How to find information about mutual funds

As with common stocks, there are a number of places to find accurate, reliable information about mutual funds. The best place to look is the mutual fund’s prospectus. A prospectus is a legal document prepared by the mutual fund company. It is filed with the Securities and Exchange Commission and lists the most recent information about the fund. These are produced once a year. However, some fund families put out revised prospectuses throughout the year. A prospectus will include an expense summary for the fund, the fund’s investment strategy and risks, any minimum purchase restrictions, financial highlights of the fund, and many other useful bits of information. The prospectus will also disclose the different types of securities and assets that the particular fund is allowed to invest in. Each mutual fund has its own prospectus.

Another good source of information is a mutual fund’s semiannual or quarterly report. Often times, this is included in the prospectus booklet, but it can also come separately. An annual report should list the fund’s top 10 holdings, its long-term performance, an independent auditor’s report about the fund, and its portfolio and financial statements, among other things. The annual report will also detail the most recent capital gains and dividend distributions to shareholders. These numbers are important to look at if you are searching for a mutual fund that has favorable tax consequences (i.e., low capital gains and dividend distributions).

Although prospectuses and annual reports include valuable information, because of their infrequent publishing, investors need different resources for up-to-date information. As with stocks, Yahoo! Finance (www.quote.yahoo.com), Dow Jones Market Monitor (www.dowjones.com), and Microsoft (www.msn.com) have information about mutual funds. Magazines such as Worth, Money, and Barron’s publish periodic mutual fund performance reviews. Daily financial newspapers, such as the Wall Street Journal, will contain the same type of information about funds as they do about stocks, such as the NAV, volume of shares traded, etc. Finally, mutual fund companies update their fund information on a daily basis at their respective Web sites. You may also be able either to download or read the prospectuses on-line, as well.