December 23, 2020
1. Overall, would the sample shareholder report be useful in monitoring your fund investments? If not, how would you change it?
Much better than what we have now. The report should also include quantitative risk measures such as total standard deviation of returns and correlation with standard asset class proxies (e.g. SP500, EAFE, T-bonds) as well as brokerage costs paid.
2. Rate the sections of the sample shareholder report. Please indicate whether you find each section useful or not useful. Please consider explaining your responses in the comments.
a. What was your cost for the period? : Useful : Expense ratio as a percentage is important. Should also include brokerage fees.
b. How did the Fund perform last year? What affected the Funds performance? : Useful : Important to include benchmarks.
c. How did the Fund perform over the past 10 years? : Useful : Very important to include benchmarks. Well done.
d. What are some key Fund statistics? : Useful : Should also have risk (standard deviation) and correlations with other asset classes.
e. What did the Fund invest in? : Useful : Useful for understanding the fund.
f. How has the Fund changed? : Not Useful : Useful ONLY if there is a very material change.
g. How does the Fund ensure that it has money available to pay me when I exit the Fund? : Not Useful : Not useful. Most funds meet their liquidity demands, so this will be just boilerplate most of the time.
h. Where can I find additional information about the Fund? : Useful : Links like this are important.
3. The section titled What was your cost for the period? includes an example of what it costs to hold fund shares this year.
a. Is the table clear? Yes
b. Is it helpful to see costs paid both in dollars and as a percentage of your investment? No
c. Is it clear how the total returns of the fund minus the costs paid result in the ending account value? Yes
4. The section titled How did the Fund perform last year? What affected the Funds performance? includes narrative and graphic presentations
a. There is a narrative description of the funds past performance in the Performance Highlights section. Does the narrative description help you understand the key drivers of fund performance? Yes
b. There is a graphic presentation of key drivers of the funds past performance in the Performance Attribution section. Does the graphic presentation help you understand why the fund performed as it did over the past year? Yes
c. There is a line graph representing the funds performance in dollars over the past 10 years. Does this graph help you understand how the fund performed over that time period? Yes
d. There is an Average Total Returns Table showing the funds performance as a percentage over the past 1, 5, and 10 years. Does this table help you understand how the fund performed over those time periods? Yes
e. Is it helpful to see the funds performance both in dollars and as a percentage? No
Is there any information that could be presented more clearly in the How did the Fund perform last year? section?
Percentage returns (and percentage expenses) are sufficient. Dollar amounts are redundant.
5. The sample shareholder report includes key statistics about the funds size, number of investments, and annual portfolio turnover. Do these statistics provide meaningful information regarding the fund, for example, to help put the funds performance and investments into context? Yes
6. The section titled What did the Fund invest in? includes charts describing the types of investments made by the fund. Do these charts help you understand how the fund is investing your money? Yes
7. The section titled How has the Fund changed? describes important changes to the fund within the last fiscal year. What types of changes are most important to you?
Overall change in investment direction. Only extremely material changes should be here, such as a change in the investment company as manager or change in accountant. Drivel about selling GM and buying Ford doesn't belong here.
8. Is there any information in the sample shareholder report that is difficult to understand, confusing, too technical, or that could be presented more clearly?
The liquidity risk stuff is less important. Just cut it.
9. Is there additional information that we should require in the shareholder report? This could include the funds full financial statements, the results of any shareholder votes and/or how much the fund paid to directors, officers, and others. Is there any information in the sample shareholder report that should be highlighted more?
Any investment textbook or class says that risk (standard deviation), beta, and correlation with other asset classes are extremely important. They should be included here.
10. Under the proposal, in addition to the shareholder report, you also would have access to more information about the fund online (and delivered in paper on request). How likely would you be to seek more information on the following?
The funds full financial statements : Unimportant
Key financial information over time : Very Important
Changes in and disagreements with accountants : Important
Results of any shareholder votes : Very Unimportant
How much the fund paid to directors, officers and others : Neither Important Nor Unimportant
11. Is the length of the document:
About right
12. How would you prefer to receive or read a document like the sample shareholder report?
A combination of paper and digital
13. Do you have any additional suggestions for improving the shareholder report?
Include risk as standard deviation and correlations with other asset class benchmarks.