Reading a Fund Shareholder Report
Every six months, mutual fund companies release fund annual or semiannual reports to shareholders.
On this page:
Semiannual and Annual Shareholder Reports
A semiannual report covers the first six months of the fund's fiscal year, while an annual report covers the fund's full fiscal year. In semiannual and annual reports, the fund's manager presents a general summary of the economic environment during the reporting period and how capital markets reacted. In addition, the manager discusses how the fund performed and the market and investment strategies that significantly affected its performance.
Reports for most equity funds will include an industry breakdown chart illustrating how a fund's assets were distributed among different industries at the end of the reporting period. If the fund invests globally, you may find a geographic breakdown of the various countries the fund was invested in. Equity fund reports also include a table of the 10 largest holdings, and bond fund reports usually include a table showing monthly dividends.
The Performance Summary section provides exactly what you might expect—a summary of the fund's performance. What were fund returns? How has the fund performed since inception? What were its capital gain and dividend distributions? You'll find answers to these important questions in this section.
In addition, in an annual report, this section shows how a hypothetical $10,000 investment in the fund changed in value over specific time periods. Performance numbers are provided for each share class of the fund, illustrating the performance of each share class versus the fund's benchmark index.
In this section you'll find a description and an example of how the fund's expense ratio translates into dollar costs on an actual and hypothetical basis. This information can be used to compare expenses for different funds.
This section contains the critical components of the fund's financial statements and a breakdown of its change in net asset value (NAV) from one period to another. You'll also find information about the fund's portfolio turnover rate (the frequency with which holdings are bought and sold) during the period. Some funds are known for a rapid trading style, while others have a longer-term, buy-and-hold approach, reflected by a lower portfolio turnover rate.
Statements of Investments
This section lists the fund's portfolio holdings and their value at period end.
Equity fund holdings are typically categorized by industry group. For global and international funds, holdings are often grouped by country. For example, you'd be likely to find General Motors Corp. listed under "Automobiles" in a domestic equity fund but under "United States" in a global fund. Bond fund holdings are often grouped by type of bond or, for global bond funds, country of origin.
To see how the fund's net assets and distributions changed from the previous year, consult this section. It provides additional information about the fund's assets and liabilities, statement of operation during the period, which includes fund earnings and expenses, and changes in net assets from the prior period.
Notes to Financial Statements
This section presents a thorough explanation of how financial statements are prepared. It offers a detailed description of the fund's organization and significant accounting policies covering security valuations, income taxes, security transactions, investment income, expenses and distributions, and accounting estimates. The section also provides information about fund share classes.
Key Difference between Reports
A semiannual report covers the first six months of the fund's fiscal year; an annual report covers the fund's full fiscal year. Another key difference is found in the Performance Summary section. Only the annual report provides index comparison charts showing performance of all share classes for the fund versus its benchmark index.
Generally, semiannual and annual reports concentrate on one fund. Multiple funds may be included in a report, however, usually when they are part of a "series" or "trust." For example, Franklin Flex Cap Growth Fund is part of Franklin Strategic Series. Consequently, that fund is included in Franklin Strategic Series’ semiannual and annual reports.
In addition, an independent accounting firm audits fund statements of assets and liabilities annually and stipulates the results in the Independent Auditors' Report section of an annual report. The financial statements in semiannual reports are generally unaudited.
Obtaining Semiannual and Annual Reports
The most recent Franklin, Templeton and Mutual Series annual and semiannual reports can be viewed, downloaded and/or printed online. Or you can call 1-800/DIAL BEN® (1-800/342-5236) to order a free copy.
Important Legal Information
Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. Download a summary prospectus and/or prospectus, which contains this and other information. Please carefully read a prospectus before you invest or send money.
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