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Fund Statements: What to Look For

Step 1: Which Fund Reports Do I Need to Read?

Fund Statements: What To Look For Splash image

One of the advantages of mutual fund investing is the wealth of information that mutual funds provide to fund investors and prospective investors. Taken together, the various reports provide investors with vital information concerning financial matters and how the fund is managed—both key elements in the selection process. In fact, mutual fund prospectuses, annual reports, and performance statistics are key sources of information most investors will need in the selection and monitoring process.

Classroom Steps


To new mutual fund investors, the information may seem overwhelming. However, regulations governing the industry have standardized the reports: Once you know where to look for information, the location will hold true for almost all funds.

There are basically five types of statements produced by the mutual fund: the prospectus; the statement of additional information; annual, semiannual, and quarterly reports; marketing brochures; and account statements. Actually, the second report—the statement of additional information—is part of the prospectus. However, mutual funds are allowed to simplify and streamline the prospectus, if they choose, by dividing it into two parts: a prospectus that all prospective investors must receive, and the statement of additional information—which the fund must send investors if they specifically request it. Some fund families also currently offer an abbreviated or "plain English" profile prospectus.

 

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