» Learn the Basics of Mutual Funds » Papers to Examine - Trade Confirmations, Prospectuses, Account Statements

Papers to Examine - Trade Confirmations, Prospectuses, Account Statements

When you open an account in a mutual fund, you will be regularly sent documents that are related with the executed transactions. Whenever you receive such papers make sure to open them as soon as possible and thoroughly review the information that your broker or brokerage firm has sent you.

Trade Confirmations

You should pay special attention to trade confirmations, since they include the specified period during which you can express your objections to the executed trades. You should cautiously examine the confirmation for any contradictions with the predetermined activities that have been agreed with your broker connected with the trade doings. Additionally, you should make sure that there are no misunderstandings concerning the specified transactions.

Whenever a question arises after the examination of the mutual fund transaction document, advise with your broker so that s/he can clear out the uncertainty. Additionally, get in touch with your broker or brokerage firm by writing them a letter if you encounter difficulties with a trade transaction. Don't forget to keep a copy of your letter for future source of evidence that you have taken the prompt action. Your complaint about an unauthorized transaction will not be taken under consideration if it is done after time has passed. By making evident that you have not examined the mutual fund transactions statements in a timely manner, you only hurt your chances of fixing the problem that has arisen.

Mutual Fund Prospectus

By law, every mutual fund is required to provide its potential investors with a prospectus in which all relevant information is included. When deciding on your investment with a particular mutual fund, allocate sufficient time to go through its prospectus, since it includes crucial details concerning the type of investment. Additionally, information about risk factors and the appropriateness of the mutual fund to specific investors is specified.

The mutual fund prospectus provides extensive information on the services, fees, activities and other characteristics of the fund that you should be able to examine. Risk factors are typically signified with large bold letters. Nevertheless, it may be difficult to find them from among the many other details encoded in technical jargon. Therefore, don't hesitate to consult with your broker about any misunderstandings, until everything is clarified. This is required in order to avoid future problems connected with the covered material.

Account Statements

Another document you should pay special attention to is the account statement that you will receive periodically, usually every month. You should verify that the broker follows the predetermined trading activities, for which you have authorized him/her to execute. Account statements of a mutual fund are also used for determining the performance rate of the mutual fund. This is done through the comparison of this month's beginning and ending net equity figure with that of the previous month.

Never forget that your broker or brokerage firm are here to serve you. Therefore, don't be embarrassed to ask them whatsoever question arises connected with your account statement. The latter represents the document whose understanding is of high importance. So, if your broker or brokerage firm fails to explain to you the purpose and function of the account statement, you should consider this as a problem that needs special attention and reconsider your choice of mutual fund brokerage firm.

Additionally, if the information on the mutual fund account statements is not understandable enough, contact your broker as soon as possible and give voice to your concerns. If the broker doesn't manage to answers your concerns by explaining the information under question, ask for a meeting with the broker's supervisor or branch office manager.


Another documentation that requires special attention is the correspondence that your broker or brokerage firm sends from time to time. If any information sounds strange or unusual, don't hesitate to make a contact with the branch office manager. This has been highly encouraged by brokerage firms through letters in order to insure themselves against the accusation of not paying attention to the considerations of their investors. So, when you receive a letter with such an invitation, don't ignore the given opportunity of giving voice to your questions, otherwise the firm may turn it against you.

Brokerage firms often send letters that you should sign and send back. This is done so that you express your agreement with the executed activities. Don't ignore such letters mere formalities. Allocate special attention to them and specify any disagreements you have with the executed trades. The main function of such letters is to verify that the transactions made correspond to the predetermined objectives and authorizations. Keep a copy of the letter and the notes you have made for future verifications in case a misunderstanding arises.

Rate this article : Low
  • Currently 2.8/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5