Annual Report

Annual reports are yearly publications by publicly-traded companies or mutual funds for their shareholders/unitholders. Publication of annual reports are mandatory and provide investors with valuable information of the operations of what they’re investing in.

For stockholders, annual reports are usually composed of two parts. The first part contains information about the company’s operations, ranging from charitable activities to management’s outlook. The second part contains financial figures critical for investors to judge the company’s financial performance. Peter Lynch once joked that the former part is printed on glossy paper but should mostly be ignored while the latter part should be paid serious attention to.

For mutual fund investors, annual reports generally describe the operations and financial condition of the fund, with much less content compared to the annual reports by publicly-traded companies.

Annual reports are useful tools for investors who want to understand a company’s operations deeper. Some investment gurus have noted that Enron’s annual reports were full of footnotes that were hard to comprehend, a potential lead indicator for poor investments.

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