary of tax considerations relevant to these distributions and the fund in general.
Financial highlights In this section a prospectus lists five years of annual financial information or, if a fund is less than five years old, provides data since the fund's inception. Information is presented by share class, includes net asset values at the beginning and end of each year, and details the gains or losses, dividends and distributions that account for any changes.
The Financial Highlights section also includes fund asset information such as net assets, ratios to average net assets for expenses and net investment income, and portfolio turnover rates.
Understanding Your Account
Choosing a share class Many Franklin Templeton funds offer Class A, C, R and Advisor shares, each with different fees, expenses and sales charge structures. The Choosing a Share Class section can help you select the class that best matches your investment objectives.
How to buy shares You can buy shares of a fund in multiple ways. The Buying Shares section tells you about initial and subsequent investment minimums and the various types of accounts. It also gives you information on purchasing shares by phone, mail, wire or through an exchange from an existing Franklin Templeton account.
Types of services Franklin Templeton offers a variety of ways to access your account. The Investor Services section tells you how to automatically purchase shares through an Automatic Investment Plan or automatically redeem them through a Systematic Withdrawal Plan. If you'd rather access your account online, this section explains how to set up your account for online access.
How to sell my shares You may sell shares in your account at any time. The Selling Shares section lists all the ways you can request a redemption, along with any account requirements for a specific request.
Account policies The Account Policies section contains information to help you understand your account. It explains how a share price is calculated at the close of each business day and describes minimum account balance information, statements and reports published about the fund, various account types, dealer commissions and additional policies, such as those on market timing that may affect your fund.
Additional questions If you have further questions about a fund, its policies or your account, write or call Franklin Templeton Investments. Our address and specific telephone numbers are listed under the Questions section of the prospectus for your convenience.
For more information on any of our funds, contact your financial advisor or download a prospectus, which contains important information about a fund's investment goals, sales charges, expenses and risks. Please read the prospectus carefully before investing.
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