What is the function of a prospectus in mutual fund investment?

The prospectus serves a vital role in the mutual fund investment process by providing detailed information about the fund's strategy, risks, and costs. It is essentially a legal document that investors must receive before purchasing shares in a mutual fund, ensuring that they have access to all the necessary information needed to make informed investment decisions.

In the prospectus, investors can find comprehensive details about the fund’s investment objectives, the types of securities the fund will invest in, potential risks associated with those investments, and the cost structure, including management fees and expense ratios. This information is crucial because it helps investors align their financial goals with the fund’s strategy, assess the level of risk they are willing to take, and understand all costs involved in their investment, which can significantly affect their overall returns.

While performance history and tax implications can be important when evaluating a mutual fund, they are not the primary focus of the prospectus. The prospectus is more about providing foundational knowledge regarding the fund’s operation and the investors' expected experience, making option C the most accurate answer.