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Funds 109: Important Mutual Fund Documents: The Shareholder Report

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1.
Where in the mutual fund documents are you most likely to find an explanation of why your fund performed the way it did during the past year?
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In the portfolio manager's letter. Your manager runs the fund day to day, so you are most likely to find useful context in his or her letter. The president's letter tends to focus on economic and market trends. The footnotes provide details about the portfolio.
2.
Where in the mutual fund documents are you most likely to find a general explanation of how new developments in energy have affected the economy?
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The letter from the president. This would be a large-scale type of trend.
3.
Where should you turn for information about a mutual fund?
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Both. While mutual fund documents such as prospectuses, statements of additional information, and shareholder reports are essential for smart fund analysis, don't rely strictly on fund company materials. Seek outside sources to help put the information into context.
4.
A good shareholder report will compare your fund's performance with what?
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Both. You want to know how your fund stacks up against an index as well as a set of peers.
5.
Where in the shareholder report are you most likely to find information about whether a fund shorts stock or practices other complex strategies?
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In its footnotes. While some information about strategies such as shorting stocks may appear in the portfolio holdings section, your best bet is to scrutinize the footnotes for this information. Don't count on managers touching on these strategies in their letters.