Prospectus

A prospectus is the legal document a company or fund must file and provide to investors before selling securities to the public, disclosing the business, the risks, the terms of the offering, and (for funds) the fees and past performance. It is the primary source document regulators require to make sure investors have the information to make an informed decision.

Most retail investors never read a prospectus in full, but the risk factors section in particular is worth skimming, since companies are legally required to disclose material risks there even when the marketing materials around an offering emphasize only the upside.