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Mutual Fund Education

How to Read Your Annual Mutual Fund Report

Mark P. Cussen Sep 05, 2014

Mutual fund investors can find out how their fund has done by reading the annual fund report. All mutual funds that are registered with the SEC are required to send a full report to all shareholders every year. This report contains a great deal of legal language and can be difficult to read in many cases, but it is important to know what it says so that you can evaluate the fund’s performance. Here’s what you need to look for when your copy arrives in the mail.

Fund Objective

Small cap stocks would obviously not fit your needs if you are seeking stable income. Possible objectives include growth, income, capital preservation, and tax efficiency. The fund will attempt to accomplish its objective by purchasing the appropriate types of securities, such as stocks, bonds, cash, real estate or derivatives according to a specific strategy that is outlined in the fund charter.

Be sure to also see the 7 Questions to Ask When Buying a Mutual Fund



See our Complete Guide to Mutual Fund Expenses


  • Market risk – the chance that the value of the fund can decline
  • Interest rate risk – the chance that the fund can lose value from a change in rates
  • Reinvestment rate risk – the chance that the fund will have to reinvest its returns at a lower interest rate
  • Legislative risk – the chance of the fund’s holdings being affected by new legislation
  • Political risk – the chance that fund holdings could be affected by changes in foreign governments
  • Currency risk – possible losses incurred due to changes in exchange rates
  • Liquidity risk – the chance that fund holdings may not be available for liquidation when the need arises

This section will also often state the amount or degree of each type of risk that it carries, such as low, medium or high.

General Information

Putting It All Together

The Bottom Line

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