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How do I read a fund prospectus to find the expense ratio?

Answer

Start with the summary prospectus, the short document funds put first — you don't need to read every page. Look for the "Fees and Expenses" table near the top. Two lines matter most: "Shareholder Fees" shows any sales loads or redemption fees (you want these at zero), and "Annual Fund Operating Expenses" shows the expense ratio as "Total Annual Fund Operating Expenses," expressed as a percentage. Many prospectuses also give a dollar example showing what you'd pay on a $10,000 investment over several years, which makes the cost concrete. Then skim the "Principal Investment Strategies" section to confirm what the fund actually holds and what index it tracks. If anything is unclear, the fund's website usually lists the same expense ratio plainly. The whole check takes a couple of minutes and can save you a fortune over decades.

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