DALLAS - Many investors skip reading a mutual fund prospectus because it's filled with boring legalese.

But of all the documents that a fund sends out, the prospectus is the one thing that you should read, because it tells you the fund's investment philosophy and risks.

And now, thankfully, it may be about to get easier to understand the document.

The Securities and Exchange Commission is considering a new rule that would call for funds to issue a plain-English "summary prospectus."

"In three or four pages, an investor could get the important facts about a mutual fund in a quick and convenient way," said SEC Chairman Christopher Cox. "Instead of digging through pages of legalese, investors would be able to spend more time learning how their money is invested and making informed investment decisions."

The SEC is reviewing public comments on what improvements would make the summary prospectus easier to read and understand, and what key information investors would like to see included.

In the meantime, here are the top things to glean when reading a prospectus:

1. Investment strategy

"This is the heart of the document because it tells you how the fund's manager intends to invest your savings," said Laura Pavlenko Lutton, senior mutual fund analyst, Morningstar Inc., a mutual fund research firm.

"The prospectus is full of legal language that describes a range of securities that a fund can buy, but the description of the investment strategy gets at what's most likely to happen."

The most important thing when studying a fund's investment strategy is whether it jibes with your investment goals and risk tolerance.

For example, if you're a conservative investor, you wouldn't want to go with a fund that invests in junk bonds.

2. Investment objective

Think of the investment objective as the fund's purpose in life.

Is the fund seeking to make money over a long period? Or is it trying to provide its shareholders regular income each month?

For example, if you're investing for your child's education, you'll want a fund that seeks to make money over time. But if you're looking for a monthly dividend check, you'll want something like an income fund, which invests in companies that pay steady dividends.

3. Risks

This section may be the most important one.

A prospectus must explain the fund's investment risks. For example, the prospectus for a fund that invests in emerging markets will say that the fund is likely to be riskier than a fund that invests in developed countries.

Look for a fund whose degree of risk fits your comfort level.

The investment risks "are a good reminder of what can go wrong - primarily that your investment can lose money," Lutton said.

4. Fund investment returns

In the prospectus, the funds show their calendar-year returns in a bar graph so you can see how the fund performed on an "absolute basis," meaning whether it made money. But you need to look beyond that.

"This provides a good gut check for the fund's absolute volatility, but it doesn't tell you whether the fund produced good returns relative to its benchmark or a peer group of similarly run funds," Lutton said.

That's called "relative basis." To find out how the fund's returns look on a relative basis, go to www.morningstar.com and look up general data on the fund.

Although "past performance cannot guarantee future results," it can give you an idea of how consistent a fund's returns have been.

5. Fees and expenses

These costs come directly out of the fund's investment return, so you need to pay close attention to them.

Different funds have different fees, but a table at the front of every prospectus makes it easy to compare the cost of one fund with another.

You'll find the sales commission the fund charges, if any, for buying or selling shares.

A fund that charges a fee when its shares are bought or sold is called a "load fund." One that doesn't charge such a fee is a "no-load fund."

The prospectus also tells you, in percentage terms, the amount deducted from the fund's return each year to pay for things such as management fees and operational costs. That percentage is called the fund's "expense ratio."

"Morningstar's research has consistently found that fees are the most important predictor of performance, and the lower the fund's fees, the more likely it is to outperform over the long term," Lutton said.

6. Manager profile

This section talks about the fund manager or management team who's investing your money.

"It's no longer OK to just say that the fund is 'team managed,'" Lutton said. "The fund must list the individuals who are making investment decisions for the fund."

See how long the manager has been in charge of the fund.

You want to know whether he was there when the fund was performing well or whether the fund's past record was achieved under another manager.

It's also a good idea to know whether a fund manager eats his own cooking by investing in his own fund.

To learn that, you need the fund's Statement of Additional Information, which is filed annually with the SEC in Form 408B-POS.

Never invest your money without understanding what you'd be getting into. An informed investor is the best kind there is.