A Guide to Year-End Investment Reports

Written by Matthew Wilcox

Friday, January 18th, 2019

Every January, many investors receive a series of important reports from their investment providers, summarizing activity on their accounts for the year. These reports include the Annual Report on Account Fees and Dealer Compensation, Annual Performance Report and Year-End Statements. The first two reports were implemented in 2017 as part of the Client Relationship Model (CRM2), which is meant to ensure investors receive clear, thorough, easy-to-understand information on fees and performance.

We believe it's important not only that investors receive these but that they can understand the relationship between the different reports and how they can use the information provided.

Here are the three reports and what they mean:

1. Annual Report on Account Fees and Dealer Compensation: Illustrates the amount of fees you paid to your provider. These amounts directly reduce the market value and portfolio returns presented on the other two reports.
   
   

Tips:

• Review the total dollar amount of fees you paid for the year. If this amount seems concerning, have a conversation with your provider to understand what you're getting for that money.
  
  
• This report shouldn't be taken as the total cost of investing. It covers dealer compensation only. For a mutual fund, it doesn't include the amount paid to the fund manager. You can review the total Management Expense Ratio (MER) in the Fund Facts of the fund you hold.
  
  
• The fees you pay can have a material impact on the value of your portfolio in the long term (see for yourself). By selecting an investment/provider that charges fair fees, relative to the level of service provided, you can be confident you're on the right path.

2. Annual Performance Report: Illustrates your personal rate of return over various periods, which can differ from the performance of the investments you hold, depending on the timing of your investments.
   
   
   

Tips:

• Focus on the returns for periods of 3 years and longer, if they're available. This is a better measuring stick for how you're trending towards your long-term target return. If they're not available, you can view fund returns in the Fund Facts document of the funds you hold.
• Try not to focus on 1 year returns. While this is the most current performance information, it will likely be higher or lower than your long-term target return, and this is completely normal.
• Selecting a well-diversified portfolio can help you weather the ups and downs of the stock market and reduce the volatility of your returns over the different periods.

3. Year-End Statement: This is a more transactional report, which summarizes activity on your account and changes in the value of your account over a period of usually 3 months, or even only a month. Depending on the provider, this may include market value, book value, net invested and/or average cost per unit.
   
   

Tips:

• Review transactions during the period to ensure they're recorded correctly. You should do this with every statement, not just the year-end statement.
  
  
• Avoid focusing on the change in account value within the statement period. Over such a short period, values can fluctuate up or down for a variety of reasons, which are more than likely out of your control. Reacting to these can do more harm than good.
  
  
• Setting up regular contributions to your accounts can help you take advantage of the market's ups and downs through dollar-cost averaging. Dollar-cost averaging can help take the guesswork out of deciding when to invest, and result in a lower average cost per unit, when compared to the average unit price.
  
  
  

^{Source: Investor Economics Insight, January 2018 Annual Review. Tangerine Investment Funds are considered long-term mutual funds. The asset weighted MER for long-term mutual funds as of December 31, 2017 was 2.09%. The asset weighted MER for each Tangerine Investment Fund is 1.07%.}